Managing the Financial Side of Commercial Fleets

Dean Foods Battles Transportation Fleet Inefficiencies

The company’s fluid milk delivery fleet has committed to a campaign against waste by focusing on its Ps and Qs: people, safety, quality, and service.

January 2014, by Lauren Fletcher - Also by this author


Editor's Note: Click through for a full gallery from our interview with Dean Foods VP of Transportation Michael Ahart.

Dallas-based Dean Foods has committed itself to a campaign against waste and greenhouse gas (GHG) emissions for its transportation and distribution fleet, by developing and executing strategic initiatives around vehicle utilization, driver safety, and productivity.

Dean Foods, a member of the American Trucking Associations (ATA) and the National Private Truck Council, operates one of the largest privately owned refrigerated fleets in the U.S., according to the company, with a total of 12,100 vehicles involved in the delivery and sale of its milk, ice cream, cultured dairy products, creamers, juices, and teas.

The oversight and management of this large fleet is broken up into two categories: logistics and fleet operations, and involves the dedication of nearly 7,000 employees nationwide.

Michael Ahart is VP of transportation for Dean Foods, and is responsible for ensuring the company has a safe and reliable fleet of vehicles for its logistics operation to use in the day-to-day delivery of its products, including the acquisition and maintenance of the company’s fleet vehicles.

Ahart started at Dean Foods in 2000. He has held a variety of operation and finance leadership positions before being promoted to his current position in 2006. Ahart is a member of the ATA’s Technology Maintenance Council and a charter member of the NGV Fleet Forum.

There are nearly 300 people managing and maintaining the Dean Foods fleet on a day-to-day basis, including 12 corporate-based employees (executives, senior-level management, and support staff); four field-based senior-level managers; 25 field-based managers; and 260 field-based supervisors, technicians, and support staff.

Battling Waste

Dean Foods is fully committed to its campaign against waste in its logistics and fleet operations. The company consistently reviews asset utilization, productivity, and compliance with expectations set for mpg, idling, and maintenance standards.

“If we have assets out of compliance with our established maintenance standards, we risk having unsafe assets we can’t put on the road,” Ahart cautioned.

Focusing on preventive maintenance (PM) is a high priority for Dean Foods. “We believe a thorough PM program is a best practice, and we strive to ensure our comprehensive PM program is followed and the actual process and related repairs remain at a high level of compliance,” he said.

Dean Foods also invests in training its technicians across the country and ensures outside maintenance providers are using the company’s best practices.

Ahart feels strongly that the successes achieved are due to the people he works with. “I can tell you that everything I do is only achievable because of the people working in the field every day,” Ahart explained, noting that 60 percent of the fleet’s maintenance is performed in-house by the company’s fleet maintenance team. All technicians are trained in the proper use of diagnostic equipment, helping ensure vehicles are repaired correctly the first time.

“There is significant waste associated with throwing parts at a problem, causing expense to go out of control,” Ahart said. “To fight the battle on waste in the maintenance department and help control expenses, we strive to diagnose and repair a vehicle right the first time.”

An additional area that Dean Foods focuses on is ensuring that no money is left on the table.

“Over the past few years, we have worked hard on the recovery of our warranty dollars. I always say the easiest way to reduce cost is never pay for something that doesn’t belong to you,” Ahart noted. “Work to get your money back. Warranty recovery is a significant part of how we manage our business.” 

For example, if a repair is covered under warranty, essentially, that cost does not belong to the fleet. Dean Foods has set goals for each of its 40 maintenance facilities as it relates to warranty dollar recovery, and measures each location monthly on its compliance. Dean Foods has recovered approximately $6 million in warranty and policy from vendors over the past three years.

Ensuring Safety & Productivity Through Technology

Dean Foods has a zero-tolerance for accidents and injuries safety culture, and requires sign-off from all drivers on a policy banning the use of electronic communication devices while operating any commercial motor vehicle. “We believe distracted driving is the number one cause of vehicle accidents and our policy is aimed at mitigating the various distractions our drivers encounter every day,” Ahart noted.

Dean Foods has equipped the entire fleet of commercial motor vehicles with on-board computers from XRS, enabling the logistics operation to better manage driver behavior and the efficiencies of its deliveries.

“We are able to compile data tracked by the on-board system in each truck,” Ahart noted. The system captures more than 25 measurements for each driver related to time management, driving behavior, and route performance. “We encourage supervisors to meet regularly with their drivers to discuss the results and opportunities for improvement,” he added.

The company has also instituted a no-idling policy, with automatic vehicle shut-off after 3 minutes of idling.

Ahart added, “Our drivers are frequently recognized for making Dean Foods a leader in idle time performance, but we maintain an improvement mindset to take us all the way to zero-idle time. Idling is not only an unnecessary waste of fuel, but it also creates excess wear-and-tear on the vehicle itself. As we look at extending safely our maintenance intervals, we have to do everything we can to ensure that the time between those intervals is related to productive use of the asset.”

