Route Evaluations

1
Route Evaluations

• Evaluating Routes for Time, Mileage, Overall
  Profitability to Enable Maximum Use of Resources

2
Why Evaluate Routes?

• To ensure that they are set up in the most
  effective/efficient manner, enabling our carriers
  to earn reasonable profits
• This allows us to negotiate for and present
  viable routes to prospective independent
  contractors, while ensuring that we have not
  incurred unnecessary revenue losses or adjustment
  expenses.

3
Where do I start?

• First
• Know your rate structures (wholesale and retail)
• Know how your PIA system works
• Know how revenue and expenses figures are derived
  at your newspaper (This is important if you get
  to point where you start adjusting
  profitability)
• Know how your carrier profitability work (Pay per
  piece? Buy/sell? Per piece billing? Period
  Billing?)

4
Get To Know The Routes

• Draw
• Time Involved
• Delivery Time
• Prep (bagging/banding/inserting) time
• Collection/Paperwork time
• Any other times associated with route
• These will vary from carrier to carrier, but you
  want to develop baseline estimates

5
Get To Know The Routes

• Mileage
• Miscellaneous fees for bundle drops, etc
• Any special challenges the route presents
• Especially bad roads
• If carrier collection involved, tough clientele
• Etc.

6
Route Evaluations

• Whichever method you use
• Evaluate time/distance involved with each route
  and carrier (GPS can help, see later slides)
• Ensure that routes can be handled effectively
  within delivery window allocated
• Keep in mind that just making a route smaller
  might make it fit the window, but need to look at
  profit, too. Is it worth coming out to do?

7
Route Profit Evaluations(See Excel Worksheets
that accompany this)

• Calculate Revenue (Gross Profit)
• Profits from subscribers
• Profits on single copy (net), if applicable
• Fees for bundle drops (carrier relays, stores,
  schools, etc)
• Calculate Expenses
• Supplies (bags, bands, etc.)
• Accident Insurance/Bond fees, if applicable

8
Route Profit Evaluations

• Calculate Expenses (continued)
• Vehicle operating cost (Most papers estimate this
  at 20-22 cents per mile)
• Then, estimate Net Profit
• Then, estimate Net Profit Per Hour
• But NEVER discuss profitability with carriers on
  basis of per hour, etc. Internal discussion
  only.

9
Route Profit Evaluations

• Then, estimate Profit Per Day, which is more
  accurate indicator of ability to get a carrier to
  show interest in it.
• Even if profit per hour nets out to, say, 12 an
  hour, a 30-minute route only pays 6 per day. The
  question then is whether a person will sacrifice
  an afternoon or early morning for 6.

10
Route Profit Evaluations

• After you have a solid handle on these estimated
  profits, you will need to decide if profitability
  needs to be enhanced or reduced on each route
• If you have excess profitability on some routes
  and a dire need on others, make necessary
  changeswith approval of your publisher.

11
Using Excel Profit Estimators

• Use one of the Excel worksheets included in this
  package
• Punch in one or two of your routes draws,
  mileage, profit per sub/sale, mileage, etc.
• Then, very carefully, examine what each formula
  is doing in the formula cells
• If your situation requires a slight formula
  modification (maybe you print only 6 days a week,
  not 7, etc.) make those

12
Using Excel Profit Estimators

• Then, examine the profitability per subscriber
  and (if applicable) single copy sale. If figures
  dont match yours, change formula
• Examine estimates for per-mile operating costs.
  If you feel you need to use a different figure,
  change the formula.
• Once you are confident that the formula cells
  represent your operation, only then should you
  enter the rest of your routes draws, mileage,
  etc.

13
Using Excel Profit Estimators

• When worksheet is completely filled in, look for
  possible errors
• May be punching errors
• May be formula errors
• May be anything that is entered or that is
  formula driven.
• You should know about what the outcome should be
  on a given route be sure the sheet works out
  pretty close to what you know the nets should
  come out to be. If not, check again for errors

14
Using Excel Profit Estimators

• When you are sure worksheet is complete and
  accurate, begin looking at relative values of
  routes profits
• Keep in mind that per hour values should be
  coming out at a figure that would attract
  reliable help in your market.
• Also keep in mind that per hour stats can be
  somewhat misleading. Also check per day profits
• Adjust as needed

15
GPS Use

• Offer to carriers as tool for them to map route
  and turning instruction for subs, helpers. Will
  be perceived as help to them, not a threat.
• Capture all info, but dont share with carriers
  until all routes are mapped, and time and mileage
  are captured accurately
• Keep all time/mileage info confidential until
  evaluated and ready to negotiate rates

16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
GPS Pricing
All mobile units come standard with cigarette
lighter plug kit, which is recommended method for
use among carriers, etc. Only need wiring harness
to hard wire into company vehicles.