It’s a basic business law: the more mature the market, the smaller the profit margins.  In a fully mature market, margins will be squeezed so close to zero that only the most efficient companies will survive.  Customers will demand not only exceptional service, they require competitive rates as well.  The company is caught in the middle.   Los Angeles is one of the most competitive markets for courier services in the country, and literally hundreds of start-up firms come and go every year.  A few, very few, of the best-run companies continue to be in the ranks of the lean, mean survivors.

When Terry Cleven and Michael Nevins started Bandit Delivery Service in 1991, they knew that to survive — much less to flourish — they needed an edge.  Not a gimmick, but a competitive advantage.  They found that advantage through technology. “The majority of the cost of any on-call delivery is labor,” Terry explains.  “We knew we had to take good care of our drivers, so the place to look for savings was in administration and dispatch.  We started to look for ways to reduce our costs in those areas without compromising our level of customer service.  And as it turned out, we found a solution that not only saved us money, it improved our service as well.  That solution was ASCAR.”

Finding ASCAR was the result of an exhaustive search.  “We knew the right computer system held the promise for the kind of gains we needed.  But too often, computers become an end in themselves rather than a productive business tool.  We didn’t want to fall into that trap or be seduced by advertising over substance.  The only thing that really counts in business is the bottom line.”  Reaching a bottom-line decision involved looking at far more than up-front cost, however.  Terry said, “We looked at every supplier in the market because we knew too many other companies who had made computer-related decisions based on unimportant considerations.  Too often, they were then stuck with a system that only mirrored their manual procedures and didn’t help grow the company.  We had aggressive growth plans, and felt that we needed to take a long-term perspective on our computer buying decision.  How would it affect our productivity?  Could we justify the outlay by what it added to our bottom line both today and tomorrow?”

Terry and Michael started their search by reviewing the trade periodicals.  “It was immediately clear there were companies out there spending huge sums on advertising, coining catchy labels and making all kinds of wonderful promises.  We needed more than fancy names and promises, however.  We needed a completely integrated system capable of allowing us to enter the information one time and have it flow through to all our business activities — from order entry to dispatch to billing to a modern general ledger.  As soon as we got past the ad copy and started talking to systems providers and their clients directly, it became clear that ASCAR was years ahead of the competition.  Dan Citera, ASCAR’s president, offered a number of advanced concepts with clear productivity advantages.  One of the most exciting was artificial intelligence automatic dispatching.”

Most computer vendors to the transportation market are now promoting some form of Automatic dispatching, but their systems’ real-world performance falls far short of actually routinely making a dispatch decision equal or better to one performed by a skilled, experienced dispatcher.  These systems are in fact, just sophisticated tools designed to provide more data to the already busy dispatcher.

Dan Citera believes ASCAR’s Master Dispatcher, (Dispatching expert system), sets new standards for effectiveness and cost savings.  “We began work on MD seven years ago, and had a working site within 12 months.  But dispatch is the core of the courier or express company, and just “working” wasn’t good enough.  It had to provide solid, measurable improvements in the quality of the dispatch decisions.  And it had to be absolutely bulletproof.  You can’t have the program that runs your most important business function fail to efficiently deal with a single situation, specially when things get crazy.  So we continued developing and refining MD to where, today, we’ll stake our reputation as a company on its performance.  MD works.  Works extremely well.  And it improves profitability while it cuts driver turn over by 80%, for the companies that are using it.  Period.”

That was exactly the kind of competitive advantage Bandit Delivery Service was looking for. Michael tell us “Our strategy is to sell ASCAR’s capabilities to our clients, and we earn just about all the business we want.   We must deliver on what we promise, of course, otherwise we would loose the business as fast as we earn it.   We have made big inroads in our market, and we have just began”.

Michael explains the economics of automatic dispatching.  “Our analysis of hotshot and on-demand delivery companies around the country revealed some interesting patterns, and a recent survey by Courier Magazine confirmed our findings.  A natural barrier exists limiting delivery company growth at between 500 to 1,000 deliveries a day.” 

A skilled and experienced human dispatcher will make dispatching decisions at 100% efficiency at the beginning of his shift in a non-pressured environment.   But as Michael explains, “When fatigue and pressure mount, his or her efficiency drops.  This is best reflected in the number of pickups/deliveries each driver makes per day.  I have seen small companies doing about 14, (jobs/driver/day).  When daily deliveries approach 500, average stops per driver drops to about 10.  This trend continues to where the courier/on-demand delivery company making 1,000 stops a day, routinely averages lower deliveries per driver per day and lower percentages of deliveries done on time”.

