Efficiency and Productivity: Take a Second Look
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 number one 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.
I didn’t 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.
The second 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 integrity can be assured throughout the supply chain. 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.
Ours is a process-driven industry. Eliminating labor-intensive, repetitive, error-prone activities is always the best option. Automating and accelerating such tasks will yield immediate and significant benefits to your business.
If any task is worth doing three times 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.
More automation of everyday jobs at the front end means more availability to concentrate on personal interaction that adds commercial value to your business.
Gene Gander, is vice president for business development, Americas at WiseTech Global, a developer of cloud-based software solutions for the international and domestic logistics industries
headquartered in Sydney, Australia.