Category Archives: Technology for Local Trucking

Would you like $1200 more each month or $3750 more?

As Steve Jobs famously said, “Think different.”

A local P&D company had $3750/month more in the bank after implementing new software that was just right for its operations.

The same company had cleared $1200/month more by buying a new power unit. Which is the more profitable purchase?

More money with a new truck or better technology?

More money with a new truck or better technology?

It’s relatively routine to increase a fleet:

  • You buy a new power unit. You can haul more freight than you could haul yesterday.
  • Assuming that you bill about $3K/week/driver, you should be able to bill an additional $12,375 this month, assuming that you can keep this truck as full as your other trucks.
  • If your operating ratio is 96%, you’ll have an extra $495 in your pocket this month.
  • If your operating ratio is 90%, you’ll have an extra $1237.50 in your pocket this month.

And a trucking company tripled that return with new software. Here’s how they did it:

  • ABC Cartage Company had two “billing girls,” Audrey and Gina, who were full-time. They did the rating and invoicing and A/R. Each billing girl cost $40,000/year plus benefits, so let’s say $10K/month total outlay.
  • ABC Cartage Company bought new software from JSY. It cost them $30K the first year and will cost them $15K in support the 2nd year. (Your costs may be different depending on the options you purchase.)
  • After ABC Cartage implemented JSY, they were able to get their rating and billing done in 20 hours a week, by one person. The work that had taken 80 hours went down to 20 – that’s a 75% time savings.Rating and Billing graphic 2
  • ABC was able to let one of the girls go (Gina was thrilled, since she wanted to start a family and go back to school after the baby was born), and Audrey was shifted into 50% rating/billing/AR and 50% sales support.
  • ABC’s costs went down by $60K per year.
  • ABC’s net savings after software purchase were $30K the first year and $45K the second year.
  • ABC saved $2500/mo. in the first year and $3750/mo. every year after that.
  • All that extra money flowed to the bottom line.
  • ABC earned more money on top of that savings, because Audrey helped the sales manager close some business that they hadn’t had the office muscle to follow up on before.

This is a hypothetical example, based on real-world stories from our customers. “Your results will vary,” as they say… but not by much.

So, where you will make your next investment?

“I Just Want To Work a 12-Hour Day”

clock_07-00I hear this from busy trucking executives all the time. Sometimes it’s the owner/CEO who wants to work less. Sometimes it’s a spouse or family member in the company who wants a different proportion of work time to non-work time. Regardless, a trend seems to be developing: working all the time is not necessarily the life that people want, even for owners.

Where does the time-suck come from in trucking? There are several, but my customers and prospects in local P&D and related fields tell me of one particular demand that has mushroomed over the past few years. Customers want proof of delivery as close to real-time as possible. Customers will even sometimes leave carriers over this one issue.

We shouldn’t be surprised by this, really. Society in general has seen an acceleration of the speed at which people are able to retrieve information of all sorts (on smartphones, tablets, and so on). In the local P&D world, this acceleration takes the form of an expectation by shippers that the trucking carrier should also be able to provide “on-demand POD.”

When the customer calls, we generally want to avoid the following: Frustrated-caller-copy

  • “Dude, am I on hold again while you chase down that POD? That is so 20th-century. You are so lame. ”

So let’s assume you’ve said “okay” to this new demand. Who is going to do it? You? Everyone in the office?

One difficulty is this: Trucking companies are experts in hauling freight. You excel at getting the freight to its destination on time, accurately and damage-free, with special services as needed. You make appointments. Local P&D companies bring a liftgate or 2-man crew if needed, handle inside deliveries or tight urban dock locations, and so on. We might call this “core service.” Superior core service like this is a justifiable point of pride for many carriers. It can take 12 or 14 hours a day from many employees just to give great core service.

  • “So, Jonathan, are you telling me that this is not enough? I need to give my customer instant, on-demand POD too?”

No, I’m not telling you this…. your customers are. That is, they probably are, if you’re listening.

At some point we all have to ask:  What is best for my trucking company, right now? What is best for me, for my spouse, for my people, for my customers, for their customers?

