“If you wish to prosper, let your customer prosper… When people have learned this lesson, everyone will seek his individual welfare in the general welfare. Then jealousies between man and man, city and city, province and province, nation and nation, will no longer trouble the world.” –Claude Frédéric Bastiat

OK – THAT quote is definitely over the top! But the extremity of what Bastiat (b. 1801, d. 1850, a French economist, legislator, and writer who championed private property, free markets, and limited government) said is meant to highlight how important the relationship is between customer and service provider – a relationship that’s becoming more and more critical every day in trucking.

Of course, many shippers in the freight world are focused solely on price (and lord knows, many shippers and receivers docks need electroshock-style customer service training for the way they treat truck drivers) so the value of courtesy, hard work, and diligence oft times get lost in the demand for low cost.

But not always. I talked to Gary Kelly, senior director of transportation and distribution for Schwan’s Logistics, a few months ago about this subject after his firm – a division of the renowned Schwan Food Company, based in Marshall, Minn. – presented a series of wards to contracted carriers are rated for their on-time delivery, customer service, invoicing accuracy, damage free deliveries and technology.

K&J Trucking, Inc., of Sioux Falls, S.D., received the Gold Carrier of the Year award from Schwan, while Floyd Wild, Inc., of Marshall, Minn., received the Silver Carrier of the Year award and Triangle Trucking, Inc., of Salina, Kan., received the Bronze Carrier of the Year award. Doug Bradley Trucking, Inc., of Salina, Kan., received the People’s Choice Award — given for outstanding customer service.

(Pictured left to right: Gary Kelly; Jim Gray, Marketing Manager, K&J; Shelley Schipper, President, K&J;

Joe Buysse, Carrier Relations Manager, Schwan’s Logistics.)

“We are well aware of the high level of commitment and fully appreciate the hard work that our entire carrier base does day in and day out,” said Kelly. “Their hard work assures that our company and our customers are serviced in the most effective manner. These carriers that we have specially recognized and honored clearly represent the best of the best.”

It’s this level of customer service that reaps rewards for truckers over the long term – but it doesn’t happen without constant attention and training. Professor Jerry Osteryoung from the college of business at Florida State University has a few thoughts on the subject, gleaned not only from the classroom but from real life experience as well. Here’s why he thinks ongoing customer training service is essential in the business world today:

“I went in for some routine tests at a doctor’s office. My appointment was for nine in the morning, and I showed up at 8:45 a.m. (for some reason, I am always early). The receptionist told me to have a seat in the waiting area, and that they would call me when they were ready.

At 9:45 a.m., they still had not called me. I went up to the same receptionist and asked her when I would be called. It did not seem to matter to her that I had been waiting, but she begrudgingly said that she would check. She returned a short while later saying that one of the machines was down, and that they would get to me as soon as they could. When I asked her how much longer this would be, she said that she did not know.

During this entire exchange, the receptionist’s attitude was completely uncaring, and she never did apologize for the wait. When I finally told her that I was leaving, she asked if I wanted to reschedule my appointment. Of course, frustrated by the experience, I did not want to at that time.

When I got back to my office and calmed down, I called the office manager at the doctor’s office and explained the problem. She said she did not understand what had happened, as the front office had received training in how to deal with these types of issues. When I asked her how long ago this had been, she said she thought it was about a year and a half ago.

Evidently, the staff had received the proper training a long time ago, but they had since lapsed into old forms of habitual behavior. But if you are going to change behavior and maintain it for any length of time, you must have continual training to reinforce the wanted behavior. Great firms have customer service training every month to ensure that exceptional customer service stays in the forefront.

In my case, the receptionist should have noticed how long I was waiting and done something about it. Basically, she needed to take action instead of being a passive receptionist. The real problem was not that a machine was broken, but that no one told me about it or really seemed to care when I brought up the problem.

Obviously, this experience was awful, but with additional training, it could be easily fixed. Customer service is a critical function of all offices – medical as well as non-medical. It is an important way to keep your customers returning. Since it is roughly 15 times more expensive to get a new customer than it is to keep an existing one, maintaining your customer base is vital. Once a customer walks in your door, it is the job of customer service to keep that customer happy and returning.

Every firm needs to have a continual customer service training program for all their employees that interact with customers. This training could use role-playing to simulate various problems and situations the staff might encounter. Having other staff observe the way an employee deals with a simulated situation is a powerful motivator for changed behavior. Customer service training could also cover the appropriate words to use when a customer is upset, current customer issues, and how to be proactive in customer service. That will ensure that you maintain great customer service.”

No doubt the carriers working for Schwan know more than a little about how that gets done.

“The absolutely number one thing we focus on is providing top notch service to the customer. If we didn’t provide that, we wouldn’t be nearly the size we are today.” –Brett Hartman, vice president and director of operations for Truck Enterprises Inc. (TEI), which operates eight truck dealerships throughout Virginia.

Sit and talk with Brett Hartman for a while and you’ll quickly understand why his family’s had such success in the truck dealership business.

(Brett Hartman in front of the trucks for sale at TEI’s Manassas Va. location.)

Hartman’s grandfather founded what became Truck Enterprises Inc. (TEI) in Harrisonburg, Va., back in 1961 as a sideline business to his trucking company – an ambitious thing to do with a family of four kids underfoot. Brett told me, though, that the time soon came when his granddad had to choose between his trucking company and dealership – with the dealership winning out.

