All managers at some point face challenging questions that they don’t have the resources to answer effectively.
Hiring a new employee or learning the right skills may not be an option due to limited funds or time.
Brightleaf Consulting Group can provide individuals with years of professional experience in a range of industries to help answer questions and overcome challenges.
Case Study – Determining The Best Avenues For Growth
The client, a trucking company owner who also performed dispatching and driving duties, was performing well relative to his competition by providing reliable service to many satisfied and loyal customers. He was interested in expanding his operations and, to determine how to grow, asked his customers how he could better meet their needs. One customer wanted to reduce trucking suppliers and shift more of their needs to the client, which meant that the client could expand by increasing his trucking fleet. Another customer expressed an interest in warehousing services to refine their distribution. The warehousing option was of interest to the client because it would also provide a central area for a mechanic to service the trucks, a necessity if the fleet size were to increase.
The client needed to evaluate the expansion options such as leasing, purchasing, or building warehouse space; hiring a full time dispatcher; contracting third party mechanic labor; initiating freight brokerage services; and adding trucks to the fleet to satisfy increased demand for services. To establish a business case required an analysis of the possible outcomes that would develop a clearer understanding of the key decisions and their effect on the expected profitability. The optimal timing of implementing these options also needed to be determined.
After first interviewing the client to deeply understand his situation and to accurately determine his needs, Brightleaf Consulting Group (“Brightleaf”) researched the trucking and logistics industry using market reports, company profiles, financial results, and trade journals. This was followed by interviews with the client’s existing customers, regional warehouse operators, and local real estate professionals. Several rounds of financial simulations involving a wide range of financial and operational variables were then performed. The analysis determined that, despite a surplus of inexpensive facilities and very attractive mortgage and lease rates, the warehousing option would not be profitable due to the desired scale of investment, current economic conditions, and the client’s customer mix of products. Instead, it was recommended to continue gathering market data from drivers, brokers, and customers while a custom tool was provided to analyze the data collected that would show the client when starting a warehousing operation would be profitable.
Increasing fleet capacity was also analyzed and a plan for growth was provided that would increase profits over several years using a combination of company owned trucks and owner/operators. An additional recommendation was to take advantage of our client’s consistent performance and strong relationships in order to develop freight brokerage services. Given the additional time required to manage implementing both of these recommendations, it became clear that a dispatcher would need to be hired.
Brightleaf suggested that the client diversify his freight hauling services to other industries as the majority of his current customers operated in industries hit hardest by the recession. Other recommendations were to increase the company’s web presence in order to capitalize on its changing identity, to utilize technology to better track shipment locations and arrival times, and to outsource accounting and other services so that the client could dedicate more time to company expansion. It was also suggested that he reduce his time on the road for the same reason.
The client evaluated the research and simulations provided by Brightleaf and agreed with the results. He is now confidently pursuing a growth plan that he both understands and believes to be achievable. As the warehouse option would not be profitable, he acted quickly on the other recommendations. To allow the owner to step into a full-time sales and management role, both a replacement driver and a dispatcher were hired. A new business entity was established for the brokerage portion of the business, and an experienced agent was hired to rapidly build the new brand. Web presence development was initiated through a third party web design service and the freight brokerage URL and web site were created