Gene Gander, WiseTech Global’s VP Business Development, Americas - explains how finding one may not necessarily lead your business directly to the other.
I once thought efficiency was synonymous with productivity. It turns out it isn’t. For operators in our industry, from high-volume express couriers to white-glove freight forwarders - isolated gains in efficiency in one product or service area can actually harm overall productivity of the company in terms of profit margins, growth, and customer satisfaction.
Let’s start by defining productivity as the total throughput of your organization as a whole. Doing so gives us the true top and bottom numbers. However, if you break it down and look at subsets of people or processes individually, they can be efficient on their own even if their input is actually detrimental to the company’s overall results. Single metrics can look good while the business fails.
How is this possible? Remember the compelling story of a turnaround airline that set a quarterly objective to be #1 in on-time departures no matter what, and they did it. But in order to turn aircraft more quickly, they paid the cost of leaving freight on the ground. They were efficient in getting out on time, but were they productive? According to cargo operations and the airline’s overall revenue: absolutely not.
Efficiency impacts your other departments and the total supply chain.
I didn’t truly appreciate the difference between efficiency and productivity until I witnessed two managers disagree over a system review of their transportation software. The first manager was obsessed with how fast a single shipment entry could be completed. It was a margin of three vs. four minutes, and he was putting a stake in the ground based solely on a 25 percent efficiency gain. But because his drive did nothing to automate dispatch, eliminate rework, or accelerate rating and billing, his ‘efficient’ dream became the other manager’s nightmare.
The second manager hesitantly admitted that at this rate they did not actually do 100+ files per person per day due to other manual and segmented tasks. His single-metric, ‘no care no responsibility’ approach actually ran counter to the company’s 1-10-100 quality initiative. This manager saw that the small amount of extra time it took to get things right from the very beginning far outweighed the multiplying factors of time and cost to rectify errors or failures later on.
Some in our industry have the mentality that their job is only to send the freight off the dock as quickly as possible, and what happens further along the supply chain isn’t their problem. But if we make the small, initial effort to correctly register a shipment - with all the validations at the point of data entry - integrity can be assured throughout the supply chain. If a mandatory Incoterm® is not included, for instance, it may delay settlement and timely release at destination. That only adds rework and eats into margins.
Get it right at the start rather than fixing it at the end. One area’s ‘efficiency’ should not come at the expense of the company’s total throughput.
If it’s worth doing three times, it’s worth not doing at all.
Eliminate. Automate. Accelerate.
Ours is a process-driven industry. Every day, tasks are being repeated over and over – with varying degrees of manual or expert input. Eliminating labor-intensive, repetitive, error-prone activities is always the best option, but otherwise automating and accelerating such tasks will yield immediate and significant benefits to your business.
If any task is worth doing three times (and that’s a worthwhile assessment in its own right) then it’s worth automating. Taking two hours to create a single report for a client twice a year isn’t a priority for automation, and it won’t bring you a strong return. Instead, find a task that takes your staff thirty seconds eight times a day every day and has frequent rework implications down the chain, and then you’ll have found something worth improving.
Even after combing through your operations, eliminating redundancies, and automating repetitive tasks, if jobs still remain that must be done via old-fashioned human effort, then at least find a way to accelerate it. The technology to accelerate your human resource and gain productivity is out there.
The more automation of everyday jobs that you can establish at the front end of your operations, the more availability you have to concentrate on personal interaction that adds commercial value to your business, allowing you to humanize the exceptions and maintain margins.
The value proposition of ERP software has always been that the whole is greater than the sum. And with today’s cost-effective, advanced TMS options, automation of those tasks will already be built-in and it’s just a matter of switching it on. The hundreds of compliance and tracking databases that weigh down global forwarders can be reduced to one. Then you can move to truly accelerating your productivity, not just gaining efficiency in isolated areas.
Gene Gander is WiseTech Global's VP Business Development, Americas
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