Looking just at the POD requests, there are a number of ways to address the issue.

  1. Add 2-3 hours to each work day. (This gets tiresome pretty quickly.)
  2. Hire more people. (This gets expensive pretty quickly.)
  3. Ignore your customers.

Bury-your-Head-in-the-sand (We don’t recommend this.)

There are other choices too. One is to find technology that can do all this POD work for you, much more cheaply and reliably than a new hire. Depending on your situation, you may be able to satisfy most or all of your POD requests with a self-service web portal, where your customers log in and download whatever they need. In other situations, you may be able to satisfy several key accounts this way, providing some other communication mechanisms for other customers. In any case, given the trends, it’s worth devoting some serious time to thinking this through.

If you’d like to get down to that mythical 12-hour day, you can harness technology to get this done for you. Some effort is required to set it up. Of course, it also takes effort to do nothing and remain stuck in the same situation.

Finally: If POD isn’t the Great Time Suck for your business, what is?  For some carriers it’s billing.  Please leave comments below, or anywhere else you’ve seen this post, so that we can continue the conversation together. I look forward to hearing what you think.

–The Editors

Mobile Fleet Devices in Local P&D: BYOD, COPE, or both?

There is a great article in FleetOwner about evaluating how to deploy mobile devices in a fleet. The basic choice is between these two options:

  • using drivers’ existing personal smartphones for business purposes or
  • having company-owned phones with selected personal features.

Read on for a great discussion about BYOD (“bring your own devices”) vs. COPE (“corporate-owned, personally-enabled”) smartphones. A lot of it depends on who your drivers are, since you can only demand so much from independents, while employee drivers have less choice. A good read for any fleet owner or fleet manager.

http://fleetowner.com/technology/smart-devices-and-fleet-desires?page=1

You’ll need to register for FleetOwner.com to read the entire article.

–Jonathan Miller

Resisting Downward Pressure on Rates

How can you keep your local P&D rates up when everyone’s beating you down?  How can you compete when the national firms enter your last-mile market with tempting lowball prices?

There is one way to do it:  with unbeatable service.

resist downward pressure on rates local trucking

Keep Your Service Up!

There’s really no other way.

If you want to stay off the slippery slope, you need tools to give you consistently unbeatable service.  We’ve got the tools for you.  The ROI is totally a no-brainer.

For a personal consultation, contact Jonathan Miller at 630-517-0705 or jmiller@jsysoftware.com.

How To Harness Big Data (When You’re Not That Big)

We read all the time about how Big Data will transform your life. We see headlines like this: “Big Trucking Company XYZ Saves $6 Million with Big Data.” You can read such an article here:

http://tinyurl.com/c6hu4bw

But what about the small-to-medium sized carrier?  Can a firm with 20 to 75 trucks use Big Data?

Of course you can.

For my customers — local trucking / cartage / P&D / intermodal carriers — I’ve seen the impact when my customers have tools to measure and monitor things like this:

  • Driver revenue per hour (hugely valuable for employee drivers)
  • Truck / route revenue, per day, week, month, quarter
  • Profitability of certain customers (am I billing a lot but losing money on that big customer?)

You won’t have as many data points as the big guys, but who cares? The important thing is that you can develop your own KPIs—Key Performance Indicators—and track them.  You don’t need expensive consultants to get your own powerful Big Data. You just need to know what is happening in your company every day.

And let’s not forget operational data – info we need to get every order done and every job billed:

  • Arrival / departure times and POD info as pickups and deliveries happen
  • Detention charges that you can actually document and justify
  • List of daily or weekly pickups that need to get schedule but aren’t yet scheduled
  • Complete rating information in one place so anyone can auto-rate on the fly

For more information, contact me.  Let’s work together to develop your KPI’s and get you the tools to measure them.

You can contact Jonathan Miller at 630-517-0705 or jmiller@jsysoftware.com.

