In 1990, Continental Airlines did something that sounds rather silly: It removed the armrest ashtrays from its entire aircraft fleet operating within the United States. Congress had abolished smoking on airline flights in the late 1980s, and Middle East tensions during Operation Desert Shield had jet fuel prices soaring. Removing the obsolete ashtrays saved about 50 pounds per aircraft, thereby saving fuel.
The savings were miniscule to be sure – probably not even measurable on a given flight. Yet, when you consider that Continental operates hundreds of flights a day, the airline over 15 years surely has saved hundreds of thousands of gallons of fuel just from this seemingly meaningless step. And best of all, it cost Continental practically nothing. That’s pretty easy to justify. The language of investment – payback, return on investment period and so on – simply doesn’t apply. Even if the airline had retired all those aircraft in 1991, it would have come out ahead.
Your operation may not log the miles Continental Airlines does, but the concept of tiny savings, small increases in revenue or improvements in cash flow adding up to meaningful financial progress applies nevertheless. One or two such steps could have a noticeable impact on your profitability and cash position over an extended period. Several such steps might combine for a positive impact in monthly or quarterly financials.
Pull together a team representing all of your departments and spend a day brainstorming ways to cut costs and increase revenue. Keep it positive and constructive by taking off the table anxiety-inducing measures like staffing cuts or major shifts in the organizational chart.
In this meeting, keep the discussion focused on specific steps that are within the operation’s power to execute in the near term without spending a significant amount of money. Once you get into issues like spec’ing new components or systems on trucks or trailers or buying a new information technology, you probably need an ROI analysis. That’s something you should do, but not in this meeting. Make a list of those potential investments and meet on them a few weeks later – after you have gathered the low-hanging fruit.
What this fruit may be depends heavily on the specifics of your operation, of course. But it might include unnecessary miles because you failed to change your drivers’ routes out of a terminal even though a closer interstate interchange opened a year ago. Or perhaps you invested in document imaging a few years ago but certain departments are still making and filing paper copies because no one told them to stop. Or maybe accounts receivable doesn’t make it a priority to open all checks each morning and deposit them by the bank’s cutoff for the business day. These are small changes in process that will add up over time without inconveniencing anyone.
Not all steps that yield significant financial benefits without an investment will be easy, however. Consider speed. Cutting back slightly on governed speed likely would save fuel without hurting productivity and even enhance your risk management a bit. But how will drivers react? And how important is that to your operation? On paper, it’s a no-brainer, but not everyone will agree that these benefits offset the potential loss of existing drivers and difficulties in hiring others.
Make no mistake: None of the measures you will identify in this exercise are key performance indicators. You won’t, for example, install a big dry erase board in your office to track how many sheets of photocopying paper you used today. That’s not the point. I doubt Continental’s management ever revisited the question of whether they should have ashtrays or worried whether they might have missed one or two. The goal is to change the way you conduct business once and not worry about it again. And let the money – however little – start rolling in.
