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9-2011 MCN Case Study: Klein Steel
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Klein’s Fleet Undergoes an Information Overhaul

Klein Steel has tapped new technology developed by neighboring Rochester Institute of Technology to get a better handle on driver performance, fuel management and preventive maintenance.

By Dan Markham, Senior Editor

Klein Steel Service Inc. does not own the delivery trucks it uses to transport its products throughout western New York and five other states. But that didn’t prevent the Rochester-based service center from looking for ways to upgrade its fleet.

At a Glance

Klein Steel Service Inc.
105 Vanguard Parkway,
Rochester, NY 14606
Phone: 585-328-4000
Fax: 585-328-0167
Web site: www.kleinsteel.com
 
Key Personnel: Chairman Joe Klein, President and CEO John Batiste

Facilities: Six totaling 350,000 square feet in Buffalo, Rochester, Syracuse and Albany, N.Y

Employees: 218

Products: Carbon steel, stainless steel, aluminum

Services: Waterjet, laser, plasma, oxyfuel cutting, milling, sawing, drilling, shearing

Equipment: FleetKnowSys fleet monitoring system from Vnomics

Even though the company leases its 16 trucks from Conway Beam, Klein Steel was still on the lookout for ways to improve the performance of its transportation network. In 2009, it started exploring fleet monitoring solutions, briefly using a cell-based system for tracking truck locations, though that approach proved inefficient.

“When looking at fleet monitoring solutions, we did not intend to use it as a way to catch drivers doing things wrong,” says Joe Rodibaugh, logistics manager for Klein Steel. “We were looking for a way to decrease our truck-
related expenses, especially in fuel consumption and maintenance. We lease our vehicles, so maintenance issues unrelated to the driver are covered; however, our biggest issue is the ability to deliver our material when promised.”

Enter Vnomics and its FleetKnowSys solution. The system was designed by researchers at the nearby Rochester Institute of Technology for military use, then spun off into a separate company for commercial distribution. The Vnomics system promises more than just fleet monitoring; its designers say it can increase productivity, cut fuel consumption and reduce maintenance costs.

Rodibaugh and personnel from Vnomics began meeting to see how the system would work on Klein Steel’s leased fleet. After crunching some numbers, Rodibaugh conservatively estimated that Klein could get a return on its investment in just 30 months. The Klein Steel leadership gave an enthusiastic go-ahead.

Vnomics’ FleetKnowSys is based on a black-box-like computer linked to the tractor’s data lines, a hookup to the cab that gather’s information on the driver’s performance, as well as an in-cab advising system. 

Once the system was installed, Vnomics spent three weeks collecting data on vehicle diagnostics and drivers’ habits. Then the Vnomics team led training sessions to instruct Klein’s drivers on how the system works and how to drive more efficiently.

“It was interesting to watch the faces of my drivers as a couple 30-year-olds with computers told them how they should drive,” Rodibaugh says. But it didn’t take the skeptical drivers long to recognize that the system could help them improve the company’s
performance.

Like it or not, the in-cab advisor helps them to remember. When drivers are performing at a less-than-ideal level, outside what Vnomics calls the “envelope of best practices,” an audible tone will sound to alert them. This could be set off by poor shifting, erratic driving, speeding or hard braking.

Rodibaugh attributes the system’s success to two factors: drivers learning how to drive to maximize fuel efficiency and “driver coaching through annoyance,” he says, referring to the frequent warning tones.

Klein Steel has complemented the Vnomics system with incentive programs to encourage proper performance. “I want to reward my drivers for improving and sustaining good driving habits,” Rodibaugh says. “I can view individual driver scorecards and compare driver performance, along with percentage of improvement in various areas over a given period of time. This works to the benefit of management and the drivers. Management can recognize and reward drivers for positive driving behavior while drivers can feel they are directly contributing to the overall success of the company.”

Rodibaugh knows that the benefits of the system, including the in-cab advisor, can be a tough sell for drivers if it’s not handled properly. “If I initially got all this data and started cutting off heads, it wouldn’t have worked. Once they realized I’m not out to spy on them, but to help them be safer and more efficient, that definitely helped.”

