Schedule for Implementing a Driver Control Program

MKTG6513

Abstract
This marketing plan is used on lessening driver turnover by reducing the communication gap between drivers and dispatchers. For each of the three years of the marketing plan, a trucking company starts with$1,000,000. To prevent repeating prior mistakes which cause drivers to leave the company, effective marketing and promotion which highlight the change in hiring style need to be implemented.
To be effective in a trucking company, technology plays an imperative role which is utilized very carefully in this plan to remain within the budget while using most of it. In order to retain and minimize the turnover percentage of drivers, their training is vital, so that they represent the company in a more effective manner and help the company to retain the client. Together, the relationship of drivers with dispatchers and technology suggest the company can generate profit with a moderate rate.

The prevalent concern confronting the trucking business is not the mounting fuel and insurance expenses, but rather, the aptitude to entice, recruit and preserve excellent drivers. According to Keller and Ozment (1999), “[1] the cost to replace a driver has been reported to range from 3,000 to 12,000 dollars [1]” (p. 99). Where does one start to better retain a quality driver? Chances are you have many worthy drivers in your fleet, and the odds are even greater that you have lost myriad good drivers to the competition. As Keller and Ozment said (1999), “[1] Not only are shippers affected by higher transportation costs arising from excessive driver turnover, but they also experience poor service when carriers are unable to meet pick-up or delivery schedules due to equipment sitting idle for lack of drivers[1]”,( p.104). Industry pessimists blame the turnaround of drivers on of copious opportunities in the market and the absence of drivers to block those jobs. Some believe thinks that truck drivers are “spoiled” in terms of their behavior, and if they don’t have their own wishes granted, they will leave for greener pastures. Discontented drivers have no motivation to stay with a fruitless position. One big key to guaranteeing that we can keep efficient drivers is to analyze what is making them leave and address the concerns. Furthermore, keeping open dialogue between dispatches and drivers is a great way to understand what is going on in the company. Many companies perform ‘exit interviews’ when a driver or employee leaves. Unfortunately, when workers leave the company because of unaddressed or persisting issues, they are resistant to help the company to mend the workstation.
There are two areas management must fix in order to entice and retain good drivers. The first is recruitment. Recruiter need to hire the deserving candidate who is willing to participate in the success of the business as well as follow the rules and regulations of a company. Recruiters must be 100% honest with each applicant. Secondly, compensation is crucial. Incentives drivers receive in return for their services to the company should be appropriate. Policies on waiting time and layoffs should be appropriate. Driving times for drivers should be attuned according to rules and regulations and concerns should be given to driver’s fitness and security.
Technology is vital to the trucking industry, not only to save the company long-term overhead costs but also monitor hours of service supervised by the Federal Motor Carrier Safety Administration (FMCSA). Cantor, Corsi & Grimm (2009) stated, “[2] a significant contributing factor to motor carrier crashes is driver fatigue. Electronic logbooks have the potential to alert the driver and/or motor carrier firm when the driver is about to exceed his or her maximum allowable driving hours, thus addressing one potential factor that causes driver fatigue [2]” (p. 203).
Designing a driver control plan for a company in order to utilize the most resources and provide maximum benefit to drivers and dispatchers while simultaneously saving the dispatchers work is beneficial for the company’s interest. While the company is operating regionally and ensuring timely deliveries and shipments, the most important part of my plan is driver retention. There are many factors which contribute towards the betterment of the company, and technology plays a vital role in tracking driver’s activities, trucks and shipments. First Year Plan
The company begins with $1,000,000 for each of the three years and 100 Truck Load (TL), 50 Less than Truck Load (LTL) and 150 Pick-up and Delivery (PUD) vehicles. Twenty (20) dispatchers are currently employed and act as mediator between drivers and company. The first year plan is to focus on retaining drivers and decreasing the turnover percentage. Another goal is to improve the hiring process so that in coming years the company can save costs from driver turnover and invest in technology. The safety of drivers is one incentive to keep them loyal to the company. The New Year will start by investing in the hiring process with $100,000 to improve the recruitment process. The goal is to get the best possible drivers who will remain loyal to the company longer-term. Another important area that can help retain drivers is expert dispatchers. According to Keller and Ozment (1999),” [1] by understanding dispatcher characteristics, motor carriers may be in the best position to facilitate an internal marketing strategy within the firm. Such programs should improve a firm's overall external and internal customer orientation and help to reduce driver turnover and the associated cost” [1] (p.114). Dispatcher training funds in the amount of $100,000 for twenty (20) dispatchers are allocated. Driver training is also important in order to make sure that drivers know which job functions need to perform. Company turnover for TL carrier is 100%, LTL is 10%, and PUD turnover is 15%. Out of 300 drivers, the company provides training to only 125 drivers, that it later loses. It will cost $93,750 to cover the 3 day training of 125 drivers (with $250 cost per driver). Technology is an important part of a trucking company, so an onboard tracking system is used to ensure and record timely deliveries. It will cost $500,000 to purchase 50 onboard systems, at a cost of $10,000 each. To entice drivers to perform their duties accurately and timely, the company will give them reward of $50,000 each year. This will also create a sense of competition among drivers to perform better than the rest. Using knowledge to improve the PUD vehicles will make them more effective in delivering and receiving orders, with and investment of $150,000 on 150 PUD vehicles as ($10,000 per truck). PUD devices are necessary for drivers to track and receive orders. The first year total cost will be $993,750, and this plan saves $6,250 for the first year (ignoring the payment of drivers and fuel charges in given amount).The basic idea of the first year plan is to reduce the turnover cost of drivers by retaining in their current jobs. Investing more on dispatchers’ training, drivers’ training, technology and performance merits are the best routes to achieve this result. Although spending so much money on training company saves little the first year, but this plan will help the company in coming years by eliminating the one-time fixed equipment costs and assuring more profit in the next two years. If we look at the chart of the first year, it clearly indicates that after spending money on training and technology company is still in profit and surely will retain some drivers in coming years.
Second Year Plan
This plan is not an immediate fix to the existing system, but certainly it will change things over time. Driver turnover would be decreased in the real world if this plan were implemented; as far as our marketing scenario is concerned, driver turnover might not improve within 3 years but might improve in later years. The overall base plan will remain the same in second year too, i.e. to reduce the driver turnover and provide drivers the best chance to use technology in order to get the maximum profit out of the service provided. The Company has $1,006,250 at the start of the year ($6,250 comes from last year). It will cost $93,750 for 125 drivers’ training and 3 days orientation. The Company limits its onboard purchasing to 25 units, which cost $250,000 at the rate of $10,000 per truck. Another bold step is to invest in a system to monitor driver performance. As highlighted by Cantor, Corsi, and Grimm (2009), “[2] Technology adoption, in the context of logistics and supply chain management, has been the focus of significant research interest [2]” (P203). It will cost $500,000 a one-time cost to company. In order to focus on the retention strategy, the company will pay a $50,000 reward during the second year to entice drivers and promote the competition within the company. The Company will not spend any money on dispatcher training and hiring because training occurred in the first year, and working with the company. The total expenditure for the second year will be $893750 out of $1,006,250 with a saving of $112,500. These numbers indicate that the company’s marketing plan is working, and the company’s graph will eventually rise upward in terms of generating profit. The second year’s focus is more on the technology side as it installed driver tracking systems to get accurate feedback accurately on driver performance and activities during idle time. The expected outcome from the second year marketing plan is to keep eye on drivers’ activities while providing them with the best technology to make their work as easy and efficient as possible. As a result driver retention will greatly improve from a better work environment.
Third year plan
The Company expects even more profit in the third year depending on the training of dispatchers to resolve the driver turnover issues. The Technology management implemented in the previous two years, rewards and incentives to drivers and flexible work hours for drivers to maintain their safety all ensure timely deliveries to the customer. The Marketing plan for the third year starts with the implementation of onboard technology to the remaining 75 trucks. This will cost the company $750,000. The most important parts of the company marketing plan are the merit award and driver training costs $50,000 and $93,750 respectively. The Dispatchers are still working for the company so no additional training is needed. As the company ends its third year, the total savings are $268,750. $1,112,500 the total funds minus $43,750 spent on the activity control program. The third year plan indicates that the company has used all its maximum options of technology, training to retain drivers and now will start making profit in coming years.
Expectations
The three year marketing plans clearly states that implementing this plan will save money and maximize profit with moderate rate. If the company designs its fourth year plan accordingly, there will be no required technology costs for trucks as they are already equipped with the necessary equipment. The only thing which the company still requires is to train new drivers and update the current marketing plan, both of which will definitely reduce driver turnover. As a result, this plan will generate respectable profit after one year and reduce the driver turnover in coming years.
|3 Year Driver Control Plan |
|Types Of Expense |First Year (USD) |Second Year (USD) |Third Year (USD) |
| | |(Second Year Total Amount)= |(Third Year Total Amount)= |
| | |$1,006,520 |$1,112,500 |
|Supervisor Training |100000 | | |
|Hiring Improvement |100000 | | |
|Driver Training |93750 |93750 |93750 |
|Reward |50,000 |50,000 | |
|Onboard |500,000 |250000 |750000 |
|PUD Device |150000 | | |
|Driver Tracking Software | |500000 | |
|Total |993750 |893750 |843750 |
|Balance |6250 |112500 |268750 |

[pic]This chart clearly reflects the intentions of the company and how they want to handle their drivers and trucking business. The Company invests the maximum amount on its technology sector and driver/dispatcher training while giving a suitable amount to drivers for their fair and hard work. According to this chart the company’s main focus is on technology and training to keep drivers with the company.

REFERENCES

1. Keller and Ozment (1999), “Managing Driver Retention: Effects of the Dispatcher,” Journal of Business Logistics, Vol. 20, No. 2, p.p. 97-120.

2. David E Cantor, Thomas M Corsi, Curtis M Grimm (2009), “Do Electronic Logbooks Contribute To Motor Carrier Safety Performance?” Journal of Business Logistics, Vol. 30, Is. 1; p. 203 (21 pages).

3. A dispatcher’s thoughts on driver retention http://www.trucknews.com/pdfs/driver%20retention.pdf

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