With public safety and fuel economy in mind, the company has electronically limited road speed on all vehicles to 65 mph or lower.

All maintenance shops utilize Arsenault’s Fleet Dossier. “We use the online, 24/7 version so we have the across-the-board ability to look at our fleet maintenance as necessary,” Ahart noted.

Additionally, all maintenance shops are equipped with an advanced diagnostic trailer tester from Lite-Check and a lug-nut torque-wrench which is part of a rotation program allowing for its periodic calibration. Ahart believes the ability to perform proper and efficient PM inspections on the company equipment are heavily reliant on making the investment in training and equipment.

Partnering for Improved Financial Results

Dean Foods is a strong proponent of fostering strategic relationships with its suppliers.

“Because we are a refrigerated fleet, we work with our suppliers, ThermoKing and Carrier, to ensure we understand the most efficient way to operate the refrigeration systems on our vehicles to achieve the maximum economy while protecting our product for our customers,” Ahart said. “Product quality is paramount in achieving the company’s vision: Be the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion.”

Working with select OEMs that see Dean Foods as a valuable partner is important to the company.

“These partnerships are valuable to us. And, since delivery time and temperature are of the essence for our refrigerated product, we know that we can find someone to assist us with a quick resolution to the problems that arise from time to time,” he said. “When you look at the 12,100 vehicles in our fleet, including the tractors, trailers, trucks, refrigeration units, and lift-gates, they all compound the maintenance issues. It’s very important to have standardized specifications.”

Standardizing vehicle specifications and partnering with select OEMs and suppliers allows Dean Foods to:

Reassign vehicles around the country as necessary.

Quickly work toward a resolution if an issue or problem occurs with a particular product, and communicate it consistently to field personnel.

Leverage its buying power to achieve the lowest cost possible for new equipment and replacement parts.

“We recognize that process consistency and standardization leads to improvements in safety, productivity, and other operational efficiencies, resulting in lower operating costs. This is what we work toward every day,” Ahart noted.

Setting a Time Line for Sustainability Initiatives

In 2008, the company set an overall greenhouse gas (GHG) reduction goal to reduce its distribution fleet’s CO2 emissions by 50,000 metric tons by 2013 over its 2007 baseline emissions totals. The company surpassed this goal by the end of 2010, and revised it to reduce distribution emissions by 95,000 metric tons by 2020.

To meet its goals, the company created a “Smart Fleet” initiative to optimize routes, invest in new technology and equipment, and train drivers to drive more safely and maximize fuel economy. Fleet drivers have also been trained to minimize energy use — while keeping products at optimum temperature — by using proper refrigerated airflow management practices.

“We utilize approximately 40 million gallons of diesel fuel in our delivery fleet annually. Our ability to continually reduce that is an integral part of cost savings and sustainability initiatives,” Ahart said.

Dean Foods has made significant strides in reducing the amount of diesel fuel used in the transportation of its finished product, directly reducing the impact of related emissions on the environment. 

“We believe strongly that the SmartWay Program plays a significant role in assisting the transportation segment of our economy in doing the same. Our corporate responsibility initiatives encompass programs and vendors used by the SmartWay Program partners, focusing our efforts on successfully launching our own Smart Fleet initiatives, instead of the process of becoming certified,” Ahart explained.

In 2006, the fleet became an early adopter of automatic tire inflation systems (ATIS) for its refrigerated trailer fleet. The Meritor Tire Inflation System by P.S.I. has been deployed on more than 3,000 of the company’s refrigerated trailers. This system assists with improving fuel economy and tire wear life, notifying the driver with a visual alert anytime an issue exists the ATIS has not been able to correct. The company was even presented an award of appreciation from P.S.I.  for being a pioneer in the early adoption of this technology.

“It was very clear to us that tire inflation is something that plays a significant role with  fuel economy, so we were a very early adopter on trailers,” Ahart said.

The Bottom Line

Fleet utilization is a big thing for Dean Foods, “whether it’s achieved through a quality maintenance program or making sure we are putting the maximum amount of product on the vehicles that can be delivered, safely and within the vehicle’s specifications,” Ahart said.

In providing advice to others in the field, Ahart noted that “everyone makes mistakes, but the most important things you can do before making any significant decision are: ensure the effort is made to do research ahead of time, assemble your thoughts in support of your decision, and know there is an opportunity to correct  if necessary.”

Ahart aims to make the Dean Foods direct-to-store delivery and logistics network a competitive tool for capturing customers.

“To do this, we have to do a number of things right: recognize, respect, and appreciate the contributions of our employees; create a culture of safety with a zero-tolerance for accidents; ensure customers get a quality product every time; be competent stewards of the company’s assets and resources; control costs with the use of meaningful metrics; and implement process consistency and standardization resulting in improvements to customer service and operating efficiencies,” he concluded.

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