Tough Business Conditions Call for New Management Strategies

Although the recession may have bottomed out, many companies are still feeling the pinch. To remain competitive in today’s economy, fuel oil distributors should evaluate how they manage driver safety and business information, as well as their driver hiring practices, and make any changes that are necessary for improving efficiency and profitability.

Clearly, business conditions remain difficult, but collecting and using business and safety data can help to ease the pain. This activity has never been a high priority because business was good enough to get by doing things ‘they way they’ve always been done.” Furthermore, drivers were often hired for 12 months while working full-time for about half of the year.

As many fuel oil marketing companies ‘feel the squeeze,” there are, fortunately, a number of ways to ease the pressure. They include:

Collecting and using business data more effectively
Collecting and using safety data more effectively
Hiring drivers on a seasonal basis to obtain maximum value for payroll dollars   

Regarding seasonal hiring, LTL carriers often have excess driver capacity during your peak season and are happy to be relieved of the payroll burden during the winter months ‘ their slow time. The commitment to gathering, synthesizing and using real-time data, as well as to changing hiring practices must come from top management. Anything less is likely to result in failure of that particular effort.
 

A Sensible Approach

As the old saying goes, ‘You can’t manage what you don’t measure.” Therefore, to maximize your productivity and profitability, you should make every effort to:

·         Understand the revenue, number of bills and profitability each customer brings to your business.

·         Determine why your three most profitable accounts enjoy that status (e.g., location, date range, product/service line)

·         Develop strategies to grow your most profitable accounts and convert less profitable accounts to higher levels of profitability

Using real-time data collection for obtaining and analyzing key business and safety information can bring numerous benefits to your business, including:

·         Giving everyone a common platform to work from                                                             

·          Increasing the reliability of workflow for data access & presentation                                         

·         Improving compliance with federal and state driver safety laws and regulations

In larger companies, this method for managing information can help to avoid ‘turf battles.” In smaller companies, it can reduce or eliminate confusion. In a larger company, for example, the vice president of operations may have one set of criteria for measuring sales volume while the vice president of sales uses another. Therefore, the CEO gets a different answer from each executive when asking questions about sales volume, which could then create disagreements with the CFO.

In smaller companies, partners may have different criteria for measuring ‘success,” causing the same rift between the sales and operations ‘departments” that larger firms experience.

The ‘User Friendliness” Test

When gauging the value of an information management system, it is important for management to know before making an investment that will help to shape the company’s fate for many years:

How long did it take to ‘mine” the answer?
Is the system easy to use?
Does it give users exactly what they need?
How easily can the system be maintained?

If the system gives the CFO or owner full and instantaneous access to accounting  details, such as revenue, profits and volume (e.g., revenue,  profits, volume), defines ‘business rules” for relating various pieces of data to each other, such as customer type, location and payment history to one another. Consistent interpretation of such ‘rules” across departments is critical for analyzing any number of issues.

If those rules are logical to the individuals throughout the company who must use the system every day, chances are high that the system will serve the company well so that, for example, senior management, or the owner, can evaluate a sales manger’s performance fairly based upon real-time information about the profitability of the volume which the manager’s sales force generates. 

What Every System Should Have                                                                                        

Regardless of company size, every data collection system should contain these key features:

Complement existing capabilities
Address current priorities                                                                                                                   
Help to distribute the workload most fairly
Leverage data from existing platforms ‘seamlessly”
Be intuitive to users                                                                                
Require little in-house support

When determining the best solution, it is important for companies, regardless of size, to avoid falling victim to the ‘not invented here” syndrome that often impedes progress because, oftentimes, organizations can help themselves considerably by adapting someone else’s business tools to their specific needs. 

As for reducing heavy workloads on certain people, an effective business and driver safety management solution will enable management to continually establish, and re-establish project priorities to help ensure a better flow of information ‘ and work products. (i.e., reports, forecasts)                   

Any business intelligence, transactional and safety data system that is worth using will leverage data from existing platforms in ways that cause minimal interruption of operations, as there is never a need to ‘reinvent the wheel.”

Likewise, an effective system will capitalize on users’ prior knowledge of the business, and of computer technology, such that using it is ‘instinctive,” which help to maintain or improve productivity levels, accelerate acceptance company-wide and minimize disruption to core transacting capabilities.

With respect to in-house support, web-based software solutions are particularly effective because they require no capital investment, are easy to implement and are highly scalable, so they can grow along with the company.     

This ideal system allows organization-wide access to a ‘gold mine” of data that reinforces the engine/speedometer relationship between a company and the information system it uses. The engine (i.e., the company) must operate continually and reliably while the speedometer (i.e., the information system) translates raw data to information that the driver (e.g., CEO, owner) can act upon (e.g., slow down, speed up)

The Payoff                                                                                                                                              

Investing in a reliable, cost-effective information system enables fuel oil distributors to optimize productivity by reducing recruitment and turnover costs, and minimizing layoffs while maximizing employee satisfaction and managing fixed costs more effectively than ever.

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Sam Liberto is chief executive of ThoughtDrivers, the business-performance specialists that  deliver customized solutions to private trucking fleets which yield positive results and drive competitive advantage. Contact Sam at 866.97-RESULT (866.977.3785), e-mail sam.liberto@thoughtdrivers.com or visit www.thoughtdrivers.com