Recommendations

    Superior Towing & Transport LLC is a company that has a proven track record of success. They have started from the absolute bottom and in less than 20 years have elevated themselves to be a key contender in the regional towing industry. This company is no stranger to innovation, but like all good things there are always improvements to be made. Far too many companies quickly elevate to a level of success and become comfortable with that newfound success. Unfortunately, this leads to complacency, and complacency can eventually lead to loss of market share to newer, more innovative companies in the future. In the spirit of always wanting to make things better, we have researched and developed several strategies we believe will help Superior Towing & Transport elevate to the next level. The plan on actions that we will outline will help further streamline operating procedures, safeguard against present & future risk, and free up resources & capital to remain adaptable to tackle future endeavors. Our proposed actions focus on several key industry aspects, including: 

·         Risk Management

·         Asset Longevity

·         Strategic Data Interpretation

 

Comprehensive Insurance Package for Proactive Risk Management 

            There is a myriad of operational risks embedded in the nature of the towing industry. Firstly, there are risks of automobile accidents that hurt the business in several different ways. An accident can injure employees, customers, our Tow Trucks and possibly the customer’s vehicles as well. This opens up the business to liabilities on several fronts. Employees being hurt in the line of duty can result in costly Worker’s Compensation payouts, and the damage to our vehicles can lead not only to costly repairs in order to get the trucks back to operating capacity, but also a high opportunity cost. A truck being out of commission prevents Superior Towing from collecting money on any tow that vehicle could have completed if it were out of commission. Injury to a customer can lead to a lengthy lawsuit with hefty legal fees, in addition to possible settlements to be paid out on if Superior Towing is found guilty in judgement. Finally, damage to customer’s vehicle & other property can put us on the hook to pay for necessary repairs as the result of accidents. All of these risks are augmented with the roll-out of Superior Towing’s on-site maintenance repair. While this is an excellent consolidation of operating capacity for services offered, it comes with the inherit risk of our drivers & vehicles being out in the field longer, especially if repairs are being done at the location of the breakdown. Finally, for vehicles we tow & store in our yard we run the risk of damage/theft offering at this location. While we are storing these vehicles, we are bound by a duty of care, even things like theft which would be out of our control would leave us at least in part liable for damages that occur from this.

How do we mitigate these risks?

There is no 100% safeguard against all of these forms of risk. We have done an important step in recognizing how these risks and their consequences can manifest and armed with this knowledge we are able to strategize a course of action to prevent these risks from wreaking havoc on Superior Towing & Transport LLC. In addition to day-to-day precautions and general risk management on an individual employee level, we recommend incorporating a comprehensive set of insurance policies to shield the business from liability in the event any of these consequences happen. This will give peace of mind that if a catastrophic-type event were to occur, it would be able to be handled without interfering with daily business operations. The suite of insurance policies that we recommend Superior Towing take out, with their benefits & estimated costs, include the following:

Auto Liability Insurance – This insurance type can be further broken down into 2 sections, both of which can help protect Superior Towing in different ways.

o   Bodily Injury Insurance – In the case of an accident, this insurance helps over the costs of the other driver’s medical expenses and covers Superior’s legal fees if the other party in an accident attempts to sue.

o   Property Damage Liability – This covers the costs of repairing or replacing the other driver’s car.

As these are both legal obligations Superior Towing would have to the other party in an at-fault accident, having this insurance coverage is paramount as it safeguards against the 1^st line of liabilities in an accident.

Physical Damage Insurance – The purpose of this insurance would be to cover our tow trucks in the case of damage, assisting in getting them back on the road as soon as possible. This type of insurance can be broken down in 2 parts:

o   Collision Coverage – Repairs/Replaces Superior Towing’s tow truck if they are in an accident or if they collide with something else.

o   Comprehensive Insurance – This package encompasses other scenarios not covered in Collision Coverage, including fire, theft, vandalism, falling objects, & animal strikes.

We would recommend getting both these kinds of coverages, as having both of them in tandem will allow Superior Towing to expedite the process of getting their fleet back in operational condition to earn more revenue for the company.

On-Hook/In-Tow Insurance – This type of insurance covers a customer’s car while it is attached to one of Superior Towing’s trucks/wreckers. This is an important distinction as Physical Damage Insurance does not encompass a vehicle being on a tow, therefore; requiring a separate type of insurance to cover. Having this type of insurance is an industry standard and is one anybody in the towing industry should not be without.

Garagekeepers Insurance – While the other insurance cover a customer’s car while it is on the tow or in transport, it is important to have coverage available for after their car has arrived at a destination. In daily operations there are plenty of cars that Superior Towing stores on-site. Additionally, accidents can happen outside normal operating hours, facilitating either Superior Towing having to store customer’s vehicles overnight or drop them off at the customer’s preferred mechanic to wait for opening the next day. In either of these scenarios, while the vehicle is being stored on these kind of properties, Garagekeeper’s insurance will cover the customer’s vehicle from phenomenon such as: fire, vandalism, theft, explosion, & lightning.

