Technology has to be something that actually changes the process. Let me give you two quick examples from my days in the transportation business.
I once ran Ryder TRS, the Yellow Truck Division. We had 45,000 trucks on the road at any given time or on any given weekend. We made customer reservations for the following week based on where customers said they were going to return the trucks. However, only about 50 per cent were actually returned to the locations where they were supposed to go. Every weekend, along with Monday and Tuesday, we had the biggest fire drill you could imagine trying to get trucks to where they were needed.
Here’s the dumb part: We knew 50 per cent were not going to the right locations, but we kept planning reservations as if they were, just because that’s the way we always did it.
Finally, we started looking at demographics. What we found was that families, nine out of 10 times, returned the trucks exactly where they said they would. Single people, however, often did not return them where they said they would. Why? Divorces — people running away from something. They didn’t want to tell you where they were going. They still returned the truck but they would return it 50 miles, 100 miles or 200 miles away. We started doing driver profiles. We matched the demographics with the predicted truck drop-offs. From there, we determined how many trucks we would have to rent on Monday or Tuesday.
Here’s another example: Every winter, we were sending vehicles into Florida. Well, guess what? Nobody comes back out of Florida until the spring. For years, our guys in Florida would still rent the trucks for the standard rate. Of course, no one was renting them in the winter. We ended up paying $1 a mile to move the trucks back to Atlanta.
I then said: “Let’s rent the trucks for nothing. Customers pay for the fuel, and I’ll throw in the pads or whatever they need.”
My guys thought I was insane. It didn’t matter. The fact remained we still had to get those trucks up north. And before you knew it, we were renting 75 per cent of the fleet for nothing. And Ryder saved a dollar a mile on every truck that a customer drove up north.
These two solutions came from applying technology in innovative and practical ways to show us business patterns. From those patterns, we started making smarter decisions. We began to build a new management system based on those patterns as compared to a yield-management system without any logic behind it.
