I constantly remind managers: “If you want better performance, you have to make better decisions!”
The first step is to make sure you know what decisions you are making (and of course you have to understand what metrics you are trying to improve).
A “decision” refers to anything that is directly controlled by the company at some level in the organization. In truckload trucking, decisions might include:
Physical decisions:
- Choosing the load to assign to a driver (or the driver to assign to a load).
- Whether to accept a load for the asset-based fleet or the brokerage division.
- How many drivers to domicile at each location, and what type (local, regional, OTR, company vs. owner operator).
- How many tractors and trailers to own?
- What lanes to bid on, and at what price?
Financial decisions:
- How much to keep in cash reserves or longer-term investments? Should the company have a line-of-credit to protect against downturns?
- How much insurance to hold to protect against lawsuits from accidents?
Informational decisions:
- How much to spend on social-media advertising (and which outlets to use)?
- Whether to hire a consulting firm to perform a study?
- Whether to invest in a new TMS system?
These decisions range from very real-time operations to longer-term strategic planning.
Next is to pick the decisions with the biggest impact on the metrics you are targeting.
Read Part 4 on Risk Metrics.