Not that it was a huge operation, you understand. “It was a small place – barely fit five trucks,” Brett told me. But oh how they grew that small operation over time, slowly but steadily expanding TEI’s reach, opening dealerships in Richmond Va. (1971), Roanoke Va. (1978), Kaiser Md. (1985), Hagerstown Md. (1995), Chesapeake Va. (1996), Lynchburg Va. (2004) and finally Manassas Va. (2007).

[For fun, I made a short video of my visit to TEI’s Manassas Va. location. Enjoy!]

The reasons TEI expanded to each location differed – some were heavy with current customer business, so a new location was needed to adequately serve them; others had strong truck populations where TEI felt good market share was available for the taking – but the reason the company succeeded at each boiled down to two reasons: an almost fanatical devotion to customer service and the grit, determination, and loyalty of the company’s 350 employees.

All the dealerships have all-makes and models parts and service operations working multiple shifts and Saturdays to meet the needs of customers. Franchises include Kenworth, Volvo and GMC trucks, Rhodes and Ox bodies, and Rhodes and Transcraft trailers. Full service body shops are located in Harrisonburg Va. and Richmond Va., with Harrisonburg also featuring Josam frame straightening and alignments systems.

(TEI’s “youngest” dealership in Manassas Va. sits on 12 acres 25 miles outside of Washington, D.C., just off I-66. Much of that property is as yet undeveloped, giving TEI plenty of room to expand as business volume grows.)

“All I really am here for is to support our operations – we let our general managers really run things day-to-day, telling them to run each dealership like it was their own business,” Brett explains. “We give them a lot of flexibility to address customer needs. We want them to have the authority to make those crucial decisions, with corporate really just setting the overall strategy and guidelines.”

Brett feels that if every employee understands and acts on the philosophy that the customer comes first and that it’s a team effort to serve the customer – without regard to what position that particular employee holds – then the foundation for ultimate success is in place. “Hey, if a customer needs a part and I am heading up that way, I’ll take that part with me,” he told me. “I get those 1 a.m. calls from a customer broken down in South Dakota, and we do what wee can to help them even if though they are out of our area.”

[That mentality extends to the company’s heavy truck technicians as well – as a short chat with Jimmy Bailey below illustrates.]

The Hartman’s boil it down this way: their strategy is to build lasting relationships with current customers and attract new customers by providing exceptional products and services – all of this accomplished through talented people committed to high ethical standards; people that anticipate the customer needs and exceed their expectations.

“The mentality is, if we take care of the customer, then the business will take care of itself,” Brett explains. “That’s why we try to be a one-stop shop – selling new and used trucks, offering finance, insurance, maintenance, stocking our parts inventory properly, etc. – so we can take care of the customer. I don’t ever want to be tasked with the customer calling to say ‘you didn’t take care of me.’”

That’s one reason Brett spent two and a half years centralizing TEI’s finance arm, so the company’s economies of scale – the business of several dealerships instead of each one individually – could pay off for the customer. “It gives the customer better rates – that’s why we did it,” he says.

Of course, maintaining that philosophy in the tough market of today isn’t easy. The Hartman’s saw the writing on the wall about a year and a half ago in terms of sales of new trucks falling way, way off, so they started switching their focus from trucks sales to parts and service.

“As trucks get older and aren’t traded out, they need more maintenance, they need more parts,” Brett said. “So we saw this as an opportunity to build more relationships with customers through exceptional parts and service capability, which we hope to turn into truck sales as well when the market returns.”

(Trucks of all makes, modesl, sizes, and applications get worked on at TEI’s Manassas dealership — and at all of its other locations as well.)

In the meantime, everyone is focused on cutting expenses and trying to boost absorption to 100% or better, so parts and service business can be in a position to pay the bulk of the bills. “That strategy takes the pressure off truck sales in a down market and gives us more flexibility,” Brett explained. “We’re not yet where we want to be with absorption, but we’re on the right path. And we’re all focusing on this as a group – general managers, sales people, our parts and service departments, everyone.”

It all adds up to a pretty draining job for Brett – on average, he gets 150 emails a day – moving from dealership to dealership across large swaths of Maryland and Virginia, in his role as coach, trainer, fire support, and morale booster. But he wouldn’t have it any other way.

“The most stressful part of the job is knowing that 350 employees and their families rely on us for their livelihood – that weighs most heavily on me,” he said. “But I take a lot of pride in watching them grow and create success, getting to that level to where they are excited to come to work, that it is a career for them, not just punching a time clock. They make me look good.”

Brett notes that “can-do” attitude among TEI’s employees is what helped the company expand from one to three dealerships back in his grandfather’s day and from three to eight over his father’s tenure – and should help the company keeping right on growing, though still at a very deliberate pace.

(The management team at TEI Manassas. From right to left: Al de Charleroy, sales manager; Dane Tice, service manager; Brett Hartman; Adam Harms, parts service manager; and Patti Deariso, office manager.)

“We’re not a mega-dealer – we’re not expanding by three or four locations a year,” he said. “When we open a location, we take our time and grow into it, keeping the focus on serving the customer.”

Brett points to TEI’s Chesapeake dealership as an example; a facility that struggled for a while, reaching just a measly 4.3% market share by 2002 until a crack team of employees moved in, re-focused the business, and drove market share up to 23% by 2006.

“Once we get customers believing in us and what we can do for them, that’s when we really shine,” he says.

“Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.” –President Herbert Hoover, from a speech given at Des Moines, Iowa, October 4, 1932

Scary, I know, quoting President Herbert Hoover at a time when our economy is lurching from crisis to crisis (NOT that we are in danger of repeating the Great Depression of the 1930s … though it really feels like it some days.) He also probably wouldn’t be considered the best person to draw fiscal wisdom from, either.

But as Professor Jerry Osteryoung with the college of business at Florida State University notes, Hoover hit on a very important linchpin for any company, whether you’re involved in trucking, retail, construction, etc. – you need a steady supply of credit to stay in operation.

Lines of credit, however, are getting hard to come by nowadays, as banks continue to reel from their extremely reckless mortgage lending patterns of the recent past. Even stalwart trucking clients are finding their credit lines cut short as banks scramble to increase available capital to cover their losses. Finding new sources of credit is tough, but not impossible, no matter what sector of the economy you’re in, as Professor Osteryoung explains:

“Financial institutions are in such a precarious position. With the economy slowing down and significant losses in their real estate portfolios, so many banks are cutting back credit to both new and established accounts.

With unknown losses from the sub-prime mortgage melt down still to come, plus the financial difficulties of Fannie Mae and Freddie Mac, it is not a good year for banks. With stock values declining by more than 40% and continuing to slide, many national, regional and local banks have taken a beating. The bottom line is that financial institutions are in trouble with both share price and regulators. Losses are going up and share prices are going down.

What is happening? Financial institutions have been incurring losses, and they just cannot afford to be exposed to any further losses. Banks operate on such thin margins, and because losses jeopardize the health of banks, the regulators and banking executives are being very cautious about lending any additional funds. They are even looking at existing loans as well.

We were helping a firm that had been banking at the same bank for over 15 years. This firm went to draw additional funds on their line of credit, and the bank said ‘No’ – a response that was clearly within their rights, but totally unexpected. This firm had to scramble to find another source of funding to help pay for its season increase in inventory. They are now looking for a new financial institution.

With so much happening in the financial world, each firm must protect its ability to acquire the funds it needs to operate. Firms in need of additional financing will find that there are three alternatives. First, they will get additional funding from their existing financial institution. Second, they will not get the funding they need from their financial institution and will find an alternative source of funding. Finally, they will not get the needed funding and will not be able to find alternative sources of financing.

Obviously, if your existing financial institution is willing to provide additional funding, then you really do not have a problem. However, if your existing financial institutions will not provide the necessary funding, you will have to look elsewhere. I believe that the best place to find replacement funding is local financial institutions. With the exception of Wells Fargo, big national banks are being hit hard and are just not willing to extend themselves. However, local financial institutions typically have much better financials than their national counterparts.

When hunting for local financial institutions, look for those that have the knowledge and experience to make business loans. You might get several turn downs, but you must persevere. SBA guaranteed loans, although more expensive, are another type of loan that local banks can offer. These loans reduce the bank’s risk.

If you cannot find an alternative source of funding, you will need to consider slowing down your business commensurate with the amount of financing that you have. While this is not pleasant, it may be necessary just to survive. Using a spreadsheet, you can easily model how much sales you can support with a fixed amount of debt. It really is worth going through this process.

Regardless of the level of funding you are able get, it is important to be prepared with a plan in the case that you are unable to get the required financing.”

Indeed, tough medicine to swallow, especially for the small trucking operators out there. But there’s not much one can do when the financial sector is in such upheaval.

As usual, you can reach Professor Jerry Osteryoung by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“Any plan imperfectly executed is better than no plan perfectly executed.” –Scott Sorrell

Business planning ain’t easy – trust me, I know. (Why do you think I became a writer for a living? Because I’m organized? Able to develop strategic plans? Use basic mathematics properly??? Hardly!!!)

Yet the key to business survival and (we all hope) eventual success comes down to strategy –how you get from here to there, generating the necessary revenues, profits, and cash flows to keep things in good working order. It’s the same mantra coffee shops, factories and (yes) truckers must follow.

As usual, Professor Jerry Osteryoung from the college of business at Florida State University has some thoughts on this subject, gleaned from years spent teaching and coaching a wide variety of business entrepreneurs. So I’m getting to let him share his ideas about strategic planning. Professor, the floor is yours:

“Over the last 13 years I have conducted over 100 strategic planning sessions for all different type and sizes of companies. Five years ago, I did a strategic planning session for one company that had some real organizational and profitability issues. This company wanted to meet with me recently to discuss their progress. During this meeting they showed me how they had passed every single one of their five-year goals. They were so proud of this effort and I was proud of them. Unfortunately, this company is unique as so many companies do strategic planning and then file them under ‘dust collectors.’

The point with strategic planning is that – while the planning process is important – even more important are the processes for implementing the plan and the processes to benchmark the plan against the actual results. Just having a plan is not good enough!

The firms that I have seen most successful with this implementation process are those firms who monitor how they are doing against the plan in their monthly meeting. If they are falling behind, they typically discuss what is holding them back and if the plan has to be revised, the corrective actions they are going to take.

One big stumbling block in the implementation of strategic planning is that strategic planning and budgeting decision are kept separate. The separation of these two functions almost always guarantees that there will not be adherence to the strategic plan. A far more effective process is to start any budgeting process with a review of the strategic plan and discussing how every expenditure must relate to the accomplishment of the plan.

