Recently we have written about what are the key steps involved to initiating a yard management project. To no great surprise, being able to justifying the return on investment necessary to improve your yard operation is a key step in gaining management's support and approval for a yard management project.
So, when we examine a yard operation, what are the key cost areas that need to be improved? In this blog, we will explore the main costs areas that can be reduced by implementing a yard management system. In addition, we will also provide some historical information on what other operators have been able to achieve in effectively implementing a Yard Management Software.
In a yard operation, the most significant cost area is related to managing dedicated yard trucks and the drivers that operate these trucks. Usually a truck will have two to three drivers dedicated to it per day. In North America the total costs related to one yard truck (and the drivers using it) can vary from $175,000 to $225,000 per year depending on your local labour costs.
Another significant cost area is related to managing a fleet of trailers. If your operation does not have it’s own fleet, the costs you incur will be related to using third party carrier’s trailers. A poorly managed yard can become a black hole for trailers.
Here are the top five areas where you can dramatically reduce costs by implementing a yard management system:
Reduce Labour Costs
Improve yard driver productivity by focusing on these three areas:
- Reduce the number of moves.
- Optimize each trailer move.
- Avoid wasted time looking for trailers.
Reducing yard driver costs is not the only area to reduce labour costs in the yard. Eliminating management costs related to areas such as yard inventory and overall yard control are other means of reducing yard labour costs.
Reduce Yard Truck Costs
Improving yard driver productivity will also reduce labour & fuel costs and vehicle maintenance costs given that trucks will be running less.
Reduce Trailer Costs
For fleet owners this means reducing the number of trailers required. Greater visibility on the location of trailers allows them to be used more often. For operations using third party carrier trailers this will translate in reducing fees related to trailer detention.
Eliminate Driver Demurrage Fees
Not only will a well managed yard avoid you paying fees for delaying drivers, it will also help your operation’s image as being “driver friendly”. Several yard management solutions also include an appointment scheduling module which can further help reduce driver demurrage fees.
Improve Facility Throughput
Making sure that the right trailer, is at the right door, at the right time goes a long way in improving the overall throughput of your operation. It is one thing to focus on avoiding and optimizing trailer moves but the greatest potential benefit is gained by moving the right trailer. A dock operation can experience significant gains by not having to stage freight on the dock and avoiding congestion.
Improved dock door turnaround will also contribute to expanding the throughput of your facility. By ensuring that trailers are brought to or removed from dock doors in a timely manner increases warehouse productivity.
While not all of these cost savings areas are easily measured, reducing yard driver costs and trailer costs are. Our experience is that operations implementing a yard management system have gained in these areas:
- 20-30% reduction in yard driver costs, including reduction in yard driver truck costs.
- 10-15% improvement of trailer utilization.
- Up to 12.5% increase in warehouse throughput.
All of these factors combined will go a long way in providing a return on your yard management investment in under 12 months.