PROGRAMME FOR PROFIT
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Lawton Phillips reckons that he sleeps easier nowadays, having spent most of this year helping to set up a new computer program for his small Welsh removals company. Now it's available to the rest of the industry.
• When Lawton Phillips bought a new computer system for his small Welsh removals company, he had the same idea as any other businessman — he wanted it to help him make more money, more efficiently.
Strangely enough, it has.
Most businesses end up using their computers as glorified filing and accounting clerks. Phillips is using his to win contracts, with better and more accurately calculated profit margins. He has seen his computer bring in quantifiable results.
At the beginning of this year, Phillips' company, Dyfed Removals and Storage of Fishguard in South Wales, started working with computer programmer John Lewis. The partnership hoped to create a new, simple-to-understand software package, specifically designed to help removals and small haulage firms work out accurate quotations, control their costs and keep up-to-date files on their customers, vehicles and staff.
"Easy-to-run software for the small businessman was lacking when we set out," says Phillips. He had spent two fruitless years looking for the right system for his business.
Lewis was in the throws of setting up his own computer programming firm, Synergy Data Systems, and was trying 'to locate a suitable removals specialist with the time, interest and enthusiasm" to help set up a complete removals software package. "Lawton Phillips was exactly the right person," says Lewis.
They decided to call the new computer software Remstar.
BIGGEST
Dyfed Removals runs three trucks, each with a 56m3 (2,000ft3) body, and covers the whole of Dyfed — "the biggest county in the country," says Phillips. The firm has two old Bedfords and one new Mercedes, operated on a seven-year straight line depreciation basis.
The main base, at Fishguard, covers 24.3 hectares (60 acres) with a large, modern 160-container-capacity warehouse. The company has a sales office in Carmarthan and is hoping to expand to Aberystwyth in the near future. Phillips wanted his computer system to help maintain the firm's momentum.
As the Remstar package began to come into its own over the summer, Phillips began to appreciate its potential: "Our last VAT quarter was the best ever, we had our highest turnover figures during July, August and September and our margins were 7-8% better." Improved turnover could have been a fluke, or a seasonal hiccough. The extra margins were definitely achieved by the computer.
QUOTATION
The bottom line on the computer's quotation has become Phillips' bible: "I sleep better nowadays, because I know those companies winning jobs for less than my quotation's bottom line cannot be making any money. I know what the proper cost is now, without a doubt."
How? Phillips explains the Remstar system. After typing in the customer's name and where he or she is moving to and from, you tell the computer whether the move is 'F' (foreign job) or 'H' (home job). "That's for the VAT men," says Phillips. You key in whether or not there is going to be a return load, especially if it's a long distance move.
"'This gives me the edge of being more competitive. Lots of removers aren't accurate on an outward move, never mind a return load," he says.
Often he works out a quotation assuming that there will not he a return load to give him a wider margin to play with later on in the negotiations.
"The return load facility will be really useful for the general haulage contractors" he says. Lewis agrees and both men hope that the package, with slight modifications, will appeal to many smallto-medium-sized haulage companies. The package has been programmed to cope with fleets of one to 100 vehicles.
One of Remstar's most interesting facilities is its KUBIT database. When Phillips has a list of the different items of furniture the potential customer wants moving he refers to this Kubit list, which has a code for most items of modern furniture, based on the British Association of Removers list.
If someone wants a large wardrobe shifting, for example, the operator keys in `1..WD' and the computer works out the cubic area the wardrobe will take up inside the van.
As each item on the estimator's list is keyed in using its code, the cubic sizes are added together. "I can work out loads to perfection now," says Phillips, who is also excited about the possibility of salesmen transferring furniture lists directly onto the computer via a modem telephone line link, The next stage on the program involves keying in loading and unloading times. "The good thing about this system is that it does not take over. You still need to be a good, experienced estimator to put the right figures in," he says.
When the job has been completed the actual time is entered onto the database alongside the estimated time "It helps us keep a check on our drivers, porters and customers . . it keeps us on the ball."
Driving time estimates are then entered with the number of staff required and the hourly wage bill. Overnight stops can be included too. Vehicle costs go in next. First, a static hourly charge which should be calculated by the company's accountant. The figure should represent an hourly sum covering depreciation, insurance, road tax and so on. Then the computer asks for an hourly running cost which, once again, should be tailored to the company's experience by its accountant. This figure should represent oil, tyre and battery costs, for instance. A fuel cost is also keyed in.
There is a section for miscellaneous extras such as additional or unusual packaging cases which might have to be used. Winches, if needed, or windows which might have to be taken out can also be entered at this point.
Finally, on the cost side there is space for the overheads factor. This figure should take into account property costs for the company's warehouses and offices, telephone charges, printing costs and so on. "Our overheads rate was 21.68% last year,' says Phillips, "which was just the same as the rate recommended by the accountant from the British Association of Removers.
"It's absolutely essential you enter an accurate overheads charge, otherwise it only comes out of your profits." By now the computer has the cost of the job to be bid for, worked out thoroughly and accurately. If you want to do the job and make no money at all, just do it at Remstar's cost estimate, says Phillips. He prefers taking the program to its next stage and entering a profit margin.
Dyfed Removals usually puts a 30% profit margin into the calculation. "This factor is the only one you can really trim at all. Everything that went before was basic cost."
"When you have got that sort of calculation in front of you, you know that if someone comes and tells you Pickfords have offered to do the job for £290, and you have costed it on Remstar at £300, you can just say no. You know that '.300 is absolutely the bottom line.
"I always say that if someone only wants to pay 200 in those sort of circumstances, I'd rather keep the trucks in the warehouse.
"It's been a big help really; there are some suicidal rates being offered in the haulage business at the moment," says Phillips. "We used to call our estimates 'guestimates'. It was an instinctive thing." Too many reputable hauliers and removers just work out their costs on a costper-distance basis. Money and business is too tight today for such laxity, he argues.
"The program is a very satisfying management tool and it helps me find out who is a good worker and who is bad. We definitely have an 'A' and a "B' team. It also means that you can reward the good because you can tell how much extra money they're making for you."
SATISFYING
Possibly the most satisfying aspect of the Remstar is its cost. While most computer systems for small-to-medium-sized businesses cost between £9,000 and 07,000, Remstar costs £3,210 ex-VAT.
For that you get the software, program and the hardware — a Tandy 1000HD personal computer with a 10 megabyte hard disk drive facility. If you just want the software, which is IBM-compatible, the cost is £1,895 ex-VAT.
Lewis, who set up Synergy at the start of this year to work on Remstar, says the package "is basically an expert system." This should not present any problems — quite the opposite — it simply means it has been tailor-made for the haulage and removals business.
"Very few, if any, demands should be made on computer experience." Lewis says. "The user should only need to know how to perform his or her job. They should not need to master some obscure computer language. If you can do your job, you can use Remstar."
El by Geoff Hadwick