Understanding factors driving Road Transport Strategy
As a natural consequence of company structure, i.e. Marketing, Sales, Administration, Operations & Technical, there is an ever-present danger of departmental, “silo” interests affecting strategic unison within an enterprise. Both positive and negative examples of this are found in private and road transport fleets. For example; low fleet availability due to budget constraints on Fleet managers and/or inefficient fleet utilisation by Operations attempting to improve service delivery by scheduling part-or-overloading trucks for expediency reasons.
Despite success or failure in implementation, all management endeavours should be guided by a strategy intended to deliver Shareholder Value. Furthermore any planned or emergent strategy ultimately influences all aspects of a business to produce desired results. Lack of attention to the structural detail in planning a road transport strategy (RTS) may leave it vulnerable to imbalances in intent and direction. By relating these trends and their impact on a road transport business strategy, the TTQUAD Strategy Initiative (QSI) vividly illustrates advantages of robust and integrated planning.
In formulating the coherent TTQUAD Strategy Initiative, careful attention was paid to include the10 structural components deployed in fundamental finite-element structural engineering relationships, meaning each of the 10 components in this pyramid like structure contribute equally to the structural integrity of the system. In this instance the four nodes (Profit, Price, Performance and Sustainability) were chosen to figuratively represent all aspects of the strategy. The crucial unidirectional relationships connecting these nodes form a tactical framework and are represented by the six pin-jointed links attaching them to the four nodes.
Principal Node 1: Profit
In the case of private fleet operation, Shareholder Value is measured in terms of contribution to service delivery and considered an overhead expense.
In the instance of a Road Transport Operation, Profit is considered first and foremost to justify the investment and is therefore pivotal to the success of the enterprise. Either way it is considered the Principal Node.
Tactical Node 2: Price
Price is a major force governing Income, which includes every aspect relating to - Marketing, Sales, Branding and the Company’s standing with its stakeholders.
Tactical Node 3: Performance
Performance is taken to mean the application or use of resources in extent to which an investment produces Value, and encompasses every aspect of a business essential to competitiveness.
Tactical Node 4: Sustainability
Refers to the business being viable, which infers its ability to operate without being subsidised.
As the three Primary links, PL-1, PL-2 and PL-3 contribute equally in magnitude to supporting the Principal node (Profit), they each receive the same level of importance and therefore attention in the overall strategic structure of the business. First, Link PL-1 connects the Price node to the Profit node. Second, Link PL-2 connects the Performance node to the Profit node and third, Link PL-3 connects the Sustainability node to the Profit node. As these links are unidirectional in purpose, the Profit node shares support from the three Tactical nodes: Price, Performance and Sustainability.
The third Primary Link PL-3 connects the Profit and Sustainability nodes. Again, this relationship supports the rationale that, should there be insufficient margin (profit) to support investment sustainability, then the Strategy needs attention as it renders the company unviable and will therefore consume capital. Loss of sustainability presents a severe risk to shareholders’ investment which, in turn, demands a higher ROI to justify the increased risk, further challenging the enterprise’s competitiveness for funding.
Secondary Links SL-1, SL-2 and SL-3, in that order, connecting the Price, Performance and Sustainability Tactical nodes, form the foundation on which the Primary Links connect to the Principal (Profit) Node.
Although the rational used here is an over simplification of a very complex subject, the intention is to illustrate that company strategy does not exist in isolation, and should be thoughtfully integrated with all the Tactical nodes supporting the intended strategic outcomes represented by the Principal node (Profit), only then can metrics be set in place to actively measure the effectiveness of each Tactical node in supporting the associated Principal node (Profit) in achieving the intended results.
Ultimately, the success or failure of a business Strategy is reflected in its effectiveness - that of delivering attractive Shareholder Value.
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