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Logistics CFO leverages technology to focus on cash flow amid supply chain woes

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RIMS Transport, the trucking division of Transport Corp Canada, is still dealing with the impact from the latest supply chain challenges plaguing the sector, but group CFO Venu Katta said technology and other cash It relies on flow management tactics to ease the pressure on the company’s bottom line.

“Cash flow management is my focus right now,” Katta said in an interview. Supply-his chain disruptions that erupted during the first wave of COVID-19 this year saw Russia’s invasion of Ukraine lead to supply-side oilhis shock, China’s manufacturing activity contracting amid zero Covid policy Therefore, new oxygen was given.

“Parts aren’t available on time, shipping costs are skyrocketing, we’re out of warehouse space, and demand for drivers is outstripping supply,” says Katta. “The impact of the pandemic is still being felt in this business. We are still in the process of clearing the initial backlog.”

Transport Corp Canada is Southern Ontario’s largest privately held trucking company, providing transportation and supply chain management solutions in Canada and the United States.

desperate for drivers

Some of the early pressure on the trucking sector was related to a shortage of truck drivers, with some companies, such as Transport, stepping up or in some ways mitigating compensation.

For example, instead of paying truck drivers every other week, Katta started issuing weekly paychecks. He also expanded the company’s group insurance coverage to include truck brokers and owner-operators, providing premium reimbursement to workers through a captive insurance program and providing group medical and dental benefits to owner-operators and brokers. expanded to

“We had to keep brokers, drivers and owner-operators,” he said. But to make weekly payments, more cash on hand was required, and the cost of incentives prompted Katta to find ways to offset costs by better managing working capital.

One of the changes Katta made is aimed at expediting payments to the company. He sought to reduce days outstanding on sales (DSO), a measure of the average number of days it takes a company to be paid after a sale. His DSO at the company deteriorated, collections went from he 45 days to he 60 days, and the company ran out of cash faster than accounts receivable.

Previously, it would take at least three to four business days for the company to start the invoice sending process, he explains. Now the company is investing in technology to deal with it.

“We have enhanced our software system so that manifests are scanned on the same day. no longer need to file and scan it into the system, now go directly from the phone to the software, [it’s] charged,” he said.

RIMS Transport had to come up with an innovative solution even early in the pandemic when shipping lanes across the US-Canada border had virtually stopped. It has been a difficult time for companies that rely heavily on trade between the two countries.

cooked tire

To ensure there are enough drivers to cross the border, RIMS Transport has implemented an incentive strategy to ensure all truck drivers are vaccinated. “To keep our trucks going to the U.S., we gave the person who got the vaccine he donated $1,000 and paid another $1,000 for each booster he got,” he said. . As a result, he explains, 99% of his drivers, owners, operators and brokers are vaccine certified. This has also motivated him to stay with the company during a difficult time getting employees back to work, he says.
Added.

There is no end in sight to the ongoing supply chain challenges of 2022, as many have predicted, but new challenges are emerging that need to be resolved.

For example, he explains, there is a shortage of tires for the transportation industry. “Especially if you have 8, 12 or 16 tires per axle trailer or flatbed, they are not available. If it stays for months, it will be damaged because it is placed in a container with high temperature.The material inside the container is cooked.” Repair parts for trailers are also at sea and also come from countries such as China and India. . These kinds of costs cannot be passed on to customers, he adds Katta.