Spotlight on Success

“It’s been a great year,” said Timothy G. Taylor, president of Network F.O.B., a nationwide 3PL firm.   “In fact, the last five years have been great years,” he added.  “And given the fact that the nation’s economy has been in the dumpster for the past two years, it makes the company’s success even more remarkable.  As the saying goes, ‘It’s not bragging if it’s true’.”

Taylor, with more than 35 years in the business, acquired Network F.O.B. in 1987.  It formerly operated as Metro Cartage in the Minneapolis/St. Paul area.

“We were doing well with moderate growth, but all that began to change in 2005 when we began an aggressive program to analyze, streamline and expand the business.  It’s the old saw: ‘You can work hard or work smart’. My personal philosophy is like the old Jerry Jones – (Neon) Deon Sanders commercial spoof on contract negotiations when Deon said, ‘Both’.

– Rapid Expansion –

“We had 13 agents at the time and set a goal of doubling the business in three years.  We did it in two years; quadrupled in four.  In 2009 we enlisted the support of Joe Tutino, one of the finest recruiters in the business, and doubled it again.  Joe is now vice president for agent development.   As we begin 2011, we are proud of a continued  40 percent-plus growth rate while eliminating a significant number of non-productive client relationships not conducive to sustained profitability.

“Every software developer claims to have the finest eye-popping product in the business.  But equally important is management software or the thinking: if you don’t know what your costs are, how are you going to control them?  And if you can’t spot inefficiencies you can’t eliminate them.  All the ‘gee whiz’ technology in the world won’t help much if management’s thinking is stuck in the 1980’s,” Taylor noted.

“It’s easy to get bogged down in everyday minutia and miss the big picture.   Five years ago I began delegating more and more decision-making authority to supervisors.   It took a while for some to get used to the new way of doing business but I’ve found that reasonably intelligent people will usually make the right decision.  This alone freed time by eliminating a constant stream of meetings, memos, phone calls and the multiple touches so common to modern day office dynamics. Give people a job, make them accountable for doing the job and stay out of their way.

–Today’s Systems —

“Today we’re able to calculate exact costs of each function for each transaction.   System enhancements and tweaking are a constantly ongoing tenet of improvement.  For example: Calculating commission manually for 13 agents required nearly a full day’s work.  Today with more than 60 agents, commissions are automatically posted to agents’ accounts – no man-hours required.  And it’s important to note that commissions are posted to agents’ accounts when customers are invoiced, not after customers pay their invoices, or sometimes-belated carrier invoices arrive. The fact that agents themselves may transfer commission 24/7 from Network F.O.B. to their own bank account is another competitive advantage that prospective agents find amazing but which existing Network agents view as normal.  Agents should expect to receive their commissions immediately and they really appreciate that.  It builds agent loyalty and reinforces instant gratification so important to sales people.  Truckers are paid in a similar way without a lot of forms and paper shuffling.  In fact, we encourage truckers to self-settle and scan their paperwork directly to us. This builds carrier loyalty too.

“All records are imaged, archived and available with a few mouse clicks.  It’s fast and efficient.  Going paperless has dramatically reduced our back-office costs and freed up office space.  Only a very few hard-copy files of any nature are stored. We were actually able to downsize the space by over 40 percent in late 2007.  In fact, Network FOB has only one stand-alone file cabinet for the entire company.

“Most tasks are automated and just flow through our system of highly scalable outsourcing as noted.  As a result, personnel counts from mid-2005 to the end of 2010 — with now a five-fold increase in revenue — have not increased.   We monitor every function.  What gets monitored gets improved.  A side benefit of what gets monitored is accountability; a big feature in an industry where mistakes can really hurt you. You could say we’re putting more transactions through a better mousetrap.

–Best Agents Deserve Best Pay–

“A key to our success is the fact that we hand-pick and get the best agents in the business.  Sure, I know, everybody says that.  But we put our money where our mouth is – commission splits have been 70 percent to the agent with no minimums, which is pretty much the highest in the industry.  We recently introduced a new 80 percent commission split for higher performers.  In effect, it’s a pay raise of between 17 and 40 percent for agents who come aboard.  Our competitors were mad at me before for paying too much, I can’t imagine what their thoughts are going to be now.

“The increased commission is leveraging Network’s back office efficiencies with the inherent quality and skill levels present with high producers. You can’t build an elite force of professionals ‘on-the-cheap’, and agents who can handle the responsibility should be rewarded financially,” Taylor noted.

“It’s vital for Network F.O.B.’s success to accept only agents who have demonstrated they have what it takes to build a successful business and have acted responsibly in all of their practices –agents who serve clients and their constituency with professionalism and skill and who understand the concept of responsibility.

–The Challenge is High.  The Rewards are Higher–

“Our agents act independently but confidently under the umbrella of superior technological resources.  Running an independent agency is a huge challenge but prestige and control of their destiny defines a Network F.O.B. agent.  Shippers and carriers can be very demanding but our agents earn their respect and loyalty with skill and commitment.  At the end of the day our agents have the pride and satisfaction of knowing the job was well done and well worth the effort.  The monetary compensation is only the score.

–Very High Efficiency–

“Throughout the industry there is a ratio of one non-agent company employee per $2 million to $3 million in revenue,” Taylor said.  “Network F.O.B. has achieved a ratio of one person per $7.3 million-plus in revenue – on average three times better than the industry average,” he pointed out.

“But it doesn’t stop there.  We believe we can improve that ratio to nearly one per $10 million and beyond with the application of technology and creative management combined with agent culture.

“It must be understood that the cost factors are not a direct one-to-one relationship because it can be assumed that clerical, or lower-priced labor, will make up the bulk of the employee count in virtually all transportation administrative scenarios,” Taylor explained.

“Throughout all of this growth and expansion — TIA with its suite of professional development services, industry peer interaction and industry product showcasing — has been a valued partner.”

As for the future, Taylor noted, “Industry standard SG&A (Selling, General and Administration) costs typically absorbs roughly 10 to12 percent of gross revenue per load.  By attacking this area we have made, and we’ll continue to make, a significant positive impact on profitability while providing a better product.”

Smiling he said, “If I tell you any more I’ll have to charge you a consulting fee.”

“2011 should be another record growth year for Network F.O.B.”