Learning from the master
Want to reduce costs and increase profit margins in your road transport company? VIC OLIVER asks one of the foremost authorities in the game to share his secrets…
Let’s face facts: we all want to make money. Lots of it. One individual who has been remarkably successful at achieving this goal within our industry is Phil Erasmus, the man who transformed Tanker Services from a small road transport company into a world-class and highly profitable large transport operation.
It is thus that I decide to pop over to his office for a cup of tea and some pearls of wisdom: how did he do it? “The single most important contributors to reducing company costs and increasing profits were our drivers,” he reveals. “We focused on educating and motivating them; that paid huge dividends.”
Erasmus joined Tanker Services in 1961, when the fleet consisted of five tankers. He subsequently worked for the company for 35 years.
After a few years he realized that, for the business to grow, he had to do something different. “At the time I believed that it was vitally important that we differentiate ourselves from our competitors and be able to offer world class service to our customers,” he relates.
Bearing this in mind, Erasmus decided to visit road transport companies in the United States of America. “I wanted to learn how to run a more professional and profitable company; I believed that I would find the answers there.”
And he most certainly did. “The first thing that I noticed on arrival in America was that the truck drivers in America were better educated and trained compared to the South African truck drivers. Within a few days of studying the American operations it soon became apparent that drivers were the key factor in running a professional road transport operation,” he recalls.
He also realised that, by educating drivers, changing their attitudes and mindsets, plus improving their skills could place Tanker Services ahead of its competitors and many benefits could be gained.
On returning to South Africa, Erasmus immediately set up a driver training school and compiled a comprehensive driver training manual. He implemented a new policy: all drivers within the company were compelled to undergo a two-week training course, plus a yearly refresher course.
Retaining drivers once they were trained was another challenge; Erasmus overcame this obstacle by paying drivers a good salary. “We paid more than other transport companies. Also, we introduced a points demerit reward system that enabled good drivers to earn a substantial annual bonus,” he tells FOCUS.
He also endeavoured to promote employees from within the company, including most management appointments, thereby giving his employees a chance to grow.
Once the drivers were trained, motivated and rewarded with a fair and liveable salary, the following benefits were immediately apparent:
• Maintenance costs were reduced.
• Many of the accidents that the company was experiencing were eliminated.
• Tyre costs were reduced.
• Brake linings lasted longer.
• Drive line components such as clutches, gearboxes and propshafts lasted longer.
• Customers were happier; their goods were delivered on time.
• Expensive road side breakdowns were reduced.
• Drivers were happier and showed more courtesy to other road users.
• The company image improved.
To further improve on the benefits that the company was enjoying, Erasmus developed and introduced a good management information system, which provided real time information on all aspects of each vehicle and driver in the fleet. This allowed immediate action to be taken in cases where the vehicle or driver were not achieving the set benchmark on the running costs.
The next factor that helped to reduce costs and maximize the uptime of the fleet was preventative maintenance. He also focused on keeping the fleet in a clean and new condition. “It obviously costs money to keep the fleet clean but it is well worth it. Clean vehicles also have a very positive effect on the driver and improve the company image,” he insists.
As regular FOCUS readers and certainly regular readers of this column will know, well planned preventative maintenance extends the life of the vehicle. By doing all the necessary preventative maintenance on a vehicle, the vehicle remains in premium condition, negating any requirement to rebuild the truck.
“Advanced planned preventative maintenance also helps to maximise on vehicle uptime and parts can be sourced in advance at competitive prices,” Erasmus points out.
He also decided to improve driver and vehicle safety. Therefore, a strict policy was put in place that gave the full authority to the maintenance staff to stop a vehicle from operating at any time when they considered the vehicle to be unfit for the road. This authority could not be overridden by the marketing and distribution people in the company. Furthermore, Erasmus instituted a policy whereby all vehicles leaving on a trip of more than 200 km had to be inspected prior to departure. Driving hours were also restricted to ensure that the driver did not drive the vehicle beyond his physical and mental capacity.
Lastly Erasmus says that once all the above mentioned actions were put in place, vehicle accidents were vastly reduced. “Accordingly I changed the parameters of our vehicle insurance. We chose to self insure with a fleet aggregate insurance to avoid the possibility of a wipe out. This policy also motivated better management of loss precaution programmes” he reports.
The end result? An exceptional transport company. Many operators can take a leaf out of his book.
Phil Erasmus, we salute you. And thank you for allowing us to learn from the master…
One of this country’s most respected commercial vehicle industry authorities, VIC OLIVER has been in this industry for 45 years. Before joining the FOCUS team, he spent 15 years with Nissan Diesel, 11 years with Busaf and seven years with International.