When developing a strategic plan I always, work to ensure that the goals are quantitative and define how they are going to be measured. For example, if one of your goals is to expand into a new market, you would identify the target number of new customers per year from this market. The point being that the goals for any strategic plan must be measurable. Some of these measurements that you can use are typically, sales growth rate, profits, number of employees, market penetration, amount of debt, morale of organization, and community presence. Bottom line is that if you cannot measure it, then it generally is not an effective goal.

If strategic planning and implementation is going to be successful, then it must be communicated to all levels in the organization and not just the upper levels of management. Each and every employee needs to understand their role in achieving the goals and how these goals contribute to the success of the company. Once they understand this, your employees need to be informed on the progress towards the goals and how ‘their’ company is doing in achieving the strategic plan. This is critical to a successful implementation of the strategic plan.

Finally, it is important is recognize when the plan is no longer viable or operational. Strategic planning is more of an art than a science since the process requires you to predict the future. As we are all aware, it is difficult to foresee change especially in areas where we have no control like the shifts in the economy. This is why it is critical to constantly monitor your plan and adjust to the changing conditions. If the plan needs to be changed or trashed, then this must be done along with a new set of parameters to measure the success of this revised plan. This new plan then needs to be communicated to the staff along with an explanation for the changes.”

Professor Osteryoung is also the director of outreach for the Jim Moran Institute for Global Entrepreneurship within the college of business at Florida State University. He was the founding executive director of the Jim Moran Institute and served in that position from 1995 through this year. He can be reached by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“We cannot change the cards we are dealt, just how we play the hand.” – Randy Pausch, Carnegie Mellon professor and virtual reality innovator.

You’ve probably heard about Randy Pausch’s famous “Last Lecture,” given in September 2007 to a packed house at Carnegie Mellon University. The original concept for this lecture series proposed a singular challenge to leading thinkers in their respective fields: if you had only one last lecture to give, what would you talk about?

A great idea, for sure, but Pausch took it to a whole new level for a tragic reason: it really would be his last lecture, for he was dying of liver cancer when he gave it. And though he lived longer than the three to six months his doctors projected, the cancer did finally claim his life last week at age 47.

His talk, however, morphed way beyond merely a “last lecture” and became a sensation, viewed by over six million people via the Internet (at last, a great example of what this technological invention can do for good in the world). I’ve linked to it below so you can see it in its entirety: it’s about an hour and 16 minutes long and well worth your time.

OK, so why should truckers care about a lecture given by a dying professor entitled “Really Achieving Your Childhood Dreams,” a talk that doesn’t even touch on trucking industry issues?

Actually, managers and executives should get the most out of it, for a couple of reasons. For starters, only the first half of Pausch’s speech talks about how he achieved his childhood dreams – the other half is about how he helped OTHERS achieve theirs. He also took several things “off the table” in his words. “We’re not going to talk about things that are even more important than achieving your childhood dreams. We’re not going to talk about my wife; we’re not talking about my kids. Because I’m good, but I’m not good enough to talk about that,” he said at the beginning of his lecture.

A second one comes up when Pausch recalls going to Dean Gene Block’s office when he worked at the University of Virginia to see if he can take a sabbatical to work for Disney’s Imagineering group – one of Pausch’s childhood dreams. Pausch said that Block told him the following: “If you’re asking me if it’s a good idea, I don’t have very much information. All I know is that one of my star faculty members is in my office and he’s really excited … so tell me more.”

(The great Randy Pausch at the podium, delivering his “Last Lecture.”)

Throughout Pausch’s speech, the topic of “information” kept coming up – in terms of how the right information helped him achieve his dreams, allowed others to help him reach those dreams, and finally allowed him to in turn help his students achieve theirs.

Let’s face it: being a truck driver is still a childhood dream for many. I’ve talked to countless people, men and women from all walks of life, races, and creeds, that all dreamed about being a truck driver when they grew up.

But for many, it turns into a nightmare – low pay, long stretches of time spent away from family (note how Pausch said that family trumped childhood dreams every time), and disrespect from all corners. When a dream curdles like that, it’s toxic on so many levels. Yet the right information can helps fleets short circuit that transition from dream to nightmare, if the information gained is acted on appropriately.

Which leads me to Tenstreet, LLC, of Tulsa, OK. They recently launched Tenstreet Xtend, a system that’s designed to help establish effective communications channels between employees and management in order to quickly identify and correct issues/concerns that need immediate attention. In essence, it’s a retention tool that forces fleets to contact drivers at regular intervals throughout their career – every 30 or 90 days, for example – to make sure that if they have issues, those issues get addressed.

“It enables employees and drivers to feel more connected to their employers,” said Craig Johnson, CEO of Tenstreet, founded in 2005. “That, in turn, helps reduce driver turnover, builds driver loyalty, while giving fleets the opportunity to run their operations more profitably and efficiently with the best possible group of drivers.”

Johnson stresses this is particularly helpful during the first 90 days of a new driver’s hiring – a period in which most accidents occur and turnover rates are especially high. “It creates opportunities for fleets to identify and react to recurring issues even if those issues are specific to a given terminal, driver type or any other variation,” he says.

