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Article Check - Maximizing Profit in the Trucking Industry
"You are testing my patience."I had just shared an article with my husband on "Secret Dining", a hip new trend making its way from Chicago to New York. Essentially these underground "restaurants" offer gourmet dinners at invitation-only parties in exchange for "donations". Sometimes dinners are combined with salon-type discussions, art showings or other events. Cool, exclusive, hip. All the fun of running an upscale restaurant without all the health department hassles.I am a woman with a many interests. In one recent lunch conversation a friend and I managed to touch on a mind-boggling array of topics including martial arts, knitting and crocheting, gourmet cooking, Tarot cards, dream interpretation, massage/bodywork, marriage, writing, photography, tea ceremonies, pottery, journalling, and what she plans on doing when she becomes an empty nester a year from now. This was before I read the Secret Dining article, which now had me thinking about our monthly parties and the musicians I would love to have play for us an
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effectiv
Do you remember your parents asking you what you want to be when you grow up? By the time I was in the 9th grade, my mother started asking me that same question until I graduated from high school. At that time I wasn’t 100% sure what career path I would take, but I had several ideas.Your calling is that passion that you have deep inside – the career that defines your purpose in life. Someone once told me if you find a job that you love you’ll never have to work a day in your life. Some of us work in careers for so long that we are numb on the inside and outside. We go from appointment to appointment and our days are so mundane. We hardly get any enjoyment out of what we do because it is just another 9 to 5. Have you recently said, ‘I could do this job with my eyes closed?’People who choose a career, instead of their calling, wake up disappointed that they have to go to work. They hate facing another day. If you find your calling and pursue it, life will become an adventure and not just another 9 to 5.
All companies reach a point where they can either move forward to profitability or wallow in stagnation. If a company’s performance is stagnant, it’s because problems have become too complex for senior management to see and understand—what I call the Barrier of Complexity. As a result, symptoms are treated and the real problems go unresolved.
In the trucking industry, you know all too well what those problems are:
--Increased operating costs due to competitive pressures and customer demands.
--Rising capital investment and reinvestment costs.
--An acute driver shortage.
--Rising insurance costs.
--Rising wages and benefits for your employees.
--Rising fuel costs (enough said).
LTL companies often react to these problems instead of managing them because they’re measuring productivity in outmoded ways.
For example, most companies still use Operating Ratio to measure shipment profitability and make pricing decisions. But is a 105 operating ratio on a shipment a “true” 105? That shipment could generate $5 or $75 of profit. You know which one I’d pick. But do you always know how much the contribution each shipment will generate?
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effective
"Give me your tired, your poor, your huddles masses of unmotivated, your 9-5er's, you WoW players living in their mom;s basement, yearning to breathe free. Send all of these wretched failures to me. For I shall lift my golden speedo besides them, and show them through my onyx & alabaster door" - The Rich Jerk 2007Over the past few years, a man has shot to fame on the internet. And his name is The Rich Jerk.He is obnoxious, rude, arrogant and sexist. And that is being kind to him.But what you may not know about the Rich Jerk is that he was born an average chump. In fact, in Rich Jerk Evolution, he says he started off as a "homo closetus". And over time, and through hard work and determination, he finally evoled into the man we know today.Now if you are to get involved in all the name calling and hype of the Rich Jerk, then you seriously may be forgetting why you are reading this.You see, behind all the facade and joking around, Rich Jerk Evolution is a serious program for serious people. Don't
In the trucking industry, you know all too well what those problems are:
--Increased operating costs due to competitive pressures and customer demands.
--Rising capital investment and reinvestment costs.
--An acute driver shortage.
--Rising insurance costs.
--Rising wages and benefits for your employees.
--Rising fuel costs (enough said).
LTL companies often react to these problems instead of managing them because they’re measuring productivity in outmoded ways.
For example, most companies still use Operating Ratio to measure shipment profitability and make pricing decisions. But is a 105 operating ratio on a shipment a “true” 105? That shipment could generate $5 or $75 of profit. You know which one I’d pick. But do you always know how much the contribution each shipment will generate?