Dan Citera tells us.  “In theory, the more business you have in a specific area, the more stops per driver that should be possible, as proven by Federal Express.  It doesn’t work that way in the courier and L.T.L. real world, however, because of human dispatching limitations.  We developed MD to overcome that limitation.   Our MD clients are breaking through the dispatching growth barrier.  They provide better service to their clients, and their drivers are making more deliveries per day, and both company and drivers are making a lot more money”.

Bandit’s Michael says, “We’ve been growing by about 30 percent per year since we switched over to ASCAR’s integrated business and dispatching system.  Our analysis shows MD currently makes the very best decision 94 times out of 100 — less than perfect but way ahead of what a tired, harassed human dispatcher does at the end of his shift.  Plus there’s no favoritism from one driver to another, our computer never needs a vacation, never comes to work late or asks for a raise.  We believe we’ll be able to do many times our current volume and still not outgrow our dispatch system.  The only limit to MD’s capability to handle dispatching volume is the limits imposed by computer hardware, but our single Pentium 200 handles 80 drivers with ease, so it looks like the limit is so far out there, that we’re not likely to ever encounter it.  We needed up to four dispatchers in our peak times, while now we are having a contractor tear down our dispatch room!  

Our drivers are more productive and are making more money than ever before, so they love it.  At the same time, we’re delivering a higher level of service to our clients.  We’ve overcome the dispatching problems.”

So how does MD work?  Bandit’s biggest accounts have remote terminals that allow them to input orders directly, while other clients call in their order over the phone.  Once the order is in the system, the computer reviews the position, status, and pending schedule of every driver in the fleet.  The order is then matched to the most suitable driver, ensuring that all deliveries are made as fast as possible with the available resources. 

Reliable and cost effective 2 way communications with all drivers is a key element for Master Dispatcher.   For this ability, Bandit looked to RAM Mobile Data.  RAM operates the Mobitex (r) network throughout the U.S., covering more than 93 percent of the urban population.  “We needed a dependable wireless data communications system and top-notch support to integrate our dispatch system,” said Cleven.  “Enhancing customer service was also a key criteria for our decision and RAM Mobile Data’s network is extremely reliable and is available today.”

MD reviews some of 60,000 variables (no wonder it took seven years to perfect), and the computer can either assign the delivery automatically or provide the dispatch supervisor with the top choices, so that he or she can make the final decision. Each courier is outfitted with a belt-worn two-way communications device operating on the RAM network.  One keystroke and the work order is then digitally transmitted to the selected driver, who presses a single key on his or her belt-communicator to confirm receipt.   Once the pickup has been made, the driver, with minimal keystrokes, updates each of the order’s status, including completion.  The ASCAR system will then automatically fax delivery confirmation to the client.  The bill then flows through invoicing into accounts receivables and finally into general ledger, all completely automatically.  No one needs to re-enter the information, ever.

To insure quality service, the system tracks driver performance continuously, and will automatically take corrective action when a driver is running behind schedule.  It is able to reassign orders, request information from drivers, even send out alerts for things like traffic problems.  The system can operate completely without human intervention.   It will then only alert everyone in the office, (or a dispatch supervisor), when an exception condition arises that can only be handled by a human.  Of course, a dispatch supervisor can always monitor performance, and make manual overrides if he or she desires.  The grunt work of dispatching is automated, freeing your most talented people to build customer and driver relations and new business.

Dan Citera likes to talk about money.  “By the time you factor in vacations, benefits, and a couple of days of sick time each year, the average courier company incurs about $9 per driver per day in dispatching costs.  There’s some room for variance from one company to another, but that’s a pretty solid number.  Some firms spend twice that, especially those fighting the growth barrier.  We offer MD for about $3 per driver per day — including all the personal driver communication hardware and air time — meaning that in an average setting, the company saves two-thirds of its dispatching cost right off the top.  Add with the efficiency gains we’re seeing, and it’s not outside the realm of possibility to double or triple a customer’s bottom line.  MD gives the company using it, a huge competitive advantage, especially in the tougher markets.”

Bandit’s Terry Cleven says they gain more from ASCAR’s partnership than just net profit, however.  “Their fully integrated system gives us better control and makes the business easier to manage.  We save both money and hassles.  Reports are fully customizable.  The system is rock-reliable, and their support program is the best in the industry.  Unlike the software some of our competitors use, our system doesn’t run into file size limitations and blow up when the pressure’s on.  I know that our computer it’s going to be there every time.  That’s worth a lot to me.”

Delivery and L.T.L. trucking companies interested in visiting a Master Dispatcher, automatic dispatching live site, and finding out more about ASCAR’s productivity tools and integrated software packages may contact ASCAR at 800/878-0330 or www.ascar.com.