Home Columnists Role of proper accountability in achieving adequate profitability margin within courier industry – Onwuka
Columnists - December 26, 2022

Role of proper accountability in achieving adequate profitability margin within courier industry – Onwuka

In any business, primary objectives of its establishment are to make profit. This being the case therefore, it becomes pertinent that adequate planning, control and proper accountability is required to effectively realize the goal and objective of setting up the business.

PLANNING

Planning which is deciding in advance what to do, how to do it, when to do it and who to do. It is very important in organization growth and development as it will appear that most business fail due to lack of proper planning. Proper planning will assist the manager to develop strategies, make forecasts, fix goals and set targets. That will be geared towards achieving a good profit margin to keep the business afloat.

Besides, planning as a management function helps in achieving the followings; identifying opportunities, determining goals and objectives, evaluation of objectives, policy formation, implementation and review. It is important to stress here that planning provides direction and a purpose for organizations. It provides a unifying framework for decision making throughout the organization. A good plan must be able to reveal future opportunities and treats stated by Peter Drunker.

CONTROLLING: Controlling on the other hand is one of the most important management processes, which deals with the way and manner we approach issues. It is related to planning, organizing and leading. Planning is concerned primarily with setting goals. Leading involves guiding employees so that goals will be reached.

Controlling functions involves judging the success of meeting the goals and taking corrective action, if necessary, when goals are not being achieved. This means that through the organization should be able to determine whether stated goals and objectives are appropriate, in the first instance. Controlling is essential a managerial function and the establishment of control system is usual the concern of top and senior managers.

Although, some form of control is needed at all levels of the managerial hierarch, as it is a guide to productivity and good performance.

Because of the impact of these in organization growth and survival, the manager undoubtedly is expected to play a pivot role in this endeavour’s as the person  is expected to provide the missing link in the organization’s value/quality , delivery chain that  are very crucial to propelling the  organization to consistently achieving superior performance. To ensure that the organization becomes responsive to the dictates of its environments, it workforce must play a crucial role, both in the short and long term.  Extent there participations would depend dent on the quality of leadership provided by management’s repository of knowledge, skill and essential attributes for enhancing productivity.

LEADERSHIP AND MANAGEMENT : Leadership which is the exercise of influence on the part of the leader over the behaviour of one or more people is a vital aspect of management since leaders are known to command some level of power and authority in influencing the action of the subordinates in an organization. Management on the other hand is usually viewed as getting things done through other people in order to achieve the stated organizational goals and objectives. Even though there is some level of different in the application of the two bottom lines, that’s both are applied by managers to achieve results.

A good manager should be able to apply leadership qualities and management techniques to carry his /her subordinate along in achieving long lasting results that will improve performance.

CRITICAL FACTORS IMPACTING ON MANAGERIAL PERFORMANCE : As competition becomes intense and destructive, manager must learn to be skillful in managing margin, overhead, people and cash flow, which are essential to sustaining productively and ensure the development of a conducive working environment.

In order, to be in tune with really and make the right judgment, the manager must be able to critically examine the past, present and future, impact both internal and external, in addition to considering strategic matters and potential future issues.

Considering, adapting the changing condition is a key to any organization’s success and manager are expected to play this crucial role on a consistent  basis such as that organizational capacity is enhanced and used as a strategic tool to achieve superior performance.

ACCOUNTABLITY : The term accountability is one of the most frequently used terms in any organization  or institution  to express the need for transparency that is concepts of being answerable and responsible to ensuring that purpose and objective of certain programmes and activities  are reached.

The process can be view from the perspective of the organization itself or from the perspective of the individual organization; the organization will be accountability will for its policies, while individuals within the organization will be accountable for their performance.

PROFIT IMPROVEMENT: Profit is the result, not the objective of efficient management on his own, profit as shown on the balance sheet is not accurate measure of success in business. Profit figure can be influenced by factors quite distinct from the trading performance of the company. These include how research and development is treated in the accounts, how stocks’ works in progress are valued and how the flow of investments is dealt with.

For example, the controller of Bethlehem Steel Company stated; we are not in business to make steel, we are not in business to build ships, and we are not in business to make money.

This statement is, of course, gross over simplifications, but at least it emphasizes the importance of the flow of money. as Robert Heller has said: Business and managers don’t earn profit, they earn money. And he has emphasized that the first rule of business is that cash in must exceed cash out. Profit improvement is about maximizing an abstraction called profit, which is subject to so many extraneous influences.

Perhaps we should think of it as a performance improvement measured in financial terms rather than profit improvement. But profit improvement is what most people call it and this is the term used here with reservations.

