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Business Research Reduce Cost and Increase Profit

Adali Cantu

Department of Org. Leadership, South Texas College

ORGL -3321- KV2: Data Driven Decision Making

Dr. Maricela G. Silva

March 1st, 2022

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Business Research Reduce Cost and Increase Profit

Introduction

Every company aims to be successful in their respective industry while making a profit.
For a company to be successful, it needs to evolve, adapt to changing times, embrace new ways
of working to stay competitive. In addition, keeping operating costs low, creating a culture that
focuses on the employees' and customers' needs can certainly lead to increased productivity and
growth. Technology has provided us with convenience, it has changed the way customers shop,
it brought the shopping experience to your fingertips via mobile devices and laptops, and you no
longer must go into a store to shop. The pandemic only increased the need to shop online as
many retailers closed in efforts to slow down the spread COVID-19.

Hypothesis

This convenience has led to a demand for an increase of goods needing to be hauled,
making the trucking industry an indispensable factor to suppliers, impacting the trucking
companies, creating a competition, placing more pressure on short delivery times, increased
truck deliveries, the shortage of truck drivers and overall company performance.

Literature Review

Hiring gap between large, small trucking companies poses challenges.

Shipping organizations of all sizes have one normal protest: It is progressively hard to
recruit drivers. There is much discussion with respect to why that is thus, and regardless of
whether this issue comprises a valid "lack" of drivers (JoC Online, 2021).

How Does Driver Turnover Affect Motor Carrier Safety Performance and What Can
Managers Do About It?

A major challenge facing the motor carrier industry is the high driver turnover and motor
carrier safety performance. These two mechanisms can negatively impact the business by
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disrupting operations due to poor safety performance and reducing revenue for the company
(Miller, 2017).

Top 50 Trucking Companies: The STRONG get STRONGER

The best operators in the truck industry say, “the pandemic has been “transformative, if
you have survived. The key to success is flexibility, being strategic and motivating your people.
We change everything we did and how we did it was overnight.” (Shultz,2021).

Power of stay interviews for engagement and retention

A stay interview is a structured discussion a leader conducts with each employee to learn
the specific action she must take to strengthen that employee’s engagement and retention with
the organization. This process does three things that surveys do not. They bring information that
they can use today, they give insights for engaging and retaining individual employees, including
top performers, and they put managers in the solution seat for developing individual stay plans
(Finnegan,2018).

Methodology

Speedy Transport is one of many companies which hauls dry goods, such as watermelon,
citrus, furniture using 53’ dry vans. However, the competitiveness within the trucking industry
and employee turnover has led to a decrease in profitability. Some key focuses for the company

would be to collect qualitative and quantitative data using the following methods: customer
accounts, company truck asset inventory, truck maintenance report, truckload volume report,
contract rates/ cost per mile, profit and loss statements, accident/safety violation reports,
employee paid time off reports, employee listing with compensation rates, employee schedules,
online or telephone, in person interviews, surveys, physical observations, system reports. The
targeted participants or respondents for surveys and interviews should include customers,
suppliers, and employees.
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As data is being collected by Speedy Transport, some of the questions that the company
should ask are: What are the company’s higher expenses? What accounts are the most profitable?
What accounts are less profitable? How do company contract rates/ cost per mile compare to the
competition? What is triggering turnover? Are employees allowed paid time off? What does the
new employee Onboarding Orientation / Training look like? Is the company offering a
competitive salary and benefit package? How do we improve employee experience to drive
retention efforts? All qualitative and quantitative data should be stored for the duration of the
research process and is contingent on how the data will be utilized. Data should be stored within
the company’s database, doing so will allow the data to be collected, managed, stored for data
analysis to share and/or for reporting purposes.

In efforts to reduce costs and increase company profits, it is recommended that all
quantitative and qualitative data drive financial profits or other financial expenditures that
significantly impact the bottom line to be tracked and collected. This information can be pulled
from the profit and loss statement and/or company general journal accounts or any system
reports available, or market research. Fixed cost, variable cost, load volume, contract rates,
market share, customer satisfaction, revenue and turnover data should be tracked and collected.
Moreover, it is important that the following KPIs be analyzed and monitored:

Revenue: This measures the amount of money generated from the sale of a company’s
goods or services.

Fixed Cost: These are costs that are independent of volume. The expenses remain the
same for a specific length of time and do not change with an increase or decrease in volume of
the business. Examples of fixed costs are rent or lease costs, truck payments, insurance, plates,
permits, salaries, utility bills, loans, etc.

Variable Cost Expenses: This is a cost that varies in relation to volume, or the amount
of services provided. IF no services are provided, then there should not be any variable costs.
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Examples of variable costs are fuel, maintenance, repairs, tolls, credit card fees, direct labor,
accident costs, safety fees, etc.

Gross profit: This measures the profit a business makes after subtracting all the costs

that are related to selling its products or services from revenue. You can calculate gross profit by
deducting the cost of goods sold (COGS) from your total revenue.

Net profit: This measures the amount of money your business earns after deducting all
operating, interest, and tax expenses over a period. To arrive at this value, you would need to
know the company’s gross profit. You can calculate by taking your revenue deduct gross profit
should give you net profit. If the value of net profit is negative, then it is called net loss.

