Proper alignment for productivity

ProMiles Software Development Corp. (www.promiles.com) released the Kingpin Edition of its mileage guide, which features door-to-door routing and enhanced road attributes, and relies on digital map data and content from the Tele Atlas/Logistics database.

Networkcar (www.networkcar.com) partnered with Automotive Resources International to offer ARI customers a wireless system to monitor the performance and location of fleet vehicles.

Getloaded.com added new website enhancements, including the ability to pinpoint truck postings from city to city. Other new features include the ability to select equipment attributes separated from trailer types, and more control over viewing load and truck search results.

AT&T introduced a fully hosted, on-demand GPS-based work force-management solution for business customers, TeleNav Track from TeleNav. The package includes GPS-enabled location tracking, mileage tracking, wireless time sheets, exception alerts and detailed location reporting to capture field data.

Integrated Decision Support Corp. (www.idscnet.com) announced new customers of its Expert Fuel and Trip Alert/Swap Advice optimization software solutions: Chicago-based Hoekstra Transport-ation and national flatbed carrier Central Oregon Truck Co., based in Prineville.

SkyBitz (www.skybitz.com) said its Global Locating System trailer-tracking product has been selected by Quebec, Canada-based Total Logistics Group and by Fittipaldi Carriers subsidiary Commodity Express Transportation.

Some of the most common tools used to measure efficiency and productivity by less-than-truckload carriers include operating ratio, wages as a percentage of revenue, pounds per man hour and stops per hour. Throw them all away, says fleet management consultant Robert Sullivan. “Get away from past-based measurements,” Sullivan says. “It’s killing us.”

When listening to Sullivan pick apart traditional accounting methods, it’s easy to see why. For example, how can a company hold a terminal manager accountable for the OR at one location when OR is taken from a standard profit-and-loss statement burdened with various fixed-cost allocations – such as rent and equipment depreciation – that the terminal manager has no control over?

Similarly, pounds per man hour is a macro-level measure of productivity computed by using historical data of weights and hours. As such, it leaves out many important variables necessary for zeroing in on productivity – like the fact that each shipment has a unique number of units, not just weight, as well as handling time.

Carriers also often use wages as a percentage of revenue to gauge productivity. The problem is that this metric – typically based on an hourly rate – doesn’t consider “fringe” costs such as health insurance, taxes, 401(k) and other employee benefits that add 25 to 45 percent of the wage cost. Productivity also is a function of the “quality” of the revenue – not just the worker.

“That number is confusing and unfair,” Sullivan says. “If the quality of the revenue is declining, this method could artificially suggest that productivity is declining because the wage as a percent of revenue would increase.”

A better measure of efficiency, Sullivan argues, is contribution ratio – the ratio of revenue to variable costs – for each shipment and customer account. When held accountable for contribution ratio, managers can take direct control of growing revenue and improving efficiencies. A more accurate measure of productivity is the level of output or efficiency against a standard. By a standard, Sullivan means an “engineered standard” for how long it takes the average worker to handle a shipment.

An engineered standard for the time and cost of a 100-mile route will vary by location, the pieces and weight of each shipment, and the number of shipments per stop. It “takes all variables into consideration,” Sullivan says. “Drive time for 100 miles in Chicago is a lot different than in Casper, Wyoming. All of those variables determine how long it takes to pick up and deliver.”

In 1986, after a 15-year career in various leadership roles at a major LTL carrier, Sullivan founded consulting firm Effective Management Systems (www.effmgtinc.com). Sullivan led the development of an AS400-based management system – the EMS Software Solution – to automate LTL costing, efficiency, profitability and performance metrics that he says are necessary to align company resources and to become the low-cost leader.

“I think it is absolutely critical that you be the low-cost provider – not the low-price provider,” Sullivan says. “If you are low cost, then all the competition is reacting to you.”

EMS Software Solution integrates with carriers’ existing information systems to pull data from sources such as customer files, freight bill files and programs that track pickup/delivery and dock/linehaul manifests. The system features a uniform scoring method to compare the profitability and performance of different terminals, which traditional accounting systems cannot do effectively, Sullivan believes.

Bismarck, N.D.-based Cross Country Courier (CCC) previously relied on simple metrics like revenue per mile, operating ratio and labor as a percent of revenue, says President Janeanne Bischke. A further hindrance to nailing down the profitability of each terminal was inadequate information systems, she adds. “It was very difficult to really know if you were making the right assumptions,” Bischke says. CCC began using the EMS system last year.

“I know exactly how much labor and expense was generated for each shipment,” Bischke says. “[The EMS system] brings us all back to one number. It requires that everybody speaks the same language. I used to feel that I had to have people in the field running their own business.” CCC has seen a 10 percent reduction in variable costs, and the company has better focused its sales efforts, Bischke says.

“We can better track excess capacity and give the information to our sales team,” Bischke says. “Now we look at areas where we have a terminal or route that is not producing the kind of workload that we need to sustain it. We can say to our sales force, ‘Do a sales blitz in Duluth, Minnesota. Either pull freight into it or get out of it.’ ”

By aligning resources to quickly grab opportunity and simultaneously get costs out of the system, companies can build a competitive advantage.

“You want your competition reacting to you, not you reacting to the competition,” Sullivan says.


Intermec introduces high-speed handheld
Intermec (www.intermec.com) announced the availability of its CDMA/EV-DO capable CN3 mobile computer, the first rugged handheld computer to operate with Evolution-Data Optimized (EV-DO) wireless broadband data transmission capabilities. The handheld computer will operate on release version 0 of the EV-DO specification for CDMA WWAN cellular networks.

The CN3 has been certified for voice and data transmission on the Sprint Mobile Broadband Network, which is the largest mobile broadband network. Sprint customers now can use the CN3 mobile computer to make voice calls, send data and manage documents, the company says. The bandwidth afforded by the computer’s EV-DO capabilities allows for richer applications as well as data-intensive services such as high-speed video telephone, video messaging and large file transmissions.

The CN3 is equipped with integrated GPS and Bluetooth, and allows onscreen and hands-free turn-by-turn voice navigation. The device, which also features 3G WAN and Cisco Compatible WiFi connectivity, is powered by Microsoft Windows Mobile 5.0 software with the Messaging and Security Feature Pack, including Direct Push Technology for wireless e-mail, and comes with a QWERTY keyboard or an optional numeric keypad.