FACTORS AFFECTING PROFIT IMPROVEMENT : The three key factors are sales, costs, and effectiveness.

SALES: The maximization of sales revenue depends largely on good marketing, although the importance of delivering quality and high level of service cannot be overestimated. There are two approaches to marketing. One is to assess the market in terms of what existing and potential customers will send. This means an analysis of sending patterns of existing customers along with possible prospective ones. The order is to assess the scope of creating  avenue for more business, which do not exist at the moment, by developing and offering better quality service and more awareness.

Good marketing ensures that the company and its products are presented to customers by advertising, merchandising and public relations in a way, which will be best, promote sales.

Maximizing profit means getting the right balance between high margins and high sales volume. Sales depend on good marketing but do not necessary follow from it.  A well trained, well motivated and well controlled sales force is an essential ingredient.

THE ORDER ASPECT THAT IS DELIVERY

Essential marketing and selling will go for which if the speed of delivery is lacking, if the delay in the delivery of customers consignments entrusted to us takes too long a time to be delivered, it will definitely affect the growth of our business and if the responsive period of enquires, complains and queries are not dealt with properly it will also affect the business.

COST: One of the many wise things Peter Drunker has said, is that cost, after all does not exist by itself. If is always incurred for the sake of a result. What matters therefore is not the absolute cost level but the relationship between efforts and their results.

The approach to cost reduction as described later in this is producing results than those which are not. Cost should be meaningful applied and incurred so as not to kill the business, since too much overhead will definitely affect the profit margin of the organization.

EFFECTIVENESS: The objective here should be effectiveness rather than just efficiency, to do the right rather than merely to do things right. Effectiveness should be aimed for in the area of:

PRODUCTIVE- Getting more for less, whether it is human resources (Out put per head). Capital (return on investment or equipment (output per unit).

FINANCE- Tightening credit policies, cracking down on bad debts, controlling quality and settlement discounts, optimizing cash holding, while gaining maximum interest on surplus cash , and reducing interest payments on bank overdrafts to a minimum.

INVESTORY- Keeping the amount tied up in working capital to the minimum, consistent with the need to satisfy customer demand.

APPROACH TO PROFIT IMPROVEMENT

Profit improvement should be a continuous exercise. It should not be left until a crisis forces you to think about it. Start with an analysis of your current level of business. Look at the whole transaction in your branch and assess the relative profitability and potential of business within your branch. Haven done this will help you to think about how to improve your marketing strategies by accelerating your rate of prospecting for business. Use the 80/20 rule (Pareto’s Law), which suggest that 20% of your business transaction will generate 80% of your profit. Therefore concentrate on maximizing the effectiveness of the 20% area where the impact will be greatest.

Identify those aspects of the business or factors impeding your potentials and convert then into opportunities.

Then look ahead. Project trends, anticipate challenges and where appropriate solve them to enable you build for the future and not being overwhelmed by such challenges, in fact, be proactive at all time.

CUTTING COST TO IMPROVE PROFITABLITY

Cost always requires to be controlled. You should start with the assumption that costs are too high and that they can be reduced. Organization that prudently mange cost always survives any form off crisis condition.

Besides, one should know what to cut, how to cut it and also plan to cut cost.

You attack on cost should concentrate on these six areas:

Payroll costs; reduce the number of staff if the organization is over staffed or if the wage bill is high, it could be reduced.

Business Development Costs; cost of advertising and promotion to increase business flow, and the cost of marketing without any result could be reduced.

Operation Costs; all the other costs incurred in operating the business e.g. Trans-loading of shipments, on-forwarding, vehicle repairs, transporting and other costs you assume incurred could be reduced.

Material and Inventory Costs; the cost of buying material in parts and maintaining optimum stock levels.

Wastage Cost; this occurs in cases of the misuse of company working materials and tools, destruction of items, loss of shipments costs of litigations, payment for lost items, extravagant use of company , facilities of equipment e.g. Photocopy machines, telephone stationery. Also waste in cost could come as a result delay in decision making, bottlenecks and inefficient workflow.

Time Wasting Costs; wasting of time here include arriving to work late or leaving early prolonged meal break or using company working hour to deal with personal matters, taking undue excuses from work etc.

Finally, the proper keeping of the revenue documents such as the Air Way Bills (AWB), Daily Sales Sheet (DSS) and the manifest are very important as the accurate recording of information on them will facilitate and reduce the error of proper accounting.

By  Tony Onwuka, Marketing Consultant to Courier Industries

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Alleged $4.5bn, N2.8bn fraud: EFCC presents first witness against Emefiele, one other 

Economic and Financial Crimes Commission EFCC, on Friday, April 12, 2024, presented its fi…