PLAYING hide and seek for costs involved in running a tank truck operation is no children's game. Some carriers may understand exactly where to look, others may not have a clue as to where expenses are coming from and how they impact the bottom line.
With today's technology in force, there is little excuse for a company missing home base by not knowing what is occurring financially on a daily basis.
Software companies offer plenty of resources, some designed for a specific operation and others for more general applications.
TMW Systems, Beachwood, Ohio, McLeod Software, Birmingham, Alabama, and efleetmgmt, Woodbridge, Virginia, are three companies with software programs to ease the financial tracking burden.
TMW has applied for a patent to cover its newest product, ResultsNow. The program is a combination of professional consulting services and software. Constant access through the TMW program provides real-time information on business performance that enables managers to make proactive decisions based on their organization's goals.
“We're arguably looking at the genesis of a new technology — the packaging of services and software together in one product that makes a long-lasting, high-level impact on an organization,” said Tom Weisz, TMW president.
The TMW program provides continuous visibility to the individual parameters a company uses to monitor its day-to-day health. These parameters may include financial, customer service, and/or operational goals.
Some companies measure success by revenue per truck per day. For others, the number of deadhead miles or on-time percentage may be more important, according to TMW.
During the initial consulting phase of ResultsNow implementation, a TMW technical consultant works with the business owner and senior management to identify the individual company's most important key performance indicators — and how to calculate them.
Once the KPIs are selected, the TMW consultant sets up the software portion of ResultsNow to work with the client's enterprise management system to automatically retrieve the data needed, and run the proper calculations to give the real-time status of the goals being measured at preset intervals. The results are then displayed on the owner's computer screen as well as on screens throughout the company.
TMW adds that with fluctuating freight volumes, rising fuel prices, and changing regulations, most trucking company owners share a common goal: identifying and implementing processes to improve their operations' efficiency and profitability. Critical to success in these initiatives is knowing exactly how the company is performing at any time in certain key areas.
In addition to providing nonstop visibility to the carrier's key performance indicators on-screen, the TMW program also will issue notifications via e-mail to select personnel whenever a preset threshold is violated, such as daily revenue falling below a certain standard. This enables employees to quickly drill down into the detailed information to determine the cause of the problem and work to fix it proactively, rather than waiting until it may be too late.
“Part of the software component of ResultsNow is what's known as a dashboard,” said Weisz. “Just as a car dashboard tells the driver at a glance exactly what he or she needs to know to drive safely — how much gas is in the car, the speed, whether there's a mechanical problem — the ResultsNow dashboard sums up at glance the information a business owner needs to know in order to drive the business productively.
“And by displaying that information constantly in front of everyone else in the organization, ResultsNow does even more. It clearly defines the company's focus and ensures that everyone on the team is working in the same direction to meet the same overall goals.”
The LoadMaster Revenue/Expense Allocation Module from McLeod Software, Birmingham, Alabama, provides carriers with an accurate way to track certain elements of the business so that they can report on, evaluate, and determine their profitability.
Revenue/Expense Allocation allows carriers to code their tractors, drivers, and orders/movements for profitability tracking. With this coding, revenue transactions are then allocated to the appropriate general ledger account based on the pick-up, delivery, or prorating of records. Expense transactions are allocated in the same manner as revenue, or, where appropriate, are allocated based on the payee allocation coding.
The program general ledger module provides the flexibility and reporting to compliment Revenue Expense Allocation. The general ledger account structure can be defined with a 20-character GL account number with up to six segments (main account plus five sub-accounts) forprofitability tracking. General Ledger reporting can be generated for each of the segments.
efleetmgmt, Woodbridge, Virginia, has prepared a cost-per-mile white paper that helps managers learn to recognize the components of the costs, and how to develop a tailored measurement for specific use by their fleet operation.
“For many fleets, expenses that in reality should be the burden of other departments find their way into the fleet budget and hurt the bottom line of the operation,” said Lisa Deyo, efleetmgmt president. “This is especially problematic when senior management is considering the viability of the fleet operation and is comparing an inaccurate internal cost-per-mile against third-party service providers.”
Factors affecting costs in the trucking industry include economies of size, economies of utilization, and the makeup of variable and fixed costs. Often, cost analyses fail to take into consideration hidden costs.
“Unfortunately, most companies refuse to allow fleet managers to charge other departments for these costs, resulting in a cost-per-mile that does not accurately reflect the true economic information,” according to efleetmgmt.
efleetmgmt also points out that in the trucking industry, cost-per-mile is one of the most heavily utilized measures for determining the viability and success of a fleet operation. However, it is one of the most difficult to accurately identify.