Contract Rates: A contract rate is the rate the motor carrier, freight broker or logistics
service provider agrees to move a shipper’s freight for a set lane and its freight characteristics

over a period. Rates typically are set for one year. It is recommended to conduct market research
to determine how your company compares to the competitor within the areas you service.

Customer satisfaction: This measures the quality of the service you provide to your
customers. This is perception based and a reflection of how the public views your business. It is
important to understand the customer base within the areas you serve and to pay attention to the
customers that have been with you the longest. Positive feedback can certainly lead to future
business by promoting it by word-of-mouth recommendation. In contrast it can also be
detrimental to the business when unsatisfied customers share their experience of the service
received by your company. Data can be collected through paper or application surveys,
interviews, phone calls and should be stored in the company’s database for the duration of the
research process or until it has been determined how this data will be utilized.

The strategy recommended to improve turnover and encourage employee retention is to

foster positive interaction and inclusiveness within the company. Leadership is encouraged to
acknowledge the opportunity and explain how this is impacting business, or brand to its
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shareholders, leadership and the employees that remain. The company is encouraged to be
flexible, strategic thinkers, and motivate its employees in ways that will enhance the employee
experience and make them an employer of choice. It is recommended to collect all employee
compensation and benefits data, paid time off, employee turnover, scheduling reports. It would
also be recommended to conduct market research to determine if the current employee
compensation rate is comparable to the competitors within your area. In addition, review existing
new hire training plans or create a training program to include not only basic training of
administrative processes and procedures, but by incorporating communication styles, address
cultural differences and how they impact them at work. Most importantly carrier safety and
maintenance protocols.

Investing in proper training on the front side can pay off eventually as it equips them with
knowledge, creates ownership and commitment to the company. This can make drivers feel
confident about their job responsibilities before they go off on their own assignments, lengthen
employee tenure and generate a cost savings for the company. This recommendation can be
implemented by a new hire orientation led by a leader of the organization that can be the subject
matter expert, a resource to the new employees that can make employees feel welcome. This
training should consist of a four -week training program and progress can be monitored through
pulse surveys at 7 days, 14 days (about 2 weeks), 30days (about 4 and a half weeks), 60 days
(about 2 months) after they are hired and have completed their new hire orientation.
Furthermore, leaders or supervisors are recommended to conduct stay interviews with employees
in active status within the company. This data can provide feedback on the employee’s work
experience within those timeframes and can be used to determine the next steps. Leadership must
engage all employees of the business and should be involved with the full cycle of every
employee. The time invested to observe, listen, and learn along with the resources to retain
employees will be critical to monitor progress and create ownership within the team and those
that play a key part in this process.
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Findings

Company leadership and all those that need should be provided with the findings of the
research as they are initiating this project to develop a strategy to improve the overall financial

state and performance of Speedy Transport. It is important to understand that collecting the data
should be based on the questions defined, setting measurement priorities, and analyzing data
once it has been collected. Once the research has been conducted and the data collected and
analyzed, results are interpreted. At this step actual value is gained from the previous steps taken
in this process, data analysis is interpreted and validated. This step consists of running statistics,
answering questions, testing the hypothesis, and preparing a report. Some recommendations
based on findings may include decisions focusing on profitable accounts, increasing, or
negotiating contract rates, nurturing long standing customer partnerships, and gaining market
share based on customer survey results, by finding new suppliers, investing on the employees by
creating an environment that demonstrates the value to their contribution through compensation,
benefits, and training.

Conclusion

Lastly, it is recommended that a business research report be prepared and made available
to leadership and those that need to know. The report should include the nature of the data, an
abstract of the research done, an introduction to the report, a discussion of the experiment or

methods used to the information, the results of the research, discussion of the changes that need
to be made and a conclusion that sums up the report to its entirety. The research report should
also include graphs and charts to the findings section to provide visual content to make data easy
to digest for the targeted audience and be able to examine the results of KPIs, surveys and trend
analysis. Based on the findings and recommendations of the research, Speedy Transport can
make some decisions that will allow the company to achieve their business goals such as
improving turnover, reducing cost, and driving profitability.
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References

Finnegan, R. P. (2018). The Power of Stay Interviews for Engagement and Retention: Second
Edition: Vol. Second edition. Society For Human Resource Management.

https://eds-p-ebscohost-com.ezproxy.southtexascolledge.edu

JoC Online, N.PAG. (2021) Hiring gap between large, small trucking companies poses

challenges. Article. https://eds-p-ebscohost-com.ezproxy.southtexascollege.edu

Miller, J. W., Saldanha, J. P., Rungtusanatham, M., & Knemeyer, M. (2017). How Does Driver

Turnover Affect Motor Carrier Safety Performance and What Can Managers Do About It?

Journal of Business Logistics, 38(3), 197–216.

https://doi-org.ezproxy.southtexascollege.edu

SCHULZ, J. D. (2021, April). Top 50 Trucking Companies: The STRONG get STRONGER:

The top carriers learned how to adapt, improvise, and improve over the pandemic-

dominated year. While harmful for some, the situation has proven to be transformative

for others. Here are the secrets of how top carriers are staying ahead of the pack.

Logistic Management, 60(4), 46–53.

https://eds-p-ebscohost-com.ezproxy.southtexascollege.edu