Garage Liability Insurance – With the expansion of roadside assistance & repair, a new liability is opened up that has to be accounted for. Accidents can happen as a result of the maintenance activities that our drivers are performing. A fringe example would be something to the effect of a driver repairing a customer’s flat tire, and the tire popping off and ending up causing another accident on the road. Having this type of insurance in the suite, while the least applicable of them all, acts as a good safeguard and in combination with other insurance types makes 100% of business activities covered in the most catastrophic of cases.  

Developing & Tracking Key Performance Indicators (KPI's) To Guide Business Strategy

            In today’s data-driven economy, Key Performance Indicators are pivotal for long-term success. They are user-defined metrics that help quantify abstract business goals. This aides in communication as it brings everyone within an organization on the same page. For this purpose, we would recommend the implementation of several KPIs for Superior Towing to keep track of. Ideally once they are implemented, they would be tracked over an extended period of time, allowing the observation of trends as well as the ability to compare actual performance with expected performance. KPI’s can be thought of as “goals” for Superior Towing to achieve, and even if the defined metrics are not being met the measuring of them are important. If the goals are not being met KPI’s allow the early detection of that, and course correction can be implemented to drive business performance. We have developed 10 KPI’s divided into 3 main categories for Superior Towing to keep track of, including:

Safety KPI’s

·         Speeding Incidents

·         Harsh Accelerations & Braking Incidents

·         Corner Handling Incidents

·         Crashes

Driver safety is vastly important as unsafe driving opens the employee & company up to a lot of the liabilities discussed previously. Having these KPI’s allows Superior Towing to develop safety profiles for their drivers, showing concrete weaknesses in the staff and allowing the company to train the driver to improve their score. This also can be used as incentive for the employees. Some fleets track data such as this and publish Weekly Driver Scorecards, reports that show every driver in the company and how frequently they commit these kinds of infractions. By developing such a scorecard and publishing it in a place all drivers can see, it creates a spirit on competition that drives better performance from employees. Additionally, employees who are low marks on the scorecard can be introduced to rewards for not exposing Superior Towing to liabilities on the job. Things such as extra PTO or cash gifts can improve employee morale, whilst allowing Superior Towing to offload excess cash in a tax-deductible fashion.

Efficiency KPIs

·         Fuel Economy per Vehicle, including Idling Time.

·         Empty Miles

·         Fleet Asset Utilization

Tow Trucks are by far the most important asset that Superior Towing & Transport LLC has. These KPIs have been developed with that in mind and will help ensure that they can keep their vehicles in optimal performing condition for as long as possible. Fuel Economy as well as idling time can help fleet managers identify excessive idling & other gas-guzzling behaviors such as speeding. Armed with the data, fleet managers can correct this problem at the employee level improving fuel economy metrics as well as decreasing wear & tear on the fleet. Empty miles & Fleet Asset Utilization are important metrics to make sure that Superior Towing is allocating resources in the most optimal way. This data can enable management to properly shuffle vehicles to better distribute the depreciation of the tow truck fleet, as well as make better informed decisions on how many tow trucks are needed in the arsenal.

Compliance KPIs

o   Available Hours of Service (HOS)

o   HOS Violations

o   Unassigned Mileage by Vehicle

In recent years, the Federal Motor Carrier Safety Administration (FMCSA) has been expanding regulations for all commercial motor carriers, including tow trucks. This mandate made electronic logging devices mandatory, and as it has been a few years since the regulations were passed the window to be grandfathered into compliance is closing rapidly. ELD Mandate Penalties average around $2,867 per violation, but the range of violations can be anywhere from $1,000 - $10,000. Frequent non-compliance can speedily build up plenty of fees, which becomes not only an administrative nightmare, but also a drain on company cash flow. These compliance KPIs utilize the mandatory ELD’s equipped in all vehicles in order to ensure that all trucks & drivers are remaining compliant. HOS is a daily metric to track, as a driver violating HOS will have to be put out of commission until their allotted HOS time has expired, which if occurred on the road can necessitate additional resources to divert the issue and loss of a driver. Tracking both available HOS hours for each driver as well as records of violations will not only help Superior Towing remain compliant but will allow their dispatchers to make more educated decisions when allocating drivers to calls in day-to-day operations. Unassigned Mileage by Vehicle is also a metric that needs to be tracked as the FMCSA required ALL driving time to be captured. From an operational standpoint, tracking and limiting unassigned mileage can assist management in making sure that company assets are being used for proper company functions at all times.