Dale Reagan, head of sales for Tenstreet, walked me through the program, which uses a specific “script” of questions to collect data that can used to track trends. For example, if drivers are having pay issues, the questions help winkle out the exact nature of them – late or missed payments, all miles not accounted for, etc. – so it can form reports from the data. As he cost of recruiting drivers is so high – some $5,000 to $8,000 per driver – technology like this helps fleets nip problems in the bud before they escalate to the point where the driver walks.

“The whole point is to change the driver experience,” Reagan told me. “Instead of them calling their dispatcher, then their recruiter, then payroll or the safety department, they get one contact who send the problem to the right person. And these problems must be addressed in a certain amount of time, or the system automatically sends emails to executives higher and higher up the chain of command.”

Basically, there’s no loafing with this technology – no more sticking a problem in a folder and forgetting about it. Melanie Ward, in charge of the new driver “help desk” at Tango Transport, has used Tenstreet Xtend over the last year and a half to help rebuild her company’s driver culture. So far, turnover has plunged from 139% to 87% since Tango began using the program to help improve management of its 700 company drivers as well as the owner-operators working for the carrier as well.

“It helps us validate the importance of the driver in our company,” she told me. “We’re not dealing in gray anymore when it comes to their issues – the system helps us find solutions to their problems and find them faster. I run a report on driver issues every week and share them with our executives, allowing us to take the temperature of the fleet any number of ways – by division (flatbed, OTR), by driver seniority, etc. – to see how we are doing.”

Tenstreet is but an example of some of the simple but brilliant ways technology is being applied to trucking to help this industry get the information necessary for keeping the dreams of driving a truck for a living alive and healthy, to the benefit of all concerned – especially those with their hands on the wheel and gearshift.

“I love this business and this industry … but we need help.” –Todd Staege, owner of trucking company TW Express Inc., Viroqua, WI.

Got a note from Todd Staege the other day, taking me to task for what he considers my off-base economic outlook where trucking is concerned. From where he sits with his company’s two trucks, things are bad and getting worse – a complaint echoed by many small carriers all over the U.S. He’s also of no mind to hear about the “tough times” at larger carriers like Con-way Inc. or Knight Transportation, either, for they are at least profitable and their executives haven’t been reduced to a hand-to-mouth existence.

“Sorry if that came across harsh. It is just so very frustrating hearing the woes of billion dollar companies when we are have to sell personal items (our car) just to keep fuel in the tanks of my two trucks,” he told me by email. “After paying expenses and the drivers there is nothing left – zero.”

Todd and his wife Wendy (That’s where the “TW” in TW Express comes from) are also extremely frustrated over diesel fuel prices – because, as the old saying goes, pump prices shoot up like a rocket but fall like a feather. “So if the price on the pump goes up in relation to price per barrel, why didn’t it drop 25 cents this week since oil dropped?” he asked me.

Freight rates are another huge issue with the price of diesel over $5 a gallon now across much of the U.S. “Check the rates on any of the boards,” Todd told me. “For example outbound to Denver is $1.15 per mile or so average. But it costs $1.60 to $1.70 per mile to run that truck down the road! I could go about this for days.”

According to the Owner-Operator Independent Drivers Association (OOIDA), fuel surcharges have long been the primary mechanism for trucking companies to respond to increased fuel costs – and now shippers are, of course, paying more in fuel surcharges to get their freight moved than they ever have before. But carriers – especially small ones – need that fuel surcharge to cover their most expensive operating costs, and it’s getting harder to get all of it.

“It’s all too common for middlemen in the trucking industry to push shippers to pay fuel surcharges, but only pass along a portion of those surcharges, or none at all, to the truckers who are actually transporting the goods and paying the fuel bill,” noted Todd Spencer, OOIDA’s executive VP, in comments earlier this year.

“Independent, small business truckers seldom deal directly with shipping customers,” he added. “Most of the freight loads they haul are acquired through third-party logistics companies or through larger trucking companies they are leased to as independent contractors. Mid-size trucking firms often have contracts with shippers for ‘front hauls,’ but depend entirely on brokers for ‘back hauls.’ That’s why small and mid-sized trucking firms that comprise the vast majority of the trucking industry have been particularly hard hit by record high diesel prices.”

Eddie Walker, president of Texas-based Best Used Trucks and president of the Used Truck Association, noted that high fuel prices are especially hard on the smaller fleets because they tend to run older, less fuel-efficient trucks.

“Years ago, if you were making $1 a mile, you were making some serious money,” he told me. “Today, if your truck gets around 5 mpg, you’re paying a $1 a mile in fuel to move that truck down the road. With costs like that, people don’t think they can make money in this business.”

(Eddie Walker is trying to find shippers that pay well for his used truck customers.)

As a result, Walker has added a new “trick” to has bag for getting folks to buy trucks from him – finding his customers shippers that pass along the full fuel surcharge. “You can still make money in this business if you get the full fuel surcharge, so I am out looking for shippers doing that – basically finding places for my customers to go to work,” he told me.

Back at TW Express, one other thing bothers Todd Staege to no end – the housing crisis. How is it, he contends, that people overextended on their mortgage are getting help, but small business owners like him are getting left out in the cold?

“When I hear of the housing bailout for people not smart enough to realize they can’t afford a $500,000 house making 40k a year, yet millions of hard working Americans running their businesses are forced out for no real reason except high fuel costs, I know I’m in the wrong business.”

In the end, Staege wanted me to understand one simple thing: It’s tough and getting tougher for smaller carriers out there … and somebody better start thinking of ways to help them survive, and do it soon.

