The rewards of perfection

For all of last year, Hurley Transportation Companies logged a mere 51 service failures, including delays, breakdowns, shortages and other errors. Considering that the Phoenix-based newspaper distribution and dedicated carriage company handles almost 500 dispatches a week, that’s not too bad.

But despite Hurley’s record of virtually error-free deliveries, President David Sly isn’t satisfied. The company devotes a great deal of time, training and money to further reduce the delays and other errors, which now occur in only a small fraction of 1 percent of its dispatches. But Sly, who has been president since 1998 and was chief operating officer for 10 years before that, has no difficulty justifying the resources Hurley pumps into this drive for perfection.

“It’s hard to put a price on quality and customer goodwill – until you get into a competitive bid situation,” Sly says. “Even though quality is an intangible, the value is very high. It sounds kind of trite, but it’s true: The only thing that really separates us is the level of service we provide.”

Sharing in the gains
With at least one account, however, continual improvement represents more than goodwill. It means hard cash for Hurley Transportation Companies and its employees. When that account was up for bid several years ago, Hurley faced a challenge. Although the customer was satisfied with the carrier’s performance, the cost was slightly higher than what another bidder was prepared to charge.

“The problem was that our staff had an attitude that since we were servicing the account on a cost-plus basis, whatever they want us to do, we would do – even if it didn’t make sense from a transportation standpoint,” Sly says. There was no incentive for managers to seek out efficiencies for the customer.

Many Hurley managers were doing clerical-type work, and the number of managers grew beyond what was needed, Sly says. “Unwittingly, what had happened was our managers had gotten themselves into situations where they were doing many things that could have been done by anyone instead of managing and looking for ways to reduce expenses.”

In the end, Hurley kept the account for a couple of reasons. The biggest was Hurley’s commitment to immediate improvements in costs and reduction of errors. Part of the new arrangement with this account was something called gain sharing. “We get half of any savings we can create within a budget year,” Sly says.

Hurley has received a gain-sharing payout in each of the past four years. What’s more, 100 percent of that bonus has gone directly to Hurley associates, both salary and hourly.

Continual improvement
To ensure that Hurley is always improving, the Hurley management team keeps meticulous records. Collection and analysis of data throughout the operation gives Hurley managers valuable insights. “I think you can always find a way to do better,” Sly says. “I don’t think there is such a thing as perfection.”

Error-free delivery is a challenge in any segment of trucking, but it’s especially difficult in a field like newspaper distribution, which requires numerous stops.

Managers know, for example, that for all of 2001, the company experienced 36 breakdowns. Of those, 14 were flat tires. Few carriers would complain about 36 breakdowns out of 25,000 dispatches. Still, the fact that almost 40 percent of Hurley’s breakdowns stemmed from tire problems got management’s attention last year. “That’s when we started looking at turning the entire fleet to virgin rubber,” Sly says.

Hurley put the idea to the test. The company installed virgin rubber on 10 units that operate intrastate and monitored the experience for seven months. Based on the experience, Hurley by June had outfitted its entire fleet with new rubber at a cost of around $136,000.

Hurley expects a return on that investment within 18 months, and the ROI is based on benefits that go beyond curtailing or eliminating tire-related breakdowns. Since completing the installation, Hurley has had no tire-related breakdowns. The company was also able to discontinue a special maintenance service for its tires. Hurley also saved money because it no longer needed an on-call mechanic. And when the company switched to virgin rubber it standardized the tires and wheels for all equipment, thus eliminating inventory.

Like its decision on tires, Hurley often looks for solutions that depart from the norm. One example is the carrier’s intrastate fleet. While most of Hurley’s dispatches in its newspaper distribution business are within the Phoenix metropolitan area, the company makes nightly runs to nine locations throughout Arizona.

The job calls for a straight truck, but Hurley found that its equipment wasn’t up to the task. “We wanted a truck we could put on the road 300 to 400 miles a night, 365 nights a year,” Sly says. Hurley’s solution was to convert Mack CH613 tractors into straight trucks for its 10-unit intrastate fleet. The conversion, performed by the local Mack dealer, Arizona Truck Center, gives Hurley a vehicle with the relatively compact size it needs that has 600,000 miles added life – or four more years in the company’s intrastate operation.

Critical success factors
Hurley puts as much effort into tracking its business data as it does its operational results. Weekly and monthly benchmarking has been a Hurley Transportation Companies hallmark since 1995, Sly says. In particular, Hurley tracks what it considers to be its seven principal “critical success factors”:

  • Happiness of associates, customers and providers
  • Revenue
  • Sales
  • Accounts receivable
  • Overtime
  • Safety
  • Turnover

Hurley Transportation
Location: Phoenix
Principal: David J. Sly
Owner: William R. Ewing
Equipment: 66 power units, including Mack tractors and Ford straight trucks, pickups and other delivery vehicles; Mack and Ford engines and transmissions; 91 trailers, including Wabash, Fruehauf and Utility
Freight: Newspaper distribution and general commodities on a dedicated carriage basis
Challenge: To compete on service while remaining competitive on price
Solution: Constant benchmarking and arrangements that allow the company and its associates to benefit financially in efficiencies it identifies

Within each of those areas, Hurley tracks specific and quantifiable metrics separately for its distribution and dedicated divisions and judges them against goals it sets for the year and against the performance from that month in the previous year. For example, in the area of sales, Hurley tracks new accounts, revenue per month from new accounts, calls on new accounts, calls on existing accounts, lost accounts and lost revenue per month due to lost accounts.

These are fairly standard benchmarks, of course. Even in the area of happiness, which might be the most unusual benchmark of the seven, some of the metrics are quite routine. In the distribution division, for example, Hurley tracks its costs versus budget and the number of service failures.

Hurley also relies on periodic surveys to gauge the satisfaction of associates, customers and suppliers. The most recent survey of associates, for example, assesses views on pay, pride, work environment, company culture, safety, tools and supervision.

Obviously, no company wants to think of its employees as being unhappy, but not all would consider happiness to be a key benchmark. “The way we look at it, happy, professional associates provide quality, flexible service for our customers,” Sly says. “If people are disgruntled or unhappy, they are probably not providing professional, quality service.”

Through almost 30 years in trucking, Sly has discovered that employee happiness has much to do with what many people would consider intangibles – the notions that what they say counts and that their input and job is important. “Pay doesn’t have a lot to do with happiness – providing pay is competitive.”

Hurley’s philosophy of business must be working as the company is celebrating its 50th anniversary this year. Behind that milestone stand some longstanding customers, including one that has been with Hurley since the very beginning.