How Horley helps cut competitors' costs
Page 46
Page 47
If you've noticed an error in this article please click here to report it so we can fix it.
THE EVER-upward spiral of road transport costs has forced some small own-account operators to branch out into the hire and reward sector — particularly on backloads — to use their fleets to the maximum. Many hire and reward hauliers faced with this new competition are quick to point out, however, that the rates offered by some of these own-account cornpanies are too low to be profitable.
So do these small ownaccount operators really have a precise idea of their operating costs, or doet; the manufacturing interest overshadow the transport outgoing!? How many include vehicle leasing or finance costs or building rents and rates as well as administration in their backload quotes, particularly if they are already budgeted within the manufacturing operation?
One company which specialises in analysing the costs of small own-account fleets is Consultran — part of the Horley Services Group which runs over 80 commercial vehicles between its hire and reward haulage subsidiary Harley Road Services and its contract hire division Kaymat.
Consuitran's director lain Mays is typical of the 'next generation' of managers developing new technology within family road transport businesses. Before joining his father, Victor Mays, at Harley Services he completed a master's degree in management sciences at London University's Imperial College where he gained his extensive experience of computers. Hiis family tie-up with Horley Services Group also provided the background material for his degree thesis — cashflow forecasting in road transport.
After graduating in 1976 lain Mays returned to Horley Services Group based near Redhill, where he began working with the company's outdated Olivetti computer. Though reliable, the Olivetti had a small storage capacity and was taking too long to produce data — up to one-and-a-half days just to run the company's payroll program, for instance = so he began looking around for suitable replacements that could expand with the company and provide more rapid, accurate Information.
The replacement system based on an IBM series 5110 was installed in 1978, lain Mays spent a year writing and designing the programs for Harley Services including vehicle coatings, maintenance records and the revised payroll, which was reduced to a oneand-a-half-hour run.
It was during this period that Consultran was conceived. Having been heavily involved with preparing job quotations and rates for Horley Road Services and Kaymat, and being in close contact with other operators, lain Mays found that many of the smaller own-account companies he talked to had little idea of their costs, particularly when quoting for work.
Among the important cost centres forgotten, according to Mr Mays, were vehicle finance charges, interest rates, licensing and insurance charges, fuel storage and purchase. "Some of them look at jobs marginally, particularly return loads, and have no idea how to control their costs, with the result that their rates are so low they cannot be matched even by an owner-driver."
Consultran was set up in 1979 to advise the smaller ownaccount companies on computerised transport management systems. lain Mays began by using the Harley Services' road transport divisions as guinea pigs to develop transport management software. This arrangement offered a number of advantages, not least that any system designed for Consultran was based on real road transport operations. And being close to Horley Road Services and Kaymat, lain Mays could also quickly assess the effectiveness of any pilot program.
Since 1979 Consultran has developed a number of computer-based transport management packages, including several generations of vehicle coatings, cashflow forecasting on contract hire, vehicle earnings, fuel usage and mileage, tyre costs, parts stock control and labour/cost recovery In commercial vehicle workshops.
Although Consultran advises companies on computer equipment as well as supplying software, lain Mays prefers not to align himself with any one manufacturer, particularly as many of his customers already operate computer equipment on the manufacturing side which they would be unlikely to replace overnight as part of a transport management system.
A vital part of any system, according to lain Mays, however, Is Its ability to expand as the company grows: "Any computer system should be installed on a long-term basis. An operator should think less about what a system can do now, but what it will have to do in the future."
Although there are a number of "off-the-shelf" finance and accounting software packages on the market that can be used in transport management, lain Mays feels that the average software house is not equipped to deal with the road haulage industry: "The tailor-made programs have some advantages, but with a practical life of only three or four years, many smaller companies cannot afford the replacement casts," he said.
Although the majority of programming work for Consultran is carried out by lain Mays, he has been joined by Martin Northfield, the company's financial director, and is looking to employ a trainee programmer to share the work.
It may appear strange that a large hire and reward haulage group like Harley Services should develop a computer company aimed at making its potential competitors more efficient, but it is in the interests of all road transport operators, whether hire or reward or ownaccount, to run at rates based on realistic and accurate costs.
No operator can expect to win every job he quotes for. But those who run for a profit rather than peanuts will be around long after the cut-price hauliers have gone out of business.