The General Theory of Productivity
There’s a truism in business: You can’t have incremental responses to dramatic changes. In fact, doing the same thing over and over and just trying to get a little bit better--amid huge, structural shifts--comes pretty close to Einstein’s alleged definition of insanity.
Now, it’s the transportation and logistics world’s turn to put that wisdom to the test as freight economics veer off in a challenging, new direction. A booming economy has created a capacity crunch and rising freight prices. Sysco CEO Thomas Bene recently told his investors, “The more freight on the road obviously creates pressure for everybody.”
Add to that a driver shortage caused by an aging workforce and a truck shortage due to new federal requirements for electronic logging devices (ELDs). The result is a tougher time booking your goods to destination and at much, much higher prices. The American Associate of Railroads reported a year-over-year increase of 6.6 percent in intermodal freight rates in May. And, driver pay went up 7 to 11 cents per mile in the first quarter, compared to the same period last year—with box-truck driver sign on bonuses skyrocketing from $1,500 a year ago to an average of $7,000 this past quarter.
In environments like this, squeezing your suppliers or putting work out to bid simply isn’t going to work. You need a transformational approach, which is where Morgan makes its reputation. Recently, we were called to audit a world-class ground transportation network facing all of the above pressures. In addition to reviewing available data, we deployed our ChronosCloud mobile tools to capture all the offline information that happens in the gaps between ERP and web systems. When we analyzed our data, we found a system that was working very hard but hauling around a lot of air. Overall, utilization for the multi-supplier fleet was stuck in the low 20 percent range. We also were able to document a mis-alignment of production, labor and transportation.
By better coordinating resources with the work to be done, our client’s going to unlock a lot of capacity—at no additional cost. Call us crazy, but that sounds like an Einstein-smart approach to today’s market.
Let us know if you’d like a no-cost and no-obligation review of your own transportation processes!