Frequently Asked Questions

WHAT DO YOU FEEL IS THE LARGEST OBSTACLE FACING THE TRANSPORTATION INDUSTRY?

Increasing complexity of the operating environment is placing tremendous internal pressure on the organization. Many companies are continuing to operate with paradigms and systems that are no longer effective in an environment that is always moving to higher levels. The traditional “Top Down” layered business model adds too much complexity and is too reactive. A flatter, leaner model will be required forcing companies to have managers at the terminal level who understand “how to run a business, not just manage a terminal”.

WHAT IS THE KEY TO PROFITABILITY?

Leadership! Leadership...it's all you've got. That simple. It is through people that performance of any kind, good or bad, is posted. Leadership determines the tools, systems, philosophy, business model the company uses and the level of success Championship athletic teams drool for the "Blue Chip Athlete". They spend tremendous energy and money to recruit and develop championship players. They do so because a coach knows that it is the quality of the athlete that provides the foundation of a championship team. Couple that with a competent, future based coaching staff and you have the ingredients for a championship team.

I was chatting with the President of a very successful LTL carrier recently and we were discussing capital investments. He stated the company was spending several million dollars (not putting a number because of confidentiality) on new equipment in the upcoming year. I asked him how large his budget for leadership recruitment and development was. I got a blank look followed by..."no capital budgeted for that". He has now though.

The most important job of a coach is deciding who is going to be on the team. Player selection is THE most important job of a coach! That is followed by a well oiled system to develop the player.

IS A SERVICE CENTER PROFIT AND LOSS STATEMENT AN EFFECTIVE TOOL TO MANAGE FROM?

A service center P&L statement is like a scoreboard in an athletic event. The game is over. All you can do is react to it. Also the statement is generally distributed several weeks after the month or operating period is over. That is like spotting the competition with two quarters in a football game or 3 innings in baseball. A company must have a management system that allows the company to manage the fundamentals on a day to day basis. If you do that the P&L will reflect that in the numbers.

WHY DO YOU FOCUS ON CONTRIBUTION DOLLARS AND THE VARIABLE COST TO REVENUE RELATIONSHIP AT THE SERVICE CENTER LEVEL?

Many, in fact almost all human, physical and financial investments are the decision of owners and senior management. The service center leadership has no or minimal input into that area. Those investments are generally fixed cost and fixed cost is where you make your investments. You cover those investments by managing the relationship of variable cost to revenue. Fixed cost is covered by contribution dollars which is revenue less variable cost. Service center leadership has control over the revenue and variable cost on the local level and should be held accountable for controlling those areas. Variable cost levels are determined by how well they manage their capacity and productivity on a daily basis relative to the work they have to perform that day.

THROUGH THE YEARS WE HAVE TRIED ALL THE A TO Z MANAGEMENT CONCEPTS YET PERFORMANCE DID NOT IMPROVE TO THE LEVEL EXPECTED. ANY IDEA WHY?

I believe everyone, including myself, is always looking for that magic bullet. I'm not sure anything replaces managing the fundamentals and managing the fundamentals requires management to get to a level of detail that requires tremendous energy. We read about some new concept that appears to be that magic bullet and we hastily grab the new process because we just do not want to get down to the detail level needed. So, we believe the new process will do that for us. Managing the fundamentals requires hours of solitude and constant attention. Besides, we're too busy running around managing my thrashabout! That is much more fun.

So we look for that magic bullet in the form of a "quick fix" espoused by some so called management expert. Also many of the so-called management concepts do not fit the "culture" of the company therefore you are immediately in a state of conflict. As all championship teams and organizations do; get back to managing the fundamentals, blocking and tackling better than your opponent, and be the best at managing them on a day-to-day basis. Never take a day off in doing that.

AREN'T YOU ONE OF THOSE SO-CALLED "EXPERTS" AND AREN'T YOU ESPOUSING A NEW CONCEPT?

Absolutely not. If you read my book, or if I have ever worked with your company, you know that I constantly talk about two areas...people and fundamentals. That is not new; those areas are as basic as bread and butter.