The Good and Bad of Controlling Fuel Costs

April 8th, 2008

The Good

There are many clever things being done by companies to control fuel costs and this weekend’s edition of Parade Magazine contains one such example from UPS.  UPS decided to change its delivery routing system such that it develops truck routes that minimize left turns.  There is a safety benefit here, since minimizing left turns minimizes the number of times a truck must cross on-coming traffic.  But minimizing left turns generates significant fuel savings due to reduced idle time at intersections.  UPS engineers figured the company eliminated 3 million gallons of gas last year from making the change.  It’s an idea worth exploring for any company that has alot of routes in urban areas.

The Bad

That said, operators must be cautioned not to become fuel price obsessed.  Conferences across the continent are devoting huge amounts of time to highlight ways to cope in a high-fuel price environment - often getting down to brass tacks (like retrofitting trucks with equipment to make them more aerodynamic).  Of course, the soaring price of fuel makes it difficult, if not dangerous, to ignore.  However, we must always look at the total cost of a solution and not focus exclusively on minimizing the cost of one aspect of the supply chain: minimizing the total cost of getting product in your customer’s hands does not result from minimizing the costs of each distinct segment in your supply chain.  When cost savings programs are proposed, the impacts on other departments cannot be ignored.

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