'Last Resort Cost Reductions to Survive a Recession' (referred to as 'Last Resort' going forward) is the first of an 8 video series 'white paper' produced by Big Truck TV in association with Joe White & CostDown Consulting. The series was developed to provide trucking executives with creative and effective suggestions for reducing costs and improving operations.

Our first video, 'Last Resort', explains how to implement and manage the painful cost reduction decisions associated with severing employees, reducing wages and benefits, and forcing vendors to provide discounts.

'Last Resort' begins by detailing an aggressive approach to downsizing corporate office staffing; perhaps the largest - and definitely the most painful - cost reduction opportunity for many trucking companies.

That approach is based on defining what a company's pre-recession annual corporate office expense was as a percent of total revenue and then applying that same percentage to current revenue forecasts. Therefore, an 18% drop in revenue suggests an 18% drop in corporate office expense and, since most of corporate office expense is labor and benefits, it also implies an approximate 18% reduction in headcount. A detailed example of how to calculate what your budget should be is provided in the video.

Terminal staff reductions are also discussed in 'Last Resort'. Unlike corporate office however, reductions in the field are not based on revenue as the 'quality' of revenue differs greatly between terminals. Instead, work demand factors are used. An example would be increasing the amount of drivers assigned to each Driver Manager to reduce the total count of Driver Managers needed.

'Last Resort' also explains and discusses the cost and operating advantages of the General Manager Staffing Model (GMSM). In the GMSM, one General Manager is placed in charge of a group of terminals (usually 2 - 4 per group). The remaining Terminal Managers are either demoted to Assistant Manager positions or replaced with more capable Assistant Managers.

Depending on a trucking company's compensation structure, the GMSM reduces salaried labor costs by approximately $25 - $50,000 for each terminal group of 3. Additionally, it provides the opportunity for improved network and productivity performance as one strong manager is now providing direction for group, not individual terminal performance.

Cost savings from wage and benefit reductions are another opportunity discussed. There are many options an organization can employ to reduce labor costs; some of which are considerably more painful to employees than others. 'Last Resort' provides a listing of these options along with prioritization of which should be implemented first based on a least-to-most painful basis.

Finally, 'Last Resort' discusses the Vendor opportunity for cost reduction. Vendor pricing offers a huge opportunity for savings through product and service discounts. The best approach to obtain these discounts is overviewed in the video.

I encourage viewer comments and questions regarding the contents of 'Last Resort' and all subsequent videos. As mentioned earlier, there are a total of 8 videos in this white paper series. I sincerely believe that every viewer that follows this series will find at least one idea or one program to incorporate into their own operations that will reduce operating costs and improve bottom line performance.