The Business Of Independent Service Provider Contracting

BIG Operational Changes On The Way?

Posted by Jeff Walczak on Sep 4, 2018 9:19:10 AM

As outlined in the recent message from Henry Maier, it appears more change may Change Is Comingquickly be approaching.

These changes, if and when implemented, will have a clear and significant impact, not only on your operation, but will definitely impact your costs, and resulting bottom line.

We are not trying to be alarmist, but the changes mentioned will fundamentally change the way you conduct your business.

The only thing that is clear right now is that you should start thinking about the operating changes that FXG is considering. We do not currently know when, which, if New Directionor how the proposed changes will impact you specifically, but it is a good exercise to consider the impact of following:

  • An extra day of linehaul operations - this was announced to linehaul contractors several weeks back. This will provide the backbone of all the proposed changes.
  • Not only Six day (which we think everybody is experiencing in some way now, or have already accepted is coming), but now, probable Seven day operations.
  • Not one, but two preloads and two dispatch waves on some or all days.
  • The acknowledgement that large packages are here to stay and quite possibly, based on some sort of operational changes, may actually increase in number.
  • In what must be some sort of balancing with the increased number of large packages, the re-inclusion of some or all Smartpost that is not currently in the system.

It should also be noted that these changes are not going to necessarily be limited to peak.

Those of you who follow us through the PRO program, or have been to any of our seminars and training sessions, know that we have been getting you thinking about these kinds of changes already. It appears that this is the first wave of much of what we've been discussing.

New Mindset-1

We do not know exactly what FXG has in mind to prepare you, or if they will try to prepare you at all. We would think they will do what they can, but, ultimately you have to run your own businesses and will have to adapt to the challenges that the changes will bring.

How The Changes Will Impact Your Business

There will be some areas of your business that will be immediately effected if the changes are implemented.Impact

From what we have seen, the following systems and processes are vulnerable in many operations out there:

  • No matter how you slice it, driver recruiting and qualification processing are now becoming as important as putting fuel in the tanks of your equipment. If you had a weak process entering this new period of change, it will cripple you as the need for people expands.
  • Care must be taken in planning and executing new and different dispatch practices without any consideration to productivity and efficiency. The monetary penalty for inefficiency will become unsustainable if all you do is “put on more people and equipment”. If you think you need to add people and equipment, it must be done while wearing your cold-blooded engineering hat.
  • Effective and creative scheduling will now be necessary. You will have to totally rethink how you schedule people.
  • “Day Pay” and salaries will absolutely have to be eliminated as the need to vary the time worked will have to adjust, based on available work to be performed. Workloads will definitely vary more than before. You will likely have to go to hourly pay.
  • There appears that there will be a need to match your cubic capacity with your work area and density characteristics. This will be a totally new concept for most, and could result in great inefficiencies.
  • There will be the need for a whole new way of approaching your contract negotiation based on some of your new needs. You’ll need to have access to data about the actual results and unique area characteristics, dispatch times, patterns, density statistics and much more.

What We Are Planning To Do To Help

  • Redesign of our recruiting service to include driver qualification administration.Recruiting Funnel 1
  • Once more is known about the changes (or proposed changes), we’ll be out around the country with new Operations Engineering courses that will address the specific needs created by the changes, so you can better think about and plan your course of action.
  • New tools and services designed to measure not only productivity and efficiency, but also the financial impact of adjusting to the changes.
  • Continued monitoring of changes and how they will impact your business
  • Enhancements to our P&D Driver App, specifically eRoute, to capture criticaleRoute1 data that you will need to negotiate your contract effectively.

Again, at this time, not much concrete is known about the timing and distribution of the changes. However, Mr. Maier didn’t send the message to you all for the fun of it.

You should know that they are very serious and very real.

As always, we are here to help you and will likely see you out there on the road, very soon, with engineering information and other operational education and help.

 

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