“Throw away those books and cassettes on inspirational leadership. Send those consultants packing. Know your job, set a good example for the people under you and put results over politics. That’s all the charisma you’ll really need to succeed.” –Dyan Machan

This really isn’t anything new, is it? I mean, in any field of endeavor – military, science, business, and, yes, trucking – leading by example is pretty much the first and last rule of management. It’s a principle as old as the history books – if not older.

Yet here we are, again mired in economic malaise brought on in large part by poor leadership in the business community – by investment banks, mortgage lenders, and numerous others whose executives aimed for big profits and stock prices while putting customers, shareholders, and employees at great risk.

Professor Jerry Osteryoung from the college of business at Florida State University has some thoughts on the subject of business leadership, so I’m going to let him share those with you.

Professor, the floor is yours:

“About three years ago I was taking some entrepreneurs visiting from Russia to Southeast Toyota’s new auto processing center in Jacksonville, FL. This facility is very large, and the majority of Toyotas for the southeast come through this operation.

The general manager of the facility was giving us a tour, and we had to walk from one large building to another. Several times during this walk, the general manager stopped and picked up pieces of paper that he saw on the ground. Now, the facility was ultra clean, but this action spoke volumes about the manager’s ability to lead by example. By this simple gesture, the general manager was saying, ‘I want this facility to be clean, and I am willing to do what is necessary to make this happen.’

Many centuries ago I was working as an engineer for General Telephone in Tampa, FL. There was about to be a strike by the labor union, and they were asking for volunteers from among the management and engineering staff to learn how to climb poles and repair telephone lines. My boss was the first to volunteer, and this really showed me his leadership skills and his commitment to the business.

Examples like these demonstrate leadership not by words, but by actions. However, this can easily be taken too far.

We are currently working with an entrepreneur who was trying to show his staff that in these lean times, he was really going to step up to the plate. He decided to let the building maintenance service go and do the work himself. He truly felt that this action would motivate his staff by demonstrating his willingness to pitch in and help out.

For the last three months, he has gotten up every Saturday morning, driven to the office and spent the day doing the cleanup. He really felt that this was a great way to show the staff that these cuts were serious and that he was willing to do his share.

In this case, however, the entrepreneur had crossed the line from good leadership to questionable leadership. While some of his staff is aware of his efforts, most have remained unaware (until they read this column, that is). However, even if his entire staff does know that he has been doing all the physical work, from empting the trash to cleaning the bathrooms, it is not the image that a staff needs to have of their leader.

In this case, you should be careful not to cross the line. Leadership by example is such an important concept, but it can be taken too far.”

You can reach Professor Osteryoung by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.” –Nelson Mandela

Here’s another one of those topics you don’t want to touch with a 10-foot pole: dealing with bad employees. In trucking, however, we should note that doesn’t mean just drivers. We’re talking about dispatchers, safety managers, etc. – anyone in the carrier’s organization, even top level executives, can be a bad employee and make things grim. For it’s important not forget the old Army saying: that there are no bad units, only bad leaders – meaning many personnel problems start at the very top of an organization, not the bottom.

With that in mind, professor Jerry Osteryoung with the college of business at Florida State University has some thoughts on how to deal with bad employees – and, more importantly, how to define the term “bad employee” from the start. His advice covers mainly office-bound workers and so doesn’t necessarily translate to this industry. One thing’s for sure, though – the old adage “one bad apple ruins the whole barrel” really still applies these days. I’ll let Professor Osteryoung take it from here: Professor, the floor is yours:

“In a recent newspaper, there was a full-page ad by CareerBuilder.com that simply said ‘Bad employees have a way of making good employees bad!’ Of course, CareerBuilder’s ultimate motive was to get employers to use their site to find workers; however, their message could not have been more perfect. Badly behaved workers are, in fact, a contagious disease. If you ignore the bad behavior, it will infect the whole body and eventually destroy it.

The question that most entrepreneurs and managers have is, ‘What is a bad employee?’ This is often a complicated question to answer as one size does not fit all. For instance, some might say a bad employee is one who just does not achieve the required goals. However, with this kind of non-achiever, it is pretty easy to identify the problem and then develop a plan to ensure that the employee meets the goals.

Employees with bad attitudes are frequently the most difficult to judge. Generally, these employees do an adequate job, but they inject poison into the entire organization destroying morale. In cases like these, it is hard to zero in on what is wrong, but it is obvious that the employee is not right for the organization.

Other typical problems are workers who always come in late and workers who harass their colleagues. In these cases, your gut reaction is probably the best indicator. The bottom line is that there is a myriad of traits that can indicate a problem worker.

Many entrepreneurs leave the problem employee alone, simply hoping that the behavior will go away, because they just do not know what to do. However, if ignored, the problem will fester and grow until the entrepreneur can no longer deny it. At this point, the entrepreneur will be forced to take action.

In many cases, though, bad employees do not have to become or remain bad employees. By far, the best thing you can do when you recognize that there is an issue with an employee is sit them down and clearly explain why their behavior is a problem. Often it just has not occurred to the employee that their conduct is harming the organization and their colleagues. On countless occasions I have seen this simple step stop the problem from developing further.

Another method that works with problem employees is assigning them a mentor to coach them through their work issues. The mentor must clearly understand the employee’s issues and the goals you are aiming for.