 

Leveraging Technology to Accelerate Productivity and Profit

This article appeared recently in Inbound Logistics. While it focuses on tech issues for 3PL’s, the core issue is the same in local P&D, hazmat, air freight, and intermodal: how are you going to use technology to improve customer service and responsiveness, and what tools are you going to use to cut down on manual processes that introduce errors and slow things down for everyone?

http://www.inboundlogistics.com/cms/article/leveraging-technology-to-accelerate-productivity-and-profit/?goback=.gde_134135_member_219383066

Just substitute “local trucking company” for 3PL and you get it exactly right:

Services that increase a client’s productivity will help a [local trucking company] win new business, satisfy the needs of a more diverse client base, and rise above the perception of being a commoditized business….. By working even more intimately with client operations, [local trucking companies] can gain insight into other ways to help maximize/efficiency.

For example, [local trucking companies] can capitalize on clients’ expectation and need for real-time data by providing access to their own  … orders and even billing through a secure Web portal. This helps clients make informed decisions with real-time information and visibility of demand, order status, and potential/exceptions.

By offering these expanded, value-added services, [local trucking companies] can gain and retain a wider range of clients. The challenge for [local trucking companies] then becomes finding the most cost-effective technology infrastructure that can adapt to the expanded range of services it provides …  and – perhaps most importantly – correctly invoice clients for each service to ensure/profitability.

Thanks to Inbound Logistics for bringing these issues to everyone’s attention.

–Jonathan Miller, Editor

3 Ways to Make More Money in Local Trucking / P&D / Air Freight

There are three ways to make more money in local trucking and local air freight. You probably know them:

guy on pile of money

“Wanna make more money?”

  1. Get More Business
  2. Charge More
  3. Reduce Expenses

I’m going to try to persuade you right now that #3 — reducing expenses — is the single most important missed opportunity for most local trucking companies. It’s also the one over which you have by far the most control (you can do something about #3 today, unlike the other two).

1.  Get More Business

Let’s look at the first one – getting more business. Of course getting more business is a good thing.  It’s a tried and true strategy for local LTL — the logic is obvious.  Just add more customers and fill your trucks with freight, increase billings, and life is great.

The Customer Store smallBut is growing your customer base easy? As if you could say, “Sure, I’ll just go down to the Customer Store and pick out a few good ones”? Heck, no. If it were that easy, everyone would be doing it, and fewer P&D companies would be shutting down or struggling. But what I hear every day is just the opposite.

It can take years to cultivate a significant new account, especially these days. And if you’re seeking new ways to take control of your business, adding new customers is out of your control, even with the best service and the best sales team. You can’t control the economy, and you can’t control when a prospect is going to pull the trigger and give you a try in a small or big way.

So adding customers might work, but it’s not the answer for everyone. Of course, you can never stop selling. But if you’re looking to take charge of your business in a way that allows you to predictably make more money every week, there are other methods.

2.  Charge More

What about charging more?   If I raise my rates and keep my weekly expenses the same, I make more money at the end of the week.  But… most people are afraid of it.

Afraid to raise rates

“Raising rates? AAAAAHHHHH!!!”

I hear it all the time:

“Jonathan, my customers will bolt if I raise rates.”

“Jonathan, I’m losing money with my rates where they are today. How can I go higher when the one-man shop down the street does truckloads for $200?”

“Jonathan, my fuel could be higher, but I don’t want to piss people off.”

If your service is so good that you can charge more, then hey! more power to you. But for most trucking companies right now, raising rates is pie-in-the-sky. It’s just a pipe dream, that is, if there is no corresponding improvement in service.

PIck 2A side note:  At some point, when we end up working together, I’m going to make you so efficient in the office, and I’m going to enable you to give such great service, that you can justify higher rates with no complaints from your customers. But that’s a little ways down the road. In the meantime, we have to finish our three-item list.

3.  Reduce Expenses

So adding more trucks isn’t always the right tactic, and charging more is mostly not going to happen. What’s left?  Spend less. 

If you are billing the same amount every week, and spending less overall every week, then every week you have more money left over. That’s good math.

