How to turn around a trucking company
Just like blindside backing a 53-foot trailer, turning around a trucking company is tough. There are so many people and so many moving pieces. Many people are set in their ways, and you’ve got a scattered workforce working all different hours.
Every facet of the industry is so competitive that it can feel like there’s no room for improvement in rates or costs. Imagine your operating ratio (OR) is over 100 and your investors and banks are demanding you get your OR into the low 90s within 18 months or you’re fired. How in the world are you going to find 1,000 basis points of OR improvement?
Even if you do the impossible and cut your deadhead in half and cut your driver turnover in half you still wouldn’t achieve your goals. Don’t get discouraged. Don’t give up.
It can be done.
Zoom out, then zoom in
As Jim Collins taught in his book Great by Choice, we need to “zoom out, then zoom in.”
First, zoom out. Our instinct is to immediately zoom in when confronted with a crisis. We immediately lock on to whatever we think is most critical and get tunnel vision blocking out everything else.
This is a mistake. There’s no way you’ll get the big improvement you need by hyper-focusing on only one or two things. Instead, you need to zoom out and take in the full range of possibilities.
First, look for “emergencies” requiring immediate “emergency room” treatment. Then, sharpen your gaze to spot the dozens and dozens of other opportunities within your reach.
One percent better
When you see these dozens of opportunities for improvement, set goals to improve each of them by a modest 1%. In addition to improving rates, utilization, deadhead, fuel economy and driver retention by 1% each, also look at all the other opportunities.
How can we reduce the number of phone calls we receive from drivers by 1%?
How can we decrease breakdowns by 1%? How can we improve load velocity by 1%? How can we increase the number of loads booked by 1%?
How can we reduce the time spent in meetings every week by 1%? When we ask people to make a huge improvement in one area, they can easily get overwhelmed and feel they’re being asked to do the impossible. If they don’t believe it’s possible, they won’t give their best effort.
Furthermore, if you are only focused on one thing, many people will feel like there’s nothing for them to do since that one thing isn’t in their area. By asking everyone everywhere to improve something by 1%, everyone is engaged and everyone should feel like they are fighting a winnable battle. Little by little, a little becomes a lot.
As you stack all these small wins together, you’ll find they add up to more than what you need.
Talk is cheap. Execution is everything. Once you’ve asked everyone to make a 1% improvement, how do you execute on all these plans?
You might give the greatest speech of your life in an all-hands meeting announcing the 1% plan, but by the next morning half the people will probably have forgotten about the speech.
After the weekend, you’ll be lucky if 10% of your people are actively working on it. Within a month, you’ll be right back where you started. As Chris McChesney, author of The 4 Disciplines of Execution, says, “The real enemy of execution is your day job.” McChesney relays the story of an executive telling him, “We don’t have dragons swooping down and knocking us off our priorities.
What we have are gnats. Every day we have gnats getting in our eyes, and when we look back over the last six months, we haven’t accomplished any of the things we said we were going to do.” Sound familiar?
McChesney concludes, “It’s like finding that faded t-shirt in the bottom of your drawer and saying, ‘Oh, yeah, Operation Summit. I wonder whatever happened to that?’ It died, and you didn’t even have a funeral.” There are multiple options for effectively executing on priorities in the midst of your whirlwind.
Some of the more complicated projects will require more sophisticated approaches. But for a lot of your people, particularly the ones closer to the front line, you just need them to create a new habit of doing one important-but-not-necessarily-urgent thing each day. For these people, try printing off a blank calendar and giving them a big red Sharpie pen.
Ask everyone to post the calendar above their desk. At the top of the calendar, they can write down what their 1% daily task is. Then, every day, they can put a big red X on the calendar when they’ve completed that task for the day.
This 1% task could be to call one driver every day to thank them for their service. It could be to go out in the yard and inspect three trucks every day. It could be for a leader to listen to two phone calls every day and give the employees feedback on what went well and what could be improved.
It could be to walk in the driver’s lounge every day and talk to five drivers. It could be to call one customer with a load running late to apologize and reassure them that you’re working to get it there as soon as safely possible.
The aggregation of marginal gains
The inspiration for this 1% strategy comes from the British cycling coach Sir David Brailsford.
In 2003, Brailsford was hired to be the program director of British Cycling. At the time, it had been 110 years since a British rider had won the Tour de France, and the British had only won a single Olympic gold medal in the previous 95 years.
In fact, the British Cycling team’s “brand” was so poor that one bike manufacturer refused to sell bikes to the team for fear that it would hurt the manufacturer’s brand and sales. Brailsford implemented a strategy that he called, “The aggregation of marginal gains.” He said, “The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.” Initially, they made changes in areas you would expect – changing things like their seats, their tires and the fabrics in their uniforms.
But as Brailsford pushed for more and more 1% changes, they changed the way they washed their hands, the massage lotions they used and even the pillows they slept on. The result? British cyclists have absolutely dominated the cycling world.
They’ve won six Tours de France in the past 10 years. At the recent Tokyo Olympics, they won more gold medals in cycling events than any other country (marking the fourth consecutive Olympics where they have achieved this feat).
This works in trucking
I’ve seen this approach work in many different trucking organizations. I’ve seen this work with both the drivers and all the employees that support the drivers (driver leaders, customer service representatives, planners, safety, maintenance, payroll, billing, etc.).
Everyone can think of a way to improve something in their area by 1%.
Often times, the improvements are simple, inexpensive and generate far more than a 1% improvement. I’ve seen huge improvements in several shops that implemented visual controls and workplace organization programs. I’ve seen load velocities improve by asking CSRs to reschedule the slowest loads.
I’ve seen service problems fixed with a single meeting. I’ve seen performance improve in every area with the introduction of simple scorecards posted on the wall that get updated every day. When teams feel like they’re already doing the best they can, help them see all the different things they can influence.
Create a list of all the defects and errors they’ve seen recently. Next, create a list of everything that was completed late recently and a list of how long it takes to do their core tasks and to process everything that comes into their area from the time it comes in to the time it is completed. Then, create a list of any costs they have in their area.
Finally, create a list of anywhere they see a “trust tax” on their team where they don’t trust someone or something else (or where someone else doesn’t trust them or a product/service their team produces). Gather these lists together, remind the team why you are doing this 1% project, and then ask them to identify the area where they think a 1% improvement is doable and most likely to have the biggest impact on the overall goal. In addition to the improved business results, I love watching the positive impact this has on a team’s culture.
People love being on a team tasked with finding creative solutions and working together on something that is important and doable.
And nothing builds confidence and trust as well as making and keeping commitments, and that trust and confidence is one of the most important ingredients of every successful turnaround.
Richard Stocking is the founder and CEO of DPX Consulting, a transportation consulting firm that helps fleets with strategic operational improvements and M&A activity. Prior to founding DPX Consulting, he enjoyed a 27-year career with Swift Transportation that began as an entry-level customer service representative and worked through various roles in sales and operations throughout the United States before becoming president and CEO. At the time of his departure, Swift Transportation had grown into the largest truckload carrier in North America with 18,000 trucks, 60,000 trailers, and £4.5 billion in annual revenues servicing the US, Mexico and Canada.
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