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effectiv
The word ‘sorites’ derives from the Greek soros (meaning ‘heap’) and originally referred to a puzzle known as “The Heap” which is based on the following:Would you describe a single grain of wheat as a heap? No. Would you describe two grains of wheat as a heap? No. … You must admit the presence of a heap sooner or later, so where do you draw the line?Similarly:Would you describe a man with one hair on his head as bald? Yes. Would you describe a man with two hairs on his head as bald? Yes. … You must refrain from describing a man with ten thousand hairs on his head as bald, so where do you draw the line?“Where do you draw the line?” is a real question for most of us. When it comes to our principles, happiness, willingness to tolerate uncomfortable people or circumstances, when is enough, enough? Somehow, we know when we are approaching our limit. I guess it is like we know a heap and a hairless skull when we see it. It is more difficult, however, to always know where to draw the line between right an
In the trucking industry, you know all too well what those problems are:
--Increased operating costs due to competitive pressures and customer demands.
--Rising capital investment and reinvestment costs.
--An acute driver shortage.
--Rising insurance costs.
--Rising wages and benefits for your employees.
--Rising fuel costs (enough said).
LTL companies often react to these problems instead of managing them because they’re measuring productivity in outmoded ways.
For example, most companies still use Operating Ratio to measure shipment profitability and make pricing decisions. But is a 105 operating ratio on a shipment a “true” 105? That shipment could generate $5 or $75 of profit. You know which one I’d pick. But do you always know how much the contribution each shipment will generate?
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effectiv
There are really only 4 ways to increase profits – sell more, improve margins, cut costs or do all three. Costs always have a habit of creeping upwards over time. So, periodically, it pays to take a hard look at them and then eliminate the things we can live without. But there’s a limit to the extent to which we can cut costs before we hurt our company’s long term growth potential. To get steady, incremental increases in profit we have to sell more and improve margins.There are only 2 ways to sell more – add new customers or increase sales to existing customers. In my experience, when we talk about selling more we tend to put the focus on adding new customers. But we know that it costs at least 6 times more to sell to a new customer than to an existing client. That’s not hard to understand when we consider the “acquisition” costs – e.g. advertising, telemarketing, etc.So, the first tip is to avoid losing your least expensive prospects – existing customers. They must be convinced that we do a great job; otherwise the
LTL companies often react to these problems instead of managing them because they’re measuring productivity in outmoded ways.
For example, most companies still use Operating Ratio to measure shipment profitability and make pricing decisions. But is a 105 operating ratio on a shipment a “true” 105? That shipment could generate $5 or $75 of profit. You know which one I’d pick. But do you always know how much the contribution each shipment will generate?
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effectiv
So I see you have a successful business over there and that is great considering the failure rates in businesses both small and larger more well-capitalized businesses. Have you considered why customers buy your products or your services; I mean what do you really do for your customers that the competition does not, will not or cannot?Have you considered that? You should know the answer to that if indeed you are in touch with your customers. So then, now you may answer the question and tell me; What is it that you really do for your customers and why have they chosen you over your competition? Have you yet considered what it is that you do for your target market and current customers, which keeps driving them back to spend more money with your company? Have you surveyed them to find out what they think about what you do; your customer service, your products and the delivery of such?Do your customers refer their friends? Why, that is to say why are you so good at getting word of mouth advertising that drives more and
If you don’t, you’re operating blind. And operating blind in today’s environment will lose you money. A trucking company is only as strong as its terminals. Effective Management Systems helps you see and understand what’s happening at the terminal level—we have the software and technology to diagnose problems based on accurate information and to help you develop strategies to maximize profit.
Here’s how.
--Accurately measuring and understanding productive output. As a manager, you don’t just want to pay by the hour—you want to pay for the productive output during that hour.
Many companies base their accounting systems on actual cost. But almost every company EMS has worked with has been at least 30% inefficient (or carrying 30% excess capacity). When you use actual costs, you’re passing your inefficiencies on to the customer with price increases, and in a free market environment that becomes harder and harder to do.
--Using capacity efficiently. With inefficiencies built in to your accounting system, your company doesn’t know the true quality of the revenue because the inefficiencies are masking that. As a result, many trucking companies don’t know their true capacity, turn away business, and as a result growth is stunted. Much more market share is available to most companies than they realize.
--Utilizing a productivity/capacity management system with engineered standards. Such a system allows you to manage capacity and productivity at the terminal level on a daily basis.
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