Road to Damascus returns prodigal profits
August 1st 2009 The recession brings the need to cut corners, reduce costs and to save on actions too costly for comfort. Or does it? Geoff Dossetter says that some economies can be false
Nobody could deny that times are very hard. Record numbers of transport operators have folded during the recession and there will be many more before we are out of it. In transport, as ever, an economic crisis turns the screw on an already vulnerable and fiercely competitive industry where only the fittest can survive.
And, not surprisingly, a crisis like this produces the necessity for good managers to take a careful look at all aspects of their operation and to identify possible areas for cutbacks in order to save money and survive.
But, beware, do be careful not to throw out the baby with the bathwater. During the 1970s I worked for a trade association in the retail industry. Our members were small businesses struggling with the recession and inflation of that decade together with the increasing bombardment of consumer legislation coming out of the then Labour government.
And, all the time, the operation of Marks & Spencer was constantly exampled to them as the paragon of virtue, customer care and fair trading. Not surprisingly that made them grumble a bit.
But the reality was that, despite their virtuous and holier than thou style of operation, Marks and Sparks was the most popular retailer with the public and, more to the point, the most profitable for its owners and shareholders. In fact, not ‘despite of’ but ‘because of’. The halo had a very positive impact on the bottom line! Fast forward more than thirty years and take a look at our 2009 transport industry.
Despite the recession there are pressures to be greener, to invest in more staff training, to achieve ever increasing demands of legal compliance, and to be squeaky clean in mind and body. All at a time when the black dog of possible failure is scratching at the back door.
Of course it’s not easy. But the fact is that all of the evidence suggests that it is the good guys, those that do operate the goody two shoes policies, that will survive and thrive in the current hostile environment.
Take the green issue. For years the price of diesel has been an increasingly major ingredient in the operating costs of a lorry. How many times have we all heard that it is the driver’s right foot on the accelerator that can cost, or save, a fortune depending on the way it is depressed? And, of course, the burning of fuel and its resultant emissions, are at the heart of carbon saving and the possible avoidance of global warming and all of the horrors it could bring.
I was at a conference of the Chartered Institute of Logistics and Transport the other day. Sainsbury’s Supermarkets told the delegates that a new programme targeted at increased environmental care by way of cutting waste and reducing lorry miles would save them £9 million per year. And Mike Brannigan, the chief executive of TDG, tellingly said ‘We have yet to find anything green that does not have a payback’.
Driver training, improved vehicle maintenance, better route planning, enhanced vehicle utilisation. They all produce the dual benefits of reducing the dreaded carbon footprint – and saving substantial sums of money for the vehicle operator.
Training itself is something which some managers consider a luxury during the recession. Wrong again. A recent report from the Sector Skills Development Agency showed that ‘Companies that do not train are two and a half times more likely to fail. Such companies do not have the skills and flexibility to compete successfully’. It’s a fair point. Smarter staff must improve company performance.
And what about vehicle maintenance and the Operator Compliance Risk Score which VOSA applies to all holders of an Olicence?
The OCRS is calculated on the basis of experience at annual tests and roadside encounters and provides a red, green and amber score dependant on the quality and compliance of that performance. In short, it means that those company’s vehicles with the best performance are less likely to get a roadside pull than those with a lower score. The benefits of legal compliance here are self evident – reduced downtime, fewer prohibitions, increased vehicle efficiency, enhanced safety and…blow me down, ultimate cost savings.
Doubters of, what is, I admit, a rather pious attitude, should take a look at how the very largest companies operate. It is not just the old M&S example. It applies to the biggest operators in the transport sector. Big companies get big by doing things properly. They know that such policies will improve the business and make money.
Going green saves the world and saves money. Staff training improves personal skills and improves profits. Legal compliance keeps you out of court and makes operations more efficient. Doing it right saves companies and makes profits. Here endeth the lesson. More articles from Handling & Storage Solutions: | 
