INCENTIVES Raise Revenue
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By Alan Smith, F.R.S.A. KEYNOTE of the operations of J. Spurting, Ltd., Peel Grove, London, E.2, described in my article published last week, is the attainment of efficiency through close control and the exploitation of articulated vehicles. Mr. C. J. Palmer, managing director, praises the keenness and high standards of courtesy of his staff. When a profit-sharing scheme was introduced two years ago its benefits to the company as a whole were quickly apparent in a sharp rise in revenue.
It is designed to increase the earnings of all vehicles, reduce vehicle accidents and prevent damage to or loss of goods in transit, and maintain happy customer relationships. For each type of vehicle a target revenue is set and drivers are paid a quarter of the amount by which the target is exceeded.
The gross sum is divided to make an allotment per turn worked. If a driver works a full week of 11 turns—six mornings and five afternoons—he will gain the maximum bonus.
Amounts paid to drivers vary between 10s. and £2 a week. If rates have to be increased because of higher costs, there is an adjustment in the target figure for earnings. In addition, other members of the staff are paid commissions as incentives to efficiency.
The engineer, for example, is allowed a revenue for the maintenance of the vehicles based on mileage covered. Some outside repairs are contracted by Spurling, and earnings from these are added to the allowance.
The engineer is paid a commission each month when the total revenue allocated exceeds the amount aidually spent on maintenance. This system is not open to the criticism that an The company have 20,000 sq. ft. of warehousing space at their Peel Grove headquarters. Here a Bedford lorry can be seen being loaded at these premises.
executive so remunerated may skimp repair work, for were he to do this there would in a future year be a heavy outlay on premature overhauls, and his overall commission receipts would be lower than if he had followed a wise course.
Three fitters, a painter, a carpenter and an electrician, are paid well on time rates. There is no incentive payment system for them because of the danger of sacrificing quality of workmanship for quantity of work. Each vehicle has a servicing card to indicate times when inspection and attention are necessary.
Duckham's Q5500 and Chevron 20/50 multi-grade oils are used. Engine oils of petrol vehicles are changed at 4,000 miles and of oilers at 2,000 miles. Use of a multi-grade oil has been found to overcome bearing trouble that was experienced with one type of engine, but its effects in extending cylinder-bore life cannot yet be judged.
Vehicles which cover small mileages are serviced monthly. Repairs are done on the driver-warning basis and are attended to immediately on complaint.
A stock of replacement components is kept in the workshops, where equipment includes a Dellow injector tester, a Zingl tyre regroover, a coldsolvent degreasing bath and gas and electric welding plant. There are pits and overhead tackle, and specimen times for the performance of various overhaul jobs include the replacement of the engine, gearbox and radiator of a Bedford within 5 hours, a clutch 1+ hours, a differential 2 hours, and a pair of king pins and bushes 3 hours.
All repair, replacement and overhaul work is coded. The different parts of the vehicle are denoted alphabetically. A stands for engine, B transmission, C brakes, and so on. Al denotes an engine change, A2 the fitting of new pistons, rings and shell bearings, and A3 a change of cylinder head.
The company prefer to rebuild engines in their own workshops, and reconditioned units are run in on a test bench for 20 hours and made ready-tuned for installation
when required. Redex is used as a sump lubricant during the running-in process. It is also employed as a 1-per-cent. additive to oil fuel and basic grade petrol.
Each vehicle's maintenance record shows the time involved for the pertormance of different jobs and their cost. A quick glance at the coded jobs on an annual record can reveal whether a particular task recurred excessively frequently, and the costper-mile figure can be compared between different types of vehicle.
Costing of the fleet is detailed, each vehicle having a weekly expense analysis so that the management can see which loads are profitable. The analysis for any week is in the hands of top executives by theTuesday of the following week.
Depredation Periods One side of the record shows revenue earned and the other side money spent or allowed. Depreciation of petrol vehicles is spread over four years, light oilers five years, and heavy oilers seven to 12 years, according to type and make.
A time basis is acceptable, because mileages covered are regular throughout the year. (This is also a factor which permits the practicability of the incentive-bonus scheme.) Depreciation allotment s are grouped for petrol, oil-engined and contract vehicles separately, and then divided according to payload capacity among the individual vehicles in each group. By this method, a 5-ton petrol vehicle bears half the depreciation allotment of a 10-ton petrol vehicle, and oilers compare similarly among each other, but a 5-ton petrol lorry and an oiler of the same capacity would have different allotments.
Care is apparent in the company's allotment of miscellaneous expenses. Tarpaulin costs, for example, are spread according to carrying capacity, because a large vehich requires more or bigger sheets than a smaller. Holiday pay allowances are, however, allotted equally.
Administrative overheads of the company are apportioned between departments. The allotment for the fleet is divided, one half being equally spread over vehicles as units, and the other half according to payload. The results of this method are considered to be more realistic than a simple unit or capacity method alone would provide.
Mileage allocations for fuel and repairs are checked each month, and monthly figures are subject to another check every half-year. To assess tyre costs, stocks are checked over a period and their value calculated. This is found, to be more simple than attempting to cost each individual tyre, a process which would be complicated because of the interchange of tyres among vehicles.
Premium tyres are preferred because it is possible to extend their life by regrooving when the original pattern is worn away. On a rigid vehicle. tyre life averages 35,000 miles and 7.00-20 tyres on a tractor may last 20,000-26,000 miles, and on a semi-trailer 50,000 miles. As is to be expected on London work, wear of tyre walls frequently determines the end of tyre life rather than tread wear.
For every £100 spent by the company in connection with their road transport activities, £36 goes on overheads, licensing and insurance, £35 on wages, overtime and allied expenses, £20 on fuel, and £9 on repairs and tyres. These figures may be compared with those of operators whose vehicles are engaged on longdistance work, and more likely to incur higher expenditure upon fuel, repairs and tyres.
Other directions in which outlay occurs are payments by which the company equal disbursements made from the staff's own sick club, and an endowment scheme for the retirement of drivers at the age of 60. There is close liaison between drivers and management at works committee meetings. Also, staff social events are well supported by the company.
Turnover of driving staff is low and this promotes the maintenance of a keen spirit among the members of this old-established concern.