“A company without an accurate measurement system is like a ship without a rudder; it just wanders aimlessly. Incidentally, directives such as “make a profit” or “increase revenue” do not provide the direction needed!” R. Sullivan
Operations Productivity / Efficiency:
In my experience there seems to be some degree of uncertainty about the word “Productivity”. I frequently hear from leaders, “What do you want, service / quality or productivity?” It is important to understand that being efficient is part of service and quality. The primary definition of service / quality is, “meeting the requirements”. Isn’t it true that being an efficient carrier or P&D driver or dockworker is a requirement just like counting the pieces of a shipment? Good productivity and efficiency can produce good profits and that is good for any company or employee.
“Productivity” can be properly defined as simply doing all we can properly by following clearly defined methods that are determined to work best. This means not a wasted minute, not a run pace and then a stop pace, or not two coffee breaks rather than one or a 45-minute lunch when 30 minutes is defined. Productivity comes from a positive attitude that says, “I will gladly do correctly and accurately all that I can, because that is what I am here for”.
EMS uses time and miles as its primary cost drivers in Pickup and Delivery Operations, time as its primary cost driver in dock and weight, cube and distance as its primary cost driver in linehaul. Most resources have capacities that can be readily measured by the amount of time available to perform work.
Good productivity comes from:
- A positive attitude
- The right materials, tools and resources
- Right layout and effective organization
- Right methods
- Most of all…a willingness to do the right things right
Why is it important to be productive?
As you know in 1980, our industry was deregulated. During regulation, rates were structured so that every carrier profited. All rates were the same and carriers charged the same thing and those that were efficient enjoyed huge profits and those that were not efficient had lower profits. That ship has sailed and profits are no longer protected or guaranteed as they were during regulation. In fact with all the FAK’s (tiered or otherwise), pallet rates, 3PL’s etc., the rate bases have been decimated through huge discounts and givebacks.
In order to provide job security for employees carriers must be price competitive with other carriers. Since prices are determined as a result of a carriers cost, the carrier must be as efficient as possible.
Being productive is an important part of service and quality. The long-term future for LTL carriers will be dependent more and more upon their ability to be efficient! Being the low cost (not low price) carrier in the markets served creates a competitive advantage.
Some of the variables the EMS productivity system gives allowances for are:
Dock Efficiency: The EMS system gives time allowances for...
- Total number of bills handled
- Total number of pieces handled.
- Total weight handled.
- Size of the terminal dock
- Distribution / Sort & Segregate
- Received at Dock (interline, customer truck)
P&D Efficiency: The EMS System gives time allowances for,
- Total number of stops made
- Total number of shipments picked up and delivered.
- Total number of pieces / handling units picked up and delivered.
- Total weight picked up and delivered.
- Total number of trailers dropped and picked.
- Total miles driven.
- Total number of Net Hours ( hours in P&D)
- Size and population of the cities served by each terminal.
In the slide above, you see 5 different P&D Trips. Please notice the diversity of workload for each trip. Most carriers are still use outdated measurements such wages as a percent of revenue, pounds per man-hour, shipments per hour, and “How many stops do you put on a driver to get an efficient workload”? No wonder so many operations leaders are frustrated and “manage by thrashabout”!
You can get an efficient workload with 7 stops if the driver has enough weight and handling units to offset the small number of stops. One trip may need 25 or 30 stops if he only has a few pieces and less than 10,000 pounds. Carriers understand this at some level. They know that shipments, pieces/handling units, weight, multiple shipments, size of docks, and population of cities all affect costs. They just do not know how much each of those elements affects cost. The EMS system does!
Oh, the 5 P&D trips above. As diverse as their workload is, under the EMS system each trip has the same amount of workload in hours…3.66 hours. That is one of the many reasons EMS clients call the system,” THE BEST MANAGEMENT TOOL AVAILABLE!