Some people glaze over when I bring this up.  “I don’t know what you’re talking about. I can’t lower costs.“ Others get annoyed. “But I can’t spend less. I can’t lower the price of fuel, and my lease payments are fixed. After drivers and fuel, there’s nothing left.”  I hear that a few times a month.

Here’s where most people stop, give up, and resign themselves to the slump.  Don’t give up!  I feel your pain – really I do – and I want to help you do something different so you can get different results in your business.

But How?
(Hint:  It doesn’t take a genius.)

Einstein

“Are you doing the same thing over and over and expecting different results?”

Albert Einstein once said that “the definition of insanity is doing the same thing over and over and expecting different results.” If Einstein is correct, then you have to do something different if you don’t want to stay stuck.  Hopefully you have an open mind about this.

So…. if we want to cut costs and are truly open to anything, what can we spend less on?

Office payroll is a relentless expense. What are we getting for it?  Sometimes we are getting redundancies.

Would you put a two-man crew on every truck? 

Most people would not.  So why do you have people do the same thing twice in the office, like entering order details in Excel and again in QuickBooks?  It’s the same sort of waste — it’s just less obvious, so we often miss it.

We can spend less on office payroll by using tools that allow us to do repetitive things right the first time, and only once.  For every ten minutes you can free up for someone in your office, that’s ten minutes they can spend doing something that actually makes you money — quoting a new job, for example. That’s ten minutes you don’t have to pay anyone any more. It adds up quickly.

Here’s the secret:  Dramatically boost the productivity that you get from the people in your office, and watch your revenue per payroll dollar go way up. 

A couple of examples show the sort of thing I encounter on a regular basis. Take a look:

  • If you’re rating by hand, you’re wasting payroll dollars.  Do you have a rating book that looks something like this?

Rate Book 5

The excess time it takes to do rating with a book like this, or paper rate sheets, is huge.

  • If you’re dispatching in Excel, you’re wasting payroll dollars.

Why?  Because you’re double-paying – you’re paying someone to enter dispatch info in Excel, and someone (usually someone else) to enter order details on an invoice every order and every invoice.

Would you put two guys on every truck?

treadmill

  • If you’re dispatching with T-cards, you’re wasting payroll dollars.   Ditto.
  • If you’re using software–however you got it–that’s a poor fit with your business, forcing your staff to double-enter data, you might as well just go flush your money down the toilet.

Why? Because double-entry leads to errors that are even more expensive to fix.

(1) It costs you office payroll time to catch and correct the error.

(2) It could cost much more if the error snowballs. If it’s a missed pickup, then you also have driver time to pay all over again.

(3) If it’s an angry customer (let’s call her Zelda) who was invoiced incorrectly, then you have to research the error, fix it and re-invoice.

(4) Then there’s perhaps the most time-consuming task of all, which is taking the time (sometimes more than one person’s time in your office) to unruffle Zelda’s feathers and salvage the customer relationship.

All of this takes office time, and all that office time costs you money. 

So double entry ends up costing you more than just double the hours. It costs you triple or quadruple, or worse.time is moneyNow given what most people in your office get paid, you may not give much thought to the benefit from ten minutes saved here or there. But here’s the other part of the secret:  when you do hundreds of orders a week and save time on every order, then something really cool happens…. a cycle gets going where your employees stop spending so much time repeating things and start spending time on things that create great service.

If you want to learn more about how this plays out in real life, shoot me an e-mail and I’ll send you a case study about how this played out at one of JSY’s customers. The time saved using our software has been unbelievable, except that it’s true. In the meantime, I encourage you to think carefully about which of the three options I’ve discussed here is best for your business. Call me at 630-517-0705 if you want to talk about it, especially if you are interested in exploring where “no more double-paying in the office” can have an impact for you.

And since this blog is intended to stimulate dialogue, feel free to post a comment on what you’ve read. I look forward to hearing from you.

Posted by Jonathan Miller, Editor

You can reach Jonathan at jmiller@jsysoftware.com or at 630-517-0705.

