The trucking industry is no longer as simple as it once was
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Atlanta, GA. (PRWEB) March 30, 2007
With trucking companies facing an uncertain operating environment in 2007, due in part to rising operating costs and an economy that is giving mixed signals, finding innovative approaches to workforce and profit management are more relevant than ever. Effective Management Systems (EMS) in Atlanta, Georgia has found a way to maximize profits in the trucking industry.
During his 21 years as a management consultant, Robert Sullivan, President of EMS, realized that most trucking companies measure productivity in outmoded ways, such as wages as a percent of revenue, pounds per man hour, or stops and shipments per hour. In measuring the profitability of customer traffic they use operating ratio, which is confusing in making pricing decisions. Without an accurate way to measure productivity and determine the level of variable cost consumed by a customer’s traffic, companies can’t make accurate pricing decisions and are operating blind.
“The trucking industry is no longer as simple as it once was,” says Mr. Sullivan. “Because of external events, which companies cannot control only react to, coupled with competitive changes in the marketplace, the escalating cost of doing business and the impact of competitive pricing, LTL companies now experience tremendous operating pressure. Revenue may be growing, but without a corresponding increase in profitability.”
Many companies base their costing systems on actual cost. But almost every company EMS has worked with has been at least 30% inefficient (or carrying 30% excess capacity). When companies use actual costs, they’re trying to passing their inefficiencies on to the customer in the form of price and in a free market environment that becomes harder and harder to do.
The key to Sullivan’s approach requires understanding and overcoming what he calls “the barrier of complexity,” or the point at which problems become too complex for current measurement systems to handle, making it difficult for management to understand and correct. As a result, symptoms are treated and the real problems go unresolved. Effective Management Systems offer a way for companies to break through that barrier and manage problems rather than just react to them.
The software package developed by Robert Sullivan helps companies diagnose problems based on accurate information and then develop effective strategies to maximize profit. His software programs enable industry managers to measure and monitor productivity accurately, which is key to productivity improvement in the trucking industry.
An LTL carrier is only as strong as its terminals, and EMS software helps companies see and understand what’s happening at the terminal level in the following ways:
--Accurately measuring and understanding productive output, so managers can pay not by the hour, but for the productive output during that hour.
--Using capacity efficiently. With inefficiencies built into a company’s costing system, the true quality of the revenue is hidden. As a result, many LTL companies don’t know their true cost, turn away business, and growth is stunted. Much more market share is available to most companies than they realize.
“By utilizing a productivity/capacity management system with engineered standards, EMS enables trucking companies to manage capacity and productivity at the terminal level on a daily basis,” Sullivan explains.
Robert Sullivan began his career at a large regional LTL carrier; perennially a leader in operating efficiency and profitability. Robert held several leadership positions in his 15-year tenure. In 1986 Robert founded Effective Management Systems, Inc. where he developed his comprehensive Profit Improvement software package. He coaches industry managers on strategy and tactics to improve performance and capacity utilization through building operating leverage. Robert also developed a Performance Based Incentive Compensation program, used by several carriers today, tied to his Profit Improvement software package. He also developed a Management Trainee Program in use by several carriers.
For more information, contact:
Effective Management Systems, Inc
Robert Sullivan, President
Atlanta, GA 770-316-2909