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Enron Mail |
There are a number of superb initiatives that are being developed and
implemented throughout EOTT that will collectively profoundly change and improve our company. I will give you periodic updates on these initiatives throughout the year. As an example, Priscilla Norton is doing excellent work to develop more accurate and appropriate truck cost guides. This tool is giving us much better knowledge about the true cost to transport crude oil in specific areas across our systems. As in most everything we do, this is a real team effort. I have asked Priscilla to briefly describe this tool and it implementation below: ============================================================= "I developed the Fleet TIME Tool because I wanted to allocate costs as accurately as possible to the individual lease level. In the past fleet cost allocation was based on district averages allocated based primarily on miles. The TIME Tool differs from past practice because it uses actual truck hours spent on every EOTT truck haul. A district cost per hour is then established based on number of truck-hours operated in each district, and total fleet operating dollars spent in each district. Using the hourly district rate, the Tool calculates district cost per barrel for each ticket based on actual truck time consumed. The resulting data is vital information because even though we may already know a district averages 70 cents per barrel, we will now know which leases are $0.45 per barrel and which are $1.10 per barrel. This improved understanding of actual cost per barrel at the lease level paves the way for a much better understanding of lease profitability. With this information, Marketing can become more aggressive, competitive, and confident about our costs when bidding on new barrels, and Operations Managers can more easily identify opportunities to optimize fleet costs. The Fleet District Managers and Marketing have been receptive to the TIME concept and very helpful in providing feedback. Although the concept of TIME as our key cost driver is still in its infancy, Marvin Mills is already using the information to identify opportunities to reduce his costs in Kansas. Willie Seale and Phil Elliot have been using TIME data to identify Stations where EOTT could bid the barrels out at a lower cost than EOTT's internal cost, and to identify marginal leases to be rebid or terminated. Bennie Orr has been using the TIME philosophy when Ark-La-Tex bids on new business because the Tool has convinced him that mileage, by itself is not a true indicator of cost. Our biggest struggle right now is just getting adequate timely data to meet our needs. With the help of Patrick Scales, the TIME Tool is currently being moved to a server platform using the new Brio software. Eventually the Tool should allow us to have near real-time data at our finger tips. Future plans include adding pipeline barrels and tariff rates to the Tool in order to be able to see both pipeline and truck business in the same tool (essential for analyzing customers who have both pipeline and truck barrels). Within the next week, we plan to roll the Server version of the TIME Tool out to at least one outlying office to begin testing functionality and accuracy, and to identify any performance issues. Our goal is that the TIME Tool move EOTT to a much greater understanding of cost/profitability at the lease level." Priscilla Norton
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