The current recession is producing changes to our economy that we are all trying to comprehend. I have recently written about these changes in my blog on “Shipper/Carrier Strategies for the Resetting Economy,” that was posted on August 28, 2009. I have also highlighted some lessons we can all learn from the current recession in last week’s blog, “Essential Skills for the Post-Recession Economy.” My objectives in trying to research and learn about these changes are twofold:

First, I want to ensure that the clients of Dan Goodwill & Associates benefit from the latest and most relevant wisdom and business strategies. Second, I hope to provide readers of this blog with some thought leadership with respect to what impacts these changes are having on the successful operation of a trucking business.

In this blog, I will look at some ideas that have been proposed on how to more effectively manage business enterprises to succeed as the economy “resets.” The inspiration for the blog came from a thought-provoking presentation I heard on Next Generation Management, delivered by John R. Brant of the MPI Group at the SMC3 Summer Conference this year. I will attempt to draw out the inferences for distributors and transportation companies.

In his presentation, Mr. Brant highlighted five key elements that will be essential to success in the “Next Generation.” Most of these elements apply to both transportation companies and manufacturing organizations. They are:

1. Customer-focused innovation: Develop, make and market new products and services that meet customers’ needs at a faster pace than the competition.

2. Engaged people/human capital acquisition, development and retention: Secure a competitive performance advantage by having superior systems in place to recruit, hire, develop and retain talent.

3. Superior processes/improvement focus: Record annual productivity and quality gains that exceed the competition through a companywide commitment to continuous improvement.

4. Green/sustainability: Design and implement waste and energy-use reductions at a level that provides superior cost performance and recognize customer value.

5. Global engagement: Secure business advantages by having people, partnerships, and systems in place capable of engaging global markets and talents better.

In the research conducted by the MPI Group, they identified that those companies with world class supply chains have a higher percentage of their workforce dedicated to their Supply Chains and more staff working on supply chain partnerships.

These companies spend a higher percentage of their revenues on IT. They have been more successful in reducing inventory levels and most important, companies with world class supply chains tend to make more money than companies that are not best in class. Mr. Brant argued that many companies measure the wrong metrics. World class supply chains have metrics that are more customer-focused.

He