 

 

On-Site or In-House? Hosting Your TMS Data In the Cloud

A number of TMS providers now offer local trucking companies a variety of alternatives to the traditional in-house installation. In the more traditional setup, both the software application and your TMS data reside on a physical server in your company’s office building. For many local P&D companies, this method of hosting data in-house may still be the best one.

However, there are some other newer options for TMS hosting that you may want to consider.  They include the following:

1.   Data in the Cloud, an App on your Desktop (“Managed Hosting”)

In this scenario, you would launch your TMS by clicking on an icon on your desktop, just as if you’re launching Excel.  The TMS application appears on your screen, just as it would if your data lived on your local. The only difference from the traditional in-house model—a difference that is invisible to the user—is that your data lives offsite, hosted by your TMS provider or one of its trusted providers such as Rackspace.

2.  Data in the Cloud, App in the Cloud (an “All-Cloud TMS)

With this alternative, the TMS application itself lives “in the cloud” and is a web-based application.  You get to it by going to a website and logging in there.  You may already have experienced something like this if you use an offsite login to get access to your Exchange e-mail server.

How to Decide?

As usual, there are advantages and disadvantages to any setup. For example, some add-on TMS options (such as GPS or route optimization) require you to have an in-house TMS, so that its database can talk to your TMS’s database.  In some cases, the cloud-hosted database works just fine with third-party vendors.  Check with your current and potential future vendors and see which is the best option for you.

Happy Shopping from the Local Trucking Blog!

–The Editors

Succession Planning in a Family-Owned Trucking Company

Why do so many people in local trucking feel like it’s impossible to retire?

Commercial Carrier Journal (CCJ) writes:  “Experts say that more than 40 percent of family-owned businesses will experience a change in ownership in any five-year period. Of those, only 4 percent have a formal succession plan.” See  http://www.ccjdigital.com/education/ccu/manuals for a little more info.

Is this you?

When we talk with customers and prospects, a recurring theme comes up:  there is often only one person in the company who knows critical things about the business.  In one example, only the owner knows the ins and outs of every special customer rate – and when the owner is away, orders get billed incorrectly. The results are embarrassing phone calls, damage to the customer relationship, and much more time and energy to fix the problem than it would have taken to bill the correct rate the first time.

The problem is not that the owner knows the rate; the problem is that nobody else does.

CCJ also notes that 65% of family-owned businesses don’t make it past the first generation.  Information is power, and perhaps you, as an owner, are afraid of giving away too much power. However, founders and owners in all sorts of businesses shoot themselves in the foot by being stingy with information that could help everyone. In your company, who is there that you can trust to run the shop when you’re not around?  Who can do things the way you would do them? Who can remember the special rates that you and only you have authorized? How will all the stuff that’s “in your head” get into the brains of the people who work for you, so that you really can enjoy that margarita at the pool without having your cell phone ring all the time?

There are a number of ways to lessen the risk of having only one person know everything about certain aspects of your business.

  • Some CEOs gradually “spin off” parts of their jobs, training one key person in that essential skill and another key person in another skill. If this happens, then piece by piece, the owner no longer is indispensable. Over time, this allows the business to survive the “what if Tim gets hit by a bus?” test.
  • Some companies cross-train everyone, so that multiple people know how to rate, dispatch, and bill, and so on. Small businesses and even some smart government agencies do this as well, so that no single person knows procedures that nobody else can replicate.
  • Some companies invest in software. Great software captures all essential order and rate information as soon as anyone knows about it. Great software gives everyone the ability (within reason) to retrieve it, so that nobody has to say “hold on, let me get George…. Oh, whoops, he’s out to lunch…. Can you call back in an hour?”

It’s a lot easier to contemplate handing over the reins when you have a place to download all the expertise in your brain so that others can use your wisdom. While no software package can replace experience and intuition, the best TMS software distills wisdom from decades of trucking experience and puts it to work for you.

At JSY, we make it our business to create easy-to-use tools that address exactly these issues of “who knows what,” reducing the need for anyone to hoard information.  Our customers tell us how much better it is when everyone has the same information and can share it with customers on demand.

–The Editors

 

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