Heavy Duty Trucking, January 2018
In broad terms gross margin is the difference between revenue and cost of goods sold divided by revenue and expressed as a percentage It doesnt include indirect fixed costs like office expenses rent or administrative costs Gross margin can help businesses determine how much of the revenue generated by the company results in profits rather than going toward covering costs The higher a companys gross margin the more efficiently the company operates But what exactly goes into the cost of goods sold can vary and trucking operations dont fit neatly into models designed for retail or manufacturing businesses I think the problem is standardization Henry says If you go to 10 different trucking companies theyre going to have 10 different definitions of what are variable costs a key component of COGS and what arent By putting our foot down as a group and saying these are what we consider variable costs you have the standardization and have a way to compare yourself Look outside your company Analyzing your own companys internal data can only take you so far In addition to the benchmarking we covered in Part 1 see December 2017 issue page 54 theres other outside data you can take advantage of explains Tim Leonard executive vice president operations and technology for TMW Systems FEATURE but from the aspect of this lane might take twice as long to deliver so Im losing capacity or the ability to take other loads Another metric May says has been helpful is something McLeod calls momentum This tracks each status change of an order in the system from when its placed to when its delivered to when its billed etc and how long each step takes One of our customers Barton Logistics said Ive got a problem but Im not sure where it exists Once we started mapping these out for him we found out it was sitting in billing for over five days before anyone did anything with it So youre missing out on cash flow at that point Chris Henry program manager for the Truckload Carriers Associations InGauge program says gross margin is a metric commonly used in other industries but not yet popular in trucking Thats changing he says and its a metric that InGauge has been focusing on with its data benchmarking program DIG DEEPER HDT JANUARY 2018 58 WWW TRUCKINGINFO COM One of the things P S Transportation relies on data for is talking to drivers about improving their performance If drivers dont trust your data they say you wont have much credibility when you talk to them about their driving habits What business intelligence really offers you is better insights into what your transactional reporting does for you says Mauricio Paredes at Alabama based P S Transportation Go to truckinginfo com readerservice and click on reader service 155
You must have JavaScript enabled to view digital editions.
