The Business of Independent Service Provider Contracting

Recently, we’ve developed a new set of services that we call the Business Support System. While adding new clients to the system, something unexpected has come to light about the root cause of what makes even well run operations sometimes experience business crippling financial challenges.

It's Process Inconsistency.

This particular revelation came about from listening to current contractors and how they plan on utilizing our new system. 

Some of the more savvy, veteran contractors were not looking at the system as merely a way to lighten their administrative load, but they see value in how the ETB programs will give them “Process Consistency”. They are looking for this as they get set to face the challenges of the new Express / Ground world.

When we set out to spread the word about our new system, we thought it would appeal to mostly new contractors. Much to our surprise, the response from seasoned CSPs has been strong. They understand that the “logistics” part of the biz is important, but so equally is the “business / money part” of it, maybe more now than ever.

Let's take a deeper look...

First, What Is A “Process” & “Process Consistency”?

A process is a set of clearly defined tasks that must take place to complete a business activity.

In the FEC contracting world, there are any number of processes that make up the daily routine of every participant. Because there are so many processes, managing them is particularly difficult. It doesn’t take much to throw a process into chaos.

So, what is Process Consistency?

Process consistency is the ability of a team to perform the same steps in similar tasks, regardless of the person doing it. It's a system that supports a business's overall strategy and produces the same results no matter what the situation.

Process consistency allows Service Providers to deal with the unknown and react to changes in the operational landscape. Process consistency allows companies to know when they are doing things right and make changes when they are not.

As you know, owning and operating a FEC-based transportation company is all about providing your customer (FEC) with the service you contracted for, while capitalizing on the industry’s best cash flow to generate significant margins and returns on investment.

Successful CSPs learn how to do this consistently, and that’s the trick.

The goal isn’t to over-complicate basic processes; the goal is to streamline operations without any unnecessary complexity. 

The Five Reasons Why Process Consistency Is Important For FedEx Contractors

That which is measured, is focused on and improves.

In a business that is free from marketing, sales, inventory, accounts receivable and many other normal business functions, it's all about your processes. It’s all about getting the same result (done differently) everyday.

Process is your business. Your challenge is getting consistent results. In order to do so, those results must be measured so that SPs can perform the next reason Process Consistency is important.

Measuring and adjusting your operation based on financially based plans and goals is the only way to make money in your business. Process Consistency is the path to a smooth, profitable operation.

Accountability sets clear expectations. People really do want to know what they are responsible for. 

Setting your standards, measuring job performance against those standards, and then communicating this with your people is the most rewarding thing you can do for your business.

This is especially important when you are managing driver performance. When you have clear goals and expectations set in place, employees will be more empowered to act on their own and leaders have to spend less time micromanaging.

You read that right. Consistent processes reduce driver turnover. 

Drivers tend to not want to adapt to change. The more consistent their routine is, the less frustrated they’ll be. The less frustrated they are, the more likely they are to provide the results needed. Then they are likely to stick around longer. This is good for the driver and the management staff.

Turnover is the invisible expense that cripples most unstable operations. Therefore, Process Consistency reduces Service Provider cost by reducing turnover.

Process Consistency is good!

4) It Promotes A Safer Operation

Closely related to keeping a driver’s life simple by employing consistent processes, is the ability to run a safer operation by keeping your processes consistent. 

Driver’s who know what’s expected of them and who know how to perform their job are less distracted by having to figure out unfamiliar situations. They can then give more focus to making sure they are “safety-aware” and able to operate in a conscientious and safe manner.

And oh by the way, a safer operation contributes to your business's bottom line!

With a consistent approach to both operations and communications with employees, BCs & AOs can establish a culture where employees feel valued and understand how their efforts contribute to overall business success.

Consistent processes facilitate the ability for BCs & AOs to focus on “revenue-producing activities” which are generally defined as measuring results, adjusting when necessary and holding people accountable. 

How To Achieve Process Consistency

• Focus

It’s difficult to focus on key elements of your biz when there are so many tasks that require completion. However it can be done.

The key is to eliminate distractions. Identify what distracts you and your BC so you can minimize or eliminate them. For example, you can let ETB handle many of your non-revenue producing activities so you and your management team can focus on those that are important and produce revenue.

“Focusing” on what is important works every time it is tried.

• Minimize Multitasking

Related to focusing, we all know there are a multitude of “things” that need attention in this business. 

This is THE most common way important things fall through the cracks. What seems harmless at the time, like not following a recruiting process, proves to be very costly down the road. Eliminate the need to do more than one thing at a time as much as possible.

• Checklists

A tried and true way of following a process is through the use of checklists. Checklists clearly define tasks and even can provide order of operations. Checklists help things get done more quickly and efficiently which ultimately saves time.

Checklists are also an excellent accountability tool that AOs can use to monitor BC activity to make sure that nothing gets missed.

• Real-time Data Monitoring

The benefits of Real-Time Data monitoring include:

1. The ability for enhance decision making
2.  Improve operational efficiency
3. Better service attainment
4. Gives a competitive advantage for one SP over the other
5. Helps avoid repeat of costly decisions

Bottom Line

This business is changing, faster than ever before.

There will be some very substantial businesses created from what is about to happen. In fact, it is already underway. Those that choose not to adapt will be exiting the space, which will create opportunity for those that remain. 

In order to keep up and run the very best business you can, it is fundamental that you have a way to maintain Process Consistency. Not only is Process Consistency fundamental to financial success, but it ensures the survival of your business.