Driving Auto ID Sales To The Trucking Industry

One of Citgo Petroleum's worst fears was realized six years ago: one of its fuel stations ran out of gas three hours prior to a scheduled delivery. The station lost hundreds of dollars because it had to turn away customers, but the lost revenue was only the tip of the iceberg. A subsequent loss in the station's customer loyalty prompted Citgo to invest in vehicle automation systems for its fleet of 140 delivery trucks. Vehicle automation systems allow a base office (e.g., headquarters) to communicate with drivers on the road. Another component is the global positioning system, which enables a base office to track the location of delivery trucks on the road. In addition, touch screen-based data collection terminals (computers) allow drivers to transmit billing- and inventory-related information to headquarters. The touch screen terminals are mounted on the delivery vehicles' dashboards.

According to Bob Montana, president of Summary Systems, vehicle automation systems would have helped Citgo avoid its crisis. Summary Systems, a Dallas, Texas, VAR, installed vehicle automation systems for Citgo. Montana explains, "When the station ran out of gas, the manager checked the delivery schedule and realized the truck wouldn't arrive for several hours. So, he called Citgo headquarters. However, headquarters didn't have a means of getting in touch with other drivers who were also making deliveries in the area. With a vehicle system, headquarters could have sent one of the drivers a message (over cellular modem), instructing him to go directly to the station in dire need of gas."

Many companies with delivery trucks are investing in vehicle automation systems because the systems' benefits go beyond the ability to communicate with drivers. These systems also help trucking companies eliminate time-consuming paperwork and redundant data entry. In the following pages, Montana discusses the challenges VARs will face in this industry, as well as approaches to overcome them.

VAR Challenges
The sheer number of trucking/transportation companies signifies the potential sales opportunities in this industry. For example, according to the American Trucking Associations, the trucking industry employed 9.3 million people in 1995, . The trucking industry in 1995 also included more than 423,000 companies and 4.2 million medium and heavy trucks.

Despite those numbers, Montana, who has sold to trucking since the early ‘90s, acknowledges the industry is not an easy sell. He says VARs can expect these challenges:

• An aversion to smaller VARs - Summary Systems has encountered its share of prospects who wanted to buy from a large VAR or integrator. According to Montana, some prospects simply don't feel comfortable buying from smaller VARs and integrators. And, at $1 million in gross sales for 1997, Summary Systems has lost sales because of its size.
  
  One tactic Montana uses is pointing out that Summary Systems has successfully installed systems for large clients, including Citgo. "It's important to have prospects contact references, so the prospect can see you're a credible reseller," he says. "It means more to a prospect to hear it from a reference, as opposed to a sales rep."
  
  
• System expense - According to Montana, vehicle systems cost about $4,000 per truck. Consequently, many companies with small fleets cannot cost-justify them. As a result, Montana says VARs will be most successful targeting companies with a minimum of 50 trucks. "Citgo's system paid for itself in two years," he adds. "Citgo significantly reduced billing- and inventory-related errors."
  
  
• Driver resistance - Because the global positioning system (GPS) monitors vehicle location, it gives companies an added degree of supervision over drivers. The GPS uses cellular modems and satellites to calculate vehicle position (see sidebar on GPS for further information).
  
  "Some drivers don't like the perception that they are being watched by a system," Montana says. "If enough drivers voice their resistance to a system, the VAR can lose the sale, even if the prospect's upper management wants it. As a result, it's important for VARs to convey a benefit to the drivers."
  
  Consequently, Summary promotes the fact that vehicle systems free drivers from having to fill out paper reports. Instead, drivers enter information on the touch screen-based terminals, and transmit the information to headquarters in real time. "Many drivers see paperwork as a time-consuming, tedious part of their job," Montana adds.
  
  In addition, vehicle systems allow headquarters to quickly and easily contact drivers in the event of emergencies.
  
