Settling your company’s civil war

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Murphy’s law holds that whatever can go wrong will. You can bet that the first shipment a prospective new customer offers will be turned down. If it is successfully booked, it will be picked up late, delivered late, or both.

But this really isn’t Murphy’s Law at work. It’s the natural consequence of a classic conflict that plagues most trucking companies.

A new customer in a backhaul area wouldn’t get such treatment. Customers in such areas are so few and far between that dispatchers jump on any hint of business. Rather, I’m referring to potential new customers in decent freight areas. A new customer calls in with a load. If he manages to get through to a dispatcher, which is sometimes a challenge, the answer undoubtedly will be that the carrier doesn’t have any trucks today.

The new customer immediately calls the salesman who has spent the last six months asking for

Sample Weekly Load Planning Matrix
From
To AL-North AL-South AR-North AR-South AZ
AL-North 0 3 3 4 0
AL-South 3 0 4 5 0
AR-North 2 2 0 7 0
AR-South 5 4 2 0 0
AZ 0 0 0 0 0
that first load. The salesman won’t believe that operations was really busy. He was hired to sell freight, and if a key customer in the same area needed trucks, operations would have found a way to cover those loads.

Does this sound familiar? Almost every trucking company I have worked with went through this. Operations and sales simply aren’t on the same page. They may work for the same company, but their agendas often are different. Salesmen are motivated mostly by the amount of revenue they book – even if the freight isn’t profitable for the carrier.

The goal of operations is to keep existing customers and drivers happy. Most shippers won’t offer their best loads to new carriers. Instead, they will offer loads they are having trouble getting booked due to the destination or a shortage of trucks in the area. If operations accepts the load, it may not be able to take care of existing customers needing trucks. Or the customer may offer a load going to a poor backhaul area. If operations accepts the load, the driver will complain if he gets laid over. So a lack of trucks becomes a convenient excuse.

Given that new customers are not likely to offer their best freight, operations and sales must determine together whether the business warrants taking some undesirable loads or having fewer trucks for existing customers.

Of course, both operations and sales need to agree on what makes for a desirable load. Consider establishing a simple “from and to” load planning matrix. The matrix shows the number of loads per week the carrier is seeking from each area to another. If the targets in the matrix are achieved, then the carrier will run a fairly balanced operation.

Once this planning matrix is established, you can compare the actual number of loads in each lane for the week against the plan. This exercise can provide valuable insight as to why imbalances resulting in empty miles or layovers are occurring. It also can provide each salesman with a clear understanding of what specific freight is needed. Ideally, sales compensation should be tied to meeting these targets, not to gross revenue.

In addition, the matrix can also provide operations with targets of how many loads to book on each lane. And it can be used to indicate a lane that the carrier is not accepting loads on. In an effort to keep existing customers happy, dispatchers will often book too many loads on a lane.

When a new customer is proposed within an area, a salesman must determine if it has available freight in the lanes the carrier needs. This helps keep the sales force focused on what the carrier needs. When sales finds customers that can improve the balance, operations must commit to hauling those first few loads even if they are undesirable. If the loads on the target lanes don’t materialize, sales and operations need to determine if further investment in the customer is warranted.

Getting sales and operations on the same page is much more challenging than these few words may indicate. But it is well worth the effort. If the two are constantly at odds you can be sure that profits are being lost.