Pub. 1 2020 Issue 3

Kentucky Trucker 19 KyTrucking.net Considering our market may not bear the brunt of such inflated cost-sharing, the compromise ends up being not moving forward or being able to execute on plans for sustainable growth. I know, that was about as clear as mud, but managing your business on the heels of what the market will bear is almost paramount to what we do daily. So, what value does each of these hold in the realm of running a trucking company, particularly the manag- ing of your day-to-day operations? 1. Worshiping high-profit margins and “pre- mium pricing.” How far in your organization would you have to look to unearth evidence that profit margins supersede the real value of your organizational strategy, safety cul- ture and business plan? Often, premium pricing in the form of cheaper rates equates to increased production demands on the workforce. In other words, do more with less. Or, as some [unsuccessful] leaders might say, “Once we reach economies of scale, we can only be profitable from that point forward.” I vehemently disagree, of course. When owners, CEOs, and presidents tell me they’re now doing more with fewer resources, the first thought that comes to mind is to ask for the year’s financials showing me what that looks like. More often than not, doing more with less simply means an organi- zation practiced “job enlargement” on their staff without any thought to “job enrichment” to accompany the the- ory. Time and time again, I’ve seen in companies where economies of scale were reached by merely exhausting the existing staff to the point of burnout. 2. Mispricing a new product by charging “what the market will bear.” Now, think with me for just a minute here. In recent months, what new initiatives have we seen take place in our industry that pushes the limits of what our “mar- ket” will bear? Moreover, how have these initiatives impacted the bottom line in your organization? Think in terms of insurance rates, litigious and unfavorable trucking environments, and other factors that dimin- ish our ability to operate efficiently and profitably. Considering our market may not bear the brunt of such inflated cost-sharing, the compromise ends up being not moving forward or being able to execute on plans for sustainable growth. I know, that was about as clear as mud, but managing your business on the heels of what the market will bear is almost paramount to what we do daily. To borrow a phrase from a family patriarch in our company, “The sweet taste of a cheap rate pales in comparison to the bitter taste of poor service.” (Bill Usher, Sr.) You see, in our business, poor service isn’t about what the market will bear. 3. Cost-Driven pricing. This is an easy one to answer because this is one we drive home in our management meetings, talk about at conventions, and seem to share a common bond over. You’ve heard the tagline: “Well, it may cost X amount of dollars now, but do you know how much it could cost if we don’t do this?” That’s our life, though, always justifying expenses with the possibility that what we do saves thousands, even millions of dollars. Cost-driven pricing in the trucking industry is one of two things. First, it’s overly complicated by convoluted accounting practices, or second, it can be easy, based on a firm understanding of your cost of goods sold as applicable to the trucking industry. In the case of our company, COGS is nothing more than a service. Service is the only measurable “goods sold” that we build upon. 4. Slaughtering tomorrow’s opportunity on the altar of yesterday. Here we go; probably everyone is smirking on this one. How many times have you personally witnessed a great opportunity being slaughtered on the altar of yesterday? In the business of safety management, we sometimes pivot our decisions or reactivity based on the good ole “loss run.” I recently watched a LinkedIn podcast where an industry-respected Safety Director continued on page 20