Is your management information system (MIS) telling you what you need to know – not what you already know?
What you really need to know
Some fairly advanced fleet management systems are available, so there’s certainly no shortage of the next-big-thing in MIS, however, are they telling you what you need to know? This is a very open ended question, so just what is it that you really need to know?
Before suggesting answers to this question, let’s just take a moment to look at what you need to know in order to optimise your operation. Road transport is probably one of the most complicated real-time businesses to manage, outside of an Airline and this is seldom fully appreciated by those who face the challenges daily.
These are some of the incredibly difficult challenges associated with managing road transport:
The above 10 points are only a few of the challenges Carriers face daily, many of which equally apply to private dedicated fleet Operators. The question: is your MIS providing you with rapid feedback on any of these critical operating challenges?
Let’s move on to budgeting
This will be one of the focal points in this Conversation
Beyond “regurgitating” last year’s budget, how much research is done before setting this year’s budget designed to address unsatisfactory projections in one area and have serious consequences in the short and medium terms on other budget projections?
We will also be focusing on the critical importance of random budget adjustments made to certain projections without considering the knock-on effects on other budget projections.
Another very common error in budgeting is when the focus is on, for instance, improving fuel cost without considering the knock-on effect on revenue. Now there is nothing wrong with budgeting for reduced fuel cost but how much prior research is done to physically measure and justify this rationale, or is it just someone’s opinion that there is room to reduce fuel costs in this area? This brings in another point – which parameters are used in assessing fuel cost per unit of revenue – an excellent example of this is how fuel consumption is measured: in litre/100km or litre/100 Rand of revenue?
Are you billing Detention time?
Moving on to managing Fixed and Variable Cost Budgets
This is an exciting challenge as it offers scope for improving financial returns but requires a lot of skill to achieve measurable gains on the balance sheet. Look at it this way: First there are 8 760 hours a year, so do you have any policy that addresses how Fixed Costs are managed? Another incredibly important issue is Variable Cost management. These and other such challenges will be principal discussion points planned for Topic 3