  
• Unusual support requirements - Post-sale support in the trucking/transportation industry is different than in many vertical markets, Montana says. The reason? Typically, when a system fails, the VAR visits the customer's site to address the problem. However, trucks are typically on the road making deliveries. "Even when vehicle systems fail, drivers usually finish their deliveries before returning to headquarters," Montana says.
  
  As a result, Montana says VARs should develop the ability to remotely "dial in" to vehicle systems. For example, Summary Systems uses a cellular modem to "connect" to its customers' vehicle systems. That way, VARs can "enter" the vehicle's system and fix problems, saving drivers from having to prematurely return to headquarters.

VAR Selling Points
Given that vehicle systems are expensive, Montana bases his sales pitch on several factors. These factors include:

• Increased accuracy - Because drivers generally dislike paperwork, some don't put much effort into turning in accurate reports. Inaccurate reporting by drivers can have serious consequences for trucking companies. "For example, say a driver delivered five pallets of goods to a store, but wrote down three pallets. The trucking company loses money because it under-bills the store. In addition, the company's inventory count will be wrong, because only three pallets were deducted from inventory, not five. As a result, the company thinks it has enough inventory to fill other orders, when in reality it doesn't. We incorporate touch screen terminals in our systems because they guide drivers through the data entry process."
  
  
• The elimination of redundant data entry - When drivers finish their shifts, they forward their paper reports to data entry employees at headquarters, who then manually enter information from the reports. "Such redundant data entry is wasteful," Montana says, "because the data entry employees are entering the same information the drivers wrote down. And data entry is prone to error."
  
  
• Increased productivity - Many companies see an increase in driver productivity upon implementing these systems. "Some drivers might spend up to a half hour less each day making deliveries," he explains. "Trucking companies can have the driver perform other tasks in that ‘extra' half hour."

Lessons VARs Can Apply
Montana has learned several lessons from selling to the trucking industry, including:

• The importance of ‘hand-holding' with prospects - Many companies consider vehicle delivery an ancillary aspect of their business. For example, a bakery would devote most of its time to making baked goods, not figuring out ways to deliver them to stores more efficiently. As a result, many prospects don't set productivity-related goals once they decide to implement a system. "In six years, we've only seen two requests for proposal, where the prospects actually spelled out specific system requirements," Montana adds.
  
  Consequently, VARs have to spend extra time with some prospects developing those types of parameters. "VARs can't just expect to drop a system in and move on to the next sale," he adds.
  
  
• Choose prospects carefully - Previously, Summary Systems pursued every prospect. However, the company has learned the importance of spending more time with fewer prospects. According to Montana, VARs can use several criteria to judge the quality of sales leads. For example, Summary Systems rarely pursues companies with small fleets (under 50 trucks). Secondly, Summary looks for prospects with what Montana calls strong home-office systems. These include systems for dispatching and routing trucks, as well as for billing customers. Summary integrates its vehicle systems with those types of systems. "If a prospect's home-office systems are old enough to be replaced, it doesn't make much sense to integrate our systems with them," he explains.
  
  In addition, some companies believe they can "get by" merely with radio communication from their home office to their vehicles. According to Montana, these prospects generally do not see the value of cellular modems and the global positioning system.
  
  
• The importance of customizing systems - According to Montana, many solution providers to the trucking industry offer standard, "off-the-shelf" systems. As a result, VARs can differentiate themselves by customizing systems around customers' unique needs. "Many prospects don't need everything a particular system offers," he says. "In addition, they may need functionality not provided by an off-the-shelf system."

The Benefits Of Selling To Trucking/Transportation
Montana acknowledges the trucking/transportation industry is not an easy sell. However, he says one trend bodes well for VARs: the distribution- and transportation-related costs of consumer goods are steadily increasing. As a result, more companies are looking toward vehicle automation systems as a way to cut those costs, which ultimately are passed on to end consumers.

Montana concludes, "Vehicle automation systems allow companies to cut distribution costs and grow their businesses without proportionately adding vehicles to their fleets."