Optimizing Operational Effectiveness Case Study
We turned a struggling 75 year old transportation company into a strong organization once again by giving them the tools and visibility to ensure every job was priced to make them money.
This company had been operating their transportation business for over 75 years. Having grown steadily and thriving throughout many decades of industry changes they were struggling to figure out why, despite strong business activity, they were not making any money. They needed a way to identify which business activities were making the business money and which ones were costing them money.
The primary issue that many transportation companies deal with is the assumption that all revenue is a positive for the company. Just because a truck is hauling a load doesn’t mean they’re making the company money – in fact certain routes could be costing the company money. Recent decades have brought about a lot of stress on the trucking industry, from increased competition driving down rates to increased overhead from the costs of required technology, to the lack of drivers to fill all available trucks. Operating in the modern transportation industry requires more visibility into all the different variables that affect the decisions company operators need to make – but how do you identify which loads, routes and customers are profitable and price them accordingly?
The Trincon Approach:
After a thorough analysis of their operations, Trincon implemented their proprietary cost modeling technology, TruCosting, which integrates operating system data along with financial data to allow companies to identify which areas of their operations are profitable, down to the individual customer, lane and truck.
Once implemented, company management was able to see that one of their primary clients had locked in an unprofitable rate. Leveraging the information reported by TruCosting, the company was able to show their client the data necessary to renegotiate rates; and allow them to return that client to profitability.
Extending this capability to other clients they are now able to consistently price services that are fair and profitable despite changing business conditions.
- To assure fuel surcharge is compensatory.
- To be able to adjust rate structures as costs – both fixed and variable – fluctuate.
- To establish accurate revenue per truck per day objectives to assure that all costs are being adequately covered.
- To assure that they were considering the fixed costs of equipment and normal business operations, as well as the variable cost of:
- Driver pay
- and other trip related expenses
In addition TruCosting allowed the client to evaluate the impact of possible changes in business strategy before committing to a course of action.
In the end, TruCosting allowed the client to evaluate the impact of possible changes in business strategy before committing to a course of action. Now they can confidently commit to a course and calculate the profit potential it has. This is just one example of planning for profit. Trincon can help customize a plan for your company’s needs, contact us today!