Best Buy Cost Optimization

The Dispatcher’s Dilemma

“Dispatchers are inherently going to choose the closest or easiest supply point out of necessity,” explains James Wroten, CEO of OptiStream. “They really don’t have any other choice.” With dozens of orders to fulfill daily, dispatchers simply don’t have time to calculate complex variables across multiple supply points and carriers.

Mark Stillman, COO of Vertrax, who has spent two decades working with fuel suppliers, sees this pattern repeatedly. “It’s very rare for a company to consider all of the different variables—fleet miles, accessorial charges, freight contracts,” he notes. “It really becomes what is easiest and what is my habit.”

The Internal Fleet Bias

One particularly costly habit is the preference for internal fleets over common carriers. Many dispatchers view using external carriers as a failure—something to do only after maximizing internal fleet usage. But this mindset ignores a critical question: which option actually delivers the best margins?

“It’s really not about which one is better or worse,” Stillman emphasizes. “It’s which one is most optimal in the context of cost and margins.” Without proper benchmarking between internal and external options, companies leave substantial money on the table.

The Surcharge Wild Card

Adding complexity to the equation are constantly fluctuating surcharges. While point-to-point carrier rates remain relatively stable, surcharges can shift rapidly based on fuel costs and market conditions. These changes can suddenly make an “obscure” carrier the most cost-effective option overnight.

“If there’s a common carrier with a lower surcharge servicing that route at a lower price, our delivered cost to that customer can be significantly lower,” Wroten explains. But dispatchers working from habit rarely capture these opportunities.

The Impossible Calculation

Consider a real-world scenario: Supplying a customer in Grand Rapids, Michigan. A dispatcher sees Duluth as the closest supply point and reflexively uses their preferred carrier. But what if Minneapolis offered better economics? Or what if another terminal receives product via pipeline from Conway with different pricing? What if a third terminal has month-old inventory with a higher weighted average cost, but lower freight rates?

“No dispatcher, no supply manager could possibly account for all these different variables,” Stillman acknowledges. “There’s just too many—freight rates, surcharges, contracts, inventory costs. They’re using intuition and gut feel.”

The Solution: Dedicated Optimization

Modern fuel suppliers need software that can process these calculations in real-time. Optistream’s platform consolidates supply contracts, posting prices, index pricing data, freight rates, surcharges, and inventory costs—all those “yellow stickies” on dispatcher screens—into a single system that instantly identifies the lowest delivered price for each order.

The result? Every load optimized. Every opportunity captured. Maximum margins realized.