Monthly Archives: July 2014

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?

Invisible Costs & Hidden Savings in the Trucking Office

Money in trashcanEveryone talks about reducing unnecessary spend in the supply chain. But almost nobody talks about the unnecessary spend in an individual trucking company’s office operations.

Which trucking office is most efficient—a firm that runs 50 trucks with 5 people in the office, 20 trucks with 8 people in the office, or 10 trucks with 5 people in the office? And why should you care?

You should care because there may be hidden savings in your operation that you may want to uncover. If you take advantage of them, that’s more money on your bottom line every week.

Trucking-company owners regularly complain to me about costs for insurance, maintenance, and so on. When I bring up office payroll, however, they often look at me funny. I get responses like these:

  • “We dispatch in Excel and bill in QuickBooks… Everyone does that, right?”
  • “The dispatcher writes everything down by hand in a book. Then he enters it into the computer. Then Tammy looks up the rate in our binder (or rating spreadsheet), calculates the rate, and tells Shari. Then Shari puts it into our accounting system. Easy enough.”

Here are the invisible costs. “Easy” is not the same as “streamlined.” Both owners above are wasting money on every order. They’re paying two or three people to enter information that could be entered once—if they had software that was a good fit with their operation. Multiplied by hundreds of orders a week, these trucking companies are paying duplicate office salaries—easily 6 figures in some offices—to have people do double-entry. It is an invisible cost because the people look busy and the work gets done.

VacuumInvisible costs suck money out every week. But are invisible costs necessary costs?

  • Are you paying 2 or 3 people to do the work of one, or 10 people to do the work of 8?
  • If one or more of those salaries flowed directly to your bottom line instead of going to your payroll account, and you still were giving great service, would that help your life?
  • If you saved that money every year for 10 years, would that be good? Could you retire early?

Office payroll is the #1 untapped opportunity  in trucking for cost savings. A business partner who can help you seize this opportunity is a valued partner indeed.