After the drivers became comfortable using the system, they began pushing themselves to perform better and better, Rodibaugh says, and the results have been impressive. The average fuel saving through July was about $227 per truck per month, a 9.1 percent improvement. At that rate, Klein will save roughly $40,000 per year.

Changing drivers’ habits is only one part of the FleetKnowSys package. Its regular diagnostic checks allow the company to anticipate maintenance much quicker than in the past. If there’s a pending maintenance issue, Rodibaugh is e-mailed an alert. Along with the alert message, he is given recommendations on what to do to manage through the situation, including whether the problem needs to be addressed immediately or can be handled at a later time. “This allows me to immediately contact Conway Beam to set up service and substitute trucks, which greatly reduces our downtime,” he says.

“For the most part, we’re a next-day service center,” he adds. “If we can’t make a delivery, it’s a big deal to us. And you can’t put a price tag on that.”

It isn’t just Klein and the service center’s customers that benefit from the system. The real-time information generated by FleetKnowSys also can help Conway Beam reduce its maintenance costs by alerting the leasing company to small problems before they become big ones.

As with other systems, FleetKnowSys allows Klein Steel to better track the location of its drivers. “As the logistics manager, it’s important I know where my vehicles are at any and all times. I can find that out instantly from any computer with Internet access, while Android, iPhone and Blackberry users can also use the mobile application to read alert codes and better manage through on-the-road situations,” Rodibaugh says. Even Klein’s sales team can tap into the system to locate trucks and pass that information along to customers.

Perhaps in part because the system is so new and Klein Steel is among Vnomics’ first commercial customers, the provider remains extremely responsive to Rodibaugh. If he has an idea about how the system can be improved, he doesn’t hesitate to call Vnomics.

“Nine times out of 10, they check with other FleetKnowSys clients to see if they could use similar capabilities. If so, Vnomics adds the enhancement to the Product Development Roadmap. When they are working on an enhancement or developing a new feature, they reach out to us for input. It’s a great two-way street,” Rodibaugh says.
 
Klein Chairman Pursues New Challenge

Joe Klein is not the first successful executive who ever decided to step away from the family business. Rather than heading to the golf course, however, he headed back to the classroom.

Klein grew up in the company founded by his father Arnold and uncle Chuck Stein in 1971 and appeared to have his future in hand as the head of a thriving service center. But in recent years he felt a calling for a new mission—improving urban education—and decided to pursue a second career in the charter school field.

Klein first got involved in the charter school movement five years ago when he assisted in the creation of True North Rochester Preparatory. At the time, he was working with a leadership group trying to enlist retired military personnel for careers in the social sector. “Every time I spoke to the generals, I told them this is the civil rights fight of our time,” Klein says of the challenges facing public education in urban environments.

While looking for potential school leaders, Klein met John Batiste, a retired major general, who was ideally suited to run Klein Steel. He hired him as company president and CEO, freeing himself up so he could turn more of his attention to his fledgling charter school.

Initially, most of Klein’s work at the charter school level was as a principal’s gopher. “You need a building? OK, I’ll do the real estate legwork. You need a lawyer? I’ll get one. You name it, I did it,” he says.

Eventually, after steering others to the Broad Superintendents Academy, Klein was encouraged to follow suit. The one hitch—no master’s degree. “I never in a million years would have gone back to school for a master’s degree because I was such a failure as a student,” he jokes. But, reflecting his commitment to the issue, he enrolled at Harvard and completed a demanding one-year program.

Today, Klein is seeking work as an administrator either in an existing charter school or for an organization that supports charter schools. He may even relocate to one of the areas where charter schools are having the most success, such as Chicago, New Orleans or Newark, N.J.

He will remain chairman of Klein Steel, providing some input on bigger issues but allowing Batiste to handle most of the decisions. “He’s running the company and does a better job of it than I could,” he says. 

But Klein is far from retired. He considers his new career to be the biggest challenge he’ll face. “Urban education makes steel look like a walk in the park,” he says.

  
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