Additional training frequently works for employees whose behavior cannot be corrected quickly. Sometimes when in a group training session, the light just goes on, and an employee is able to correct their behavior. Examples where this type of training can be helpful are harassment issues and conflict resolution.

If the problem is severe enough to warrant punishment, the penalty should be customized to the employee as well as to the infraction. For example, if an employee is frequently out on sick leave on Fridays, you must first tell them that the behavior is unacceptable. Secondly, you must tell them what the punishment will be if the behavior continues. Finally, you must document every behavioral issue that you deal with.

Bottom line: before you allow an employee’s bad behavior to turn them into a bad employee, you need to take the necessary steps to see if it can be corrected. So often conduct can be changed easily if you just take the time to address it squarely.”

As usual, you can reach Professor Jerry Osteryoung by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“In today’s dynamic global business environment with enhanced technologies and vastly extended supply chains, companies are often confused by the many logistics options available to them.” –John Fitzgerald, vice president of global sales & marketing for Seko Worldwide

Competing in the transportation and logistics market today has never been tougher. That’s why it pays to try and find ways to peek into the minds of your customers — the shipper — to figure out what their needs are when it comes to handling their freight needs.

Truckers especially need all the insight they can get – both for-hire and private fleets alike – because trucking gets increasingly marginalized in the global freight world of today, viewed many times as a commodity rather than a valuable service.

(Photos courtesy of Seko Worldwide.)

Third party logistics firms are but one of many entities that’ve reshaped the freight world since trucking got deregulated back in 1980. These companies – referred to by the slick acronym ‘3PLs’ – carved out some valuable real estate in global freight markets by offering shippers a chance to transfer transportation management to their shoulders. Many big trucking companies now offer logistics divisions now as well, to make sure they can give their customers the same freight management options as the 3PLs, while preserving – if not increasing – volumes from their customer base.

John Fitzgerald, vice president of global sales & marketing for Itasca, IL-based 3PL Seko Worldwide, recently put together a neat one-page guide to help shippers figure out if outsourcing their transportation and logistics functions might be a wise move to make. Truckers should read this over, for it’ll give you an idea about some of the issues shippers are facing as they try to maintain efficient supply chains despite higher fuel prices and increased scrutiny of cross-border freight.

(John Fitzgerald’s advice for shippers provides good intel for truckers too.)

“While outsourcing of supply chain services is still increasing despite the weakened economy, the decision for a company to outsource to third party logistics providers is not an all or nothing proposition, and requires an in-depth evaluation of its entire supply chain process,” says Fitzgerald.

“Before making a decision on how to best implement a supply chain management process, companies should evaluate their own cultural alignment, core competencies and business capabilities,” he notes. “A company’s cultural alignment and cross-departmental capabilities, especially as they relate to technology, will provide the seminal factors in determining whether it should keep supply chain management services in-house, outsource them to a third party logistics provider, or employ a combination of both.”

Fitzgerald suggests six paradigms that shippers should abide by when making an outsourcing decision:

Determine the State of Your WMS System. How state-of-the art is the WMS [warehouse management service] system you have in place? If your company is consistently out-of-stock with finished products for your customers, your in-house system probably does not have the IT [information technology] capabilities to avoid poor lead times and missed shipments for your customers. You need to outsource or lose customers. If, on the other hand, your company has the wherewithal to provide the proper implementation of an enhanced and robust IT infrastructure, you may be able to realize cost-savings and efficiencies by avoiding the need to outsource your logistics functions.

Take a Good Look at Your Production Facilities. If you find that your production facilities are down for long periods of time and your logistics operations are not flexible enough to meet the requirements of after-hours deliveries and expedited service, you may have no choice but to pay the extra costs by outsourcing your logistics process on top of paying for large overhead for an inflexible logistics operation. If your in-house logistics operation is already funded as a core competency, however, you may already have a competitive edge. Flexibility is the key here.

Evaluate Your Delivery Date Success. If the targeted dates for your time-sensitive product launches are not consistently being met, it is a good indication your internal staffing and facility capacity cannot keep up with your customer demand. Your company probably requires the assistance of a 3PL. If, on the other hand, your company properly funds your logistics department and you are already an industry leader in supply chain efficiency and service, you are probably realizing economies of scale with regards to your warehouses, fleets etc., and can probably maintain these operations in-house.

Assess Your Overhead and Fixed Logistics Costs. If these expenses are squeezing your bottom line, you may realize virtually instant savings by consolidating your warehouse operations with a “shared” facility operated by a 3PL. This can enable you to move fixed costs to a variable expense, which provides flexibility in responding to market dynamics. If your company culture includes logistics as a driving force in your overall operations, you can probably adequately leverage these expenses in-house.

Examine Your Company’s IT Capabilities. If your in-house technology is unable to adapt to your growing supply chain needs, you should consider outsourcing your company’s logistics data and integrating it with that of a 3PL that specializes in customized supply chain solutions. Rather than waiting years for a new system to be developed internally, you may find that outsourcing both the technology and logistics process to a suitable 3PL will generate cost savings, while expediting the supply chain. On the flip side, if your company fully understands the entire supply chain process and how it fits with your core competencies, you may already possess the in-house ability to optimize your supply chain management procedures.

