s a f e t y   &  o p e r a t i o n s

Benchmarking For Success

TCA project is looking for ways to set standards and help carriers fine-tune their operations.

PATRICIA SMITH
SENIOR EDITOR

      How much should it cost to maintain a highway tractor? What's the "average" driver turnover? How much do the "safe" carriers spend on risk management? If you're looking for data to help fine-tune your operations, consider joining the growing list of truckload carriers taking part in the benchmarking project sponsored by the Truckload Carriers Assn. (TCA).
      The project, launched last year, is designed to help for-hire truckload carriers tackle inefficiencies in their own fleets by identifying performance measures and finding ways to achieve those goals.
      Participants themselves decide what cost items and other operating factors will be measured and studied. Specifics are confidential but possible topics might be: maintenance costs; driver turnover rates; workers' compensation costs, or the ratio of safety-related spending to highway accidents.
      However, to avoid tangling with federal antitrust laws (the project has in fact been reviewed by the U.S. Justice Department), the project's surveys and discussions must avoid legally sensitive areas such as freight rates, surcharges, credit terms, revenue or total expenses per mile, service volumes or capacity, future sales or marketing strategies, new service plans, and customer or supplier lists.
      Data will be gathered through surveys managed by TCA. Results will be released in a composite form, making it virtually impossible to single out the costs of any individual carrier. Each survey statistic will be based on data from at least five carriers. No individual carrier's data will represent more than 25%, on a weighted basis, of that statistic.
      In addition to the surveys, TCA will host periodic Best-Practice Discussion Groups to delve further into targeted areas. Groups of 15 or so carrier executives will try to identify "best-practices" for successful fleet management and ways to improve key operating concerns like safety, efficiency and customer service.
      Although the groups will be formed based on revenue levels or types of operations, they're open to for-hire truckload carriers of all revenue brackets and all types of operations on a first-come, first served basis.
      Again, there are antitrust safeguards and rules that should ease any carrier's concerns about swapping trade secrets. Attendees will be encouraged, but never required, to speak and provide information. They may occasionally discuss their own costs or benchmark items but there will be no discussion of rates, credit terms or other items excluded from the surveys. Sales and marketing executives will not be allowed to participate in discussion groups.
      Survey results and findings of the discussion groups will be available only to project participants, but if a group comes up with a new approach that it believes would benefit truckload carriers in general, it can suggest that TCA launch a public, recommended practice proceeding.
      Clearly, the success of the project depends on the number of participants. Transportation information consultant Martin Labbe of Martin Labbe Associates is coordinating the project. He says about 45 carriers are currently enrolled, another 120 or so are set to come in. TCA expects those numbers to grow as word of the project spreads.
      The program is open to all for-hire carriers in all types of truckload operations. There are no size restrictions although Labbe says fleets with less than 30 trucks may not be able to provide the kind of data they're currently seeking — or make good use of the data compiled.
      For the participants themselves, success of the project depends on a carrier's ability to put the information to good use. As Labbe notes, there are significant variances in the different types of truckload operations. Variances from cost or other performance benchmarks may be due to some unique characteristics of the operation, not poor management.
      Carriers with good costing data on their own operations will be able to make those distinctions. "They will only address those benchmark variances that make sense for them to alter," he says.
      As a complement to the benchmarking project, TCA is sponsoring seminars to teach cost accounting basics. It is also encouraging truckload carriers to implement activity-based costing measures as an alternative to the traditional cost per mile model used by most truckload carriers (see accompanying story.)
      "Knowing somebody else's benchmark isn't a panacea for solving your own problems," cautions TCA President Robert Hirsch. "You need to be able to understand what the benchmarks really mean and you need to be able to analyze them with respect to your specific goals. Then you can not only start to make informed decisions, but you can make wise decisions."
      To learn more about the TCA Benchmarking Project, contact Robert Hirsch, Truckload Carriers Assn., (703) 838-1950.