KEY PERFORMANCE INDICATORS, MEASURING WHAT YOU MANAGE, COMMERCIAL COLLECTION.
The next in the series, “Measuring what you Manage, Key Performance Indicators” deals with Commercial Collection. As a recap, what is a KPI? KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific goal. KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions.
As you collect data and analyze the numbers, these numbers will talk to you if you are willing to look and spot the trends that they are showing you. Now, many of these reports are available from the many software providers serving our industry. If not a standard report, your provider may be able to design a custom report for you, making this data collection less daunting.
COMMERCIAL SERVICE KPI MEASUREMENT
Residential and commercial collection differ in a few but important ways. While residential waste streams are consistent from customer to customer, commercial collection introduces many variables into the day-to-day operation such as container size, service frequency, distance between stops, material compactability, material density, space constraints for material storage and time of day service requirements. All these variables influence efficiency, productivity and pricing.
Commercial collection technology varies greatly from urban, suburban and rural areas. Old cities have particular demands due to lack of space and access for containers of different materials, where suburban communities can better accommodate the extra space needed to store materials for longer periods to provide the optimal collection schedules. The economies of fewer pickups with larger containers have a significant impact on the cost to the waste generator.
While most people in our industry think front load technology when it comes to commercial collection, the same principles can apply to rear load and side load commercial collection as well. Many operations have dedicated residential and commercial routes, however in many suburban and rural areas mixed residential and commercial routes exist to be able to collect both residential and commercial customers on the same route with the same truck. When a particular KPI (Key Performance Indicator) concept is different between the different collection technologies, I will note the differences. Many KPI’s for commercial collection are the same as for residential collection.
Time. The one thing all of us are given equally is the gift of time. How we use the time given to us is especially important when running our business. Week to week and month to month consistency is difficult with commercial routes due to the number of variables (traffic, weather, special pickups, etc.) that change daily, but some trends can be seen while keeping these variables in mind. Route time, travel time, wait time at disposal sites can, with some effort, be tracked.
Miles. At its core, the garbage business is a specialized TRANSPORTATION company. Tracking the number of miles traveled during the day has a direct correlation to many other elements you should be tracking such as Operating Cost per Mile, Miles per Gallon, Average Miles per Hour, Stops per Hour, and others.
Average Miles per Hour. Dividing the miles driven by the number of hours needed to complete a route. Not a considerable number by itself, but helpful in identifying trends over a period of time.
Fuel. Best done if each day starts with a full tank. Record fuel usage daily.
Miles Per Gallon. Divide number of miles by gallons of fuel used. This is a great way to track efficiency of truck and driver’s habits. Also, a way to check for fuel theft from the truck’s tank. If MPG shows a drastic decline, either fuel is disappearing or there may be a mechanical issue with the vehicle.
Total yards collected. This would be the total number of yards collected, not necessarily based on container yards.
Total yards disposed. Even if you pay disposal fees per ton, recording yards disposed will help you track your trucks compaction ratio.
Total tonnage disposed. Easily determined by landfill tickets. Toonage between weeks may or may not be consistent, depending on the specific characteristics of your specific route.
Average tonnage per yard. Dividing tonnage collected by the number of yards disposed will show total load density. If day to day tonnage per yard varies greatly, perhaps there are some accounts whose density needs to be reflected in their pricing. Deciding what accounts are outside the norm may take a little investigative work. Look at those ethnic restaurants your salesperson picked up cheap!
Stops or yardage per mile. Dividing the number of stops or yardage by the miles driven is a good measure of the density of your work. A goal of every waste collection company should be to build and increase customer / route density. When density increases, its good! If density decreases, you need to dig deeper, find what’s going on, and correct it as soon as possible!
Software generated reports. If you are using an industry-specific software program (and why wouldn’t you?) many come with standard productivity reports that will combine data from your billing, routing and operational data base. In time, these numbers will begin to talk to you and tell you things about your business you never knew. You will see trends developing which will make you ask “why?”. Most software providers will customize a report for you if you know what data you are looking for.
So, if this sounds like a corporate type, make work, terrible waste of time to you, that’s fine. But then, ask yourself and feel free to tell me in the comments, what are you doing to gauge productivity, hold your team members accountable, and assure yourself that you are running an efficient, profitable company?
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