Evaluate Your Company’s Customs Compliance Readiness. With the implementation of the Customs Modernization Act, compliance assessments and audits became widely used as a tool to maximize compliance and provide uniformity. Regular assessment of import compliance processes and procedures require an evaluation of the overall effectiveness of the Customs Compliance Program, employee education and training programs, and operating procedures. If your company is unable to develop compliance and cost goals, formal policies, training programs, internal revenues and supplier compliance programs, the selection of a suitable 3PL to provide the required skill sets to establish a process-based compliance function is critical.

“Ultimately, following an in-depth evaluation of the entire supply chain process, many companies find that including a mix of in-house and outsourced logistics functions may provide the best solution for them,” says Fitzgerald. “In a global economy, where there is no set criterion for supply chain success, companies have to carefully analyze their requirements and determine what logistics processes are best suited to meeting their specific and unique global distribution needs.”

Here’s the clincher, one that truckers need to pay attention to: “Cost is always important, but ultimately the success of any global supply chain management process relates back to client satisfaction as a means of achieving customer focus and growth in market share,” says Fitzgerald.

So not only are we talking about meeting the shipper’s needs here, were talking about how meeting their needs helps the shipper meet THEIR customer’s needs – be it the grocery store shopper, clothes buyer, etc. Understand the supply chain issues and you may get a key or two for unlocking the concerns shippers have about it in the back of their minds. That in turn may give you an opening to bring new solutions to the table and thus win you more business. For in these rough and tumble economic times, finding ways to drum up and keep more business is vital to survival.

“Painting in watercolor is like walking a tight rope; one must achieve a perfect balance between what the paint wants to do and what the artist wants to do, or all is lost.” –Mary C. Taylor

It can’t just be about the money. That’s the conclusion reached by Professor Jerry Osteryoung from the college of business at Florida State University.

Over the many years of a career teaching a wide variety of business courses, he’s come to believe that business owners cannot just focus on making money to the exclusion of everything else; that, in his mind, is a recipe for eventual disaster.

Osteryoung isn’t out on the fringe on this one, either, as any recent glance at the business community in this country can tell you. Enron? WorldCom? Countrywide? Bear Sterns? All undone by pure naked greed – an all-consuming desire to generate hefty profits at the expense of just about everything and everyone else.

Of course, as many have told me more than once (usually with a wry laugh), you can’t focus exclusively on making money in trucking because there IS no money to be made it trucking. I mean, an industry with a profit margin hovering around 5% – if you’re lucky – doesn’t attract the kind of speculators now making hash out of the petroleum markets.

Yet trucking is a vital cog in out nation’s economy, carrying 70% of all U.S. freight tonnage. Despite that critical profile, most drivers in this industry – especially on the long haul, for-hire side of the ledger – must work long hours (a 14 hour day) for an overage five figure annual pay that fluctuates depending on mileage and keeps them away from home for days if not weeks at a time. Not exactly a winning combination.

Yet most drivers and others involved in trucking don’t do it for the money – they work in this business because they love it on some level. And successful carriers – small and large – stay afloat in this business by treating drivers and the rest of their employees justly – irrespective of the money. That’s the key, Professor Osteryoung believes, for a business to sustain itself for the long haul. Here’s why, in his own words:

“When I was in classes getting my Ph.D. in finance, my professors told me over and over, ‘the purpose of a business is to make money for its owners.’ Unfortunately, I cannot tell you how many times I repeated this mantra to my students over the years. Now, however, I have a very different opinion on the subject.

A firm cannot stay in business just to make money for its owners at the exclusion of everything or everyone else. If an entrepreneur takes the attitude that he or she deserves to make all of the money, the business will suffer and will most likely crash and burn. Just consider who stands to lose the most when a business fails.

Some folks – my former professors included – would argue that the owners lose the most since they have the most at risk. There is no question in my mind that entrepreneurs lose a bunch as they generally have the most invested in terms of dollar amount. They are not; however, the ones hurt the most by a business failure. A business closing is devastating to the employees.

Employees are one of the many entities that have a vested interest in a business’ success. In addition to owners, stakeholders such as employees, vendors, banks and customers have so much tied up in a business. They are vitally concerned with the firm’s well being and will put forth much effort to ensure its success. However, success is impossible unless all of the stakeholders are taken care of.

When a business fails all of the stakeholders suffer. Take for example a financial institution. A financial institution risks much of its depositors’ funds to support a business, and if the company fails, its own financial performance suffers.

If employees are not treated reasonably, the whole business will suffer as both the quality and quantity of work declines. So many entrepreneurs forget how important each and every employee is to the success of the business, and they often fail to treat employees well. If the business should fail, these employees are the ones that are going to pay a very high cost.

My colleague and I recently assisted an entrepreneur who had been operating a business with over 50 employees for a very long time. The business was losing hundreds of thousands of dollars each month, and we tried to give the entrepreneur the resources he needed to turn things around. When the situation failed to improve, we realized that there was only one alternative left: he had to close the business and file for bankruptcy.

Telling this entrepreneur that closing the business’ doors was the best course of action was, by far, one of the hardest things I ever had to do in this job. What made it so hard was not that we had to give the entrepreneur this bad news, but because we knew what a loss it would be for all of the stakeholders, particularly the employees. Through no fault of their own, the staff would lose their jobs.

In my opinion, the purpose of a business is to serve the stakeholders. Businesses must earn money to acquire additional funds and assets, but its staff and other stakeholders are vital contributors to this endeavor. The key is to balance and deliver on the needs of all the stakeholders.”

As usual, Professor Osteryoung puts some interesting thoughts on he table for consideration. You can always reach him by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.