Do you know the critical numbers that tell you how your hauling business is doing? Knowing these numbers, also called KPIs (Key Performance Indicators), are critical to keeping your business on the right track.
Do you already have a set of KPIs? If not, how do you measure the success of your business? This article will help you determine how to choose good KPIs.
I was talking with an owner of a small dump truck fleet the other day, and we started talking about how he knows his business is doing OK. The short story is that he looks at his bank statement periodically, and if the balance is above a certain point, he is doing fine. While he may think that approach works fine, he is missing out on a lot of opportunities to improve his business if this is all he is looking at.
In short, good KPIs meet the following requirements:
I’ll discuss each of these in the next section, including why it is important. The examples included may be similar to your bulk hauling company.
Before you choose which indicators to measure and track, it's important to start with your business goals. What are you trying to achieve right now? Are you focused on increasing profits? Reducing customer or driver turnover? Improving efficiency? Each goal may require a different set of KPIs to help you measure progress and identify areas for improvement.
The key is to keep your focus clear. When companies try to tackle too many goals at once, they often spread themselves too thin and don’t see meaningful progress in any area. Most businesses are more effective when they concentrate on just a few major goals at a time. This approach makes it easier to track the right KPIs and take action where it matters most.
A good KPI should directly reflect a meaningful business outcome. For example, if your revenue increases, your net profit usually goes up as, assuming that you’re charging more for your services than it costs to deliver them.
Consider idle time. On the surface, it might seem simple: less idle time is better. But that’s not always the case. Imagine one truck works for just an hour with almost no idle time, while another truck operates all day but has 20 minutes of idle time. Which truck is more profitable?
Clearly, the truck working all day, even with some idle time, generates more revenue. This shows that idle time by itself isn’t the best KPI because it doesn’t give the full picture.
Instead of tracking idle time alone, adjust the metric to make it more useful. Measuring the "% of work time spent idling” offers better insights. This KPI helps you see if your trucks are spending too much of their active work hours burning fuel while waiting to load, unload, or receive their next assignment. It’s a small shift, but it provides a clearer view of how efficiently your trucks are being used.
A strong KPI should be tracked regularly and early enough in the process to allow for timely adjustments. Take the example of the small fleet owner who checks his bank balance to gauge if it’s been a good month. By the time he sees that number, it’s too late to change the outcome. A better approach would be tracking revenue on a daily or weekly basis. This way, he could spot trends early and make changes before the month ends.
Is daily revenue a good KPI? It’s helpful because it aligns closely with monthly revenue, giving a snapshot of financial health. However, it has its limits. The challenge is understanding what’s driving those numbers and how to influence them effectively.
Each of these factors comes with its own set of variables. The more complex the influences on a KPI, the harder it is to pinpoint exactly what changes will improve the results. That’s why it’s important to choose KPIs that not only reflect performance but also provide clear, actionable insights.
Some KPIs are easy to measure but hard to influence. That’s why it’s better to focus on indicators earlier in the process before too many variables come into play. This makes it clearer how your actions can directly impact the results.
For example, instead of waiting to review your monthly revenue, consider tracking the number of trucks scheduled to work the next day. If you notice that several trucks are sitting idle, you still have time to take action like reaching out to regular customers to line up more deliveries.
Imagine having a KPI that shows you, by 3 PM each day, how many trucks are scheduled for tomorrow. If that number is below your target, you can shift resources to fill those gaps. It’s much easier to influence your revenue when you’re looking at real-time data like this, rather than waiting until the end of the month when it’s too late to make changes.
When it comes to tracking performance, not all metrics are created equal. Some indicators tell you how you’ve done after the fact, while others help you spot trends early enough to make changes. These are known as lagging and leading indicators.
Let’s explain each into manageable parts to understand their role in your dump truck hauling business.
Lagging indicators measure outcomes after they’ve already happened. Think of them as the final score in a game—useful for showing how you performed but offering no chance to change the outcome. Common lagging indicators include net profit at the end of the month, total revenue and overall costs.
For example, if you’re looking at your bank statement at the end of the month to gauge success, you’re relying on a lagging indicator. It’s easy to measure, but by the time you notice a problem, it’s too late to fix it for that period. The challenge with lagging indicators is that many factors contribute to the final number, making it hard to pinpoint what caused the issue.
While lagging indicators show results, leading indicators help predict them. They’re measured earlier in the process and are easier to influence because they reflect day-to-day activities that directly impact your bottom line. For example, the revenue a truck generates in a day is influenced by:
These are the moving parts that drive profitability. If any of them get off track, it affects the bigger picture.
Ideally, operations would run smoothly based on the steps listed above. But reality often looks different:
These small delays add up, cutting into revenue without you even noticing—until you look at your monthly reports and wonder what happened.
To stay ahead of these issues, you can track specific leading indicators that flag problems early. Here are a few that can make a big difference:
If these numbers aren’t where they should be, it’s a sign to investigate. Maybe you need to adjust schedules, add another truck to a route, or address delays at the job site. The point is you’ll know before it’s too late to fix it.
You might be thinking, “How can I possibly track all of this and react fast enough?” It’s true that managing these details manually is tough. But with the right tools, like GPS tracking and telematics systems, much of this data can be collected automatically. These systems can alert dispatchers or managers when key metrics fall outside expected ranges, helping you catch problems early.
The hard part is knowing which metrics to focus on. But once you identify the right leading indicators, they can help you make quick, informed decisions that improve efficiency and profits.
Many articles about KPIs may suggest that all of your indicators should be leading indicators so you can understand what influences them and can act on them. I have a slightly different take on this topic. I think you need a combination of the two.
The lagging indicators capture the overall health of the business, including the many complex variables in a company. There is no denying that net profit, a lagging indicator, is a good reflection of the health of your business. You then use the leading indicators to drive the behavior that will result in improving the lagging indicators.
While you may want to track many KPIs to see how you are doing, an organization can usually only focus on improving a few different indicators at a time. My recommendation is that you do not need to spend a lot of time capturing numerous unused KPIs unless they don’t involve any manual effort. In other words, if possible, create an automated system to track them.
Tracking KPIs is only useful if you act on them. If you’re just collecting numbers without using them to make decisions, you’re wasting time. The goal is to spot issues early and make changes before they hurt your business. When your KPIs are well-chosen, they help you quickly identify problem areas and fix them before they start affecting your profits.
The dump truck hauling industry has been slow to adopt technology, but that’s where the opportunity lies. Companies that use technology to track and manage KPIs are often a step ahead of those still relying on outdated methods.
Interested in learning how a system can give your business an edge? If you have more than 10 trucks and want to see how we can help improve your numbers, click the big red “Request Demo” button at the top of the page or call me at 864-214-2558.
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