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 changes�with 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 don�t 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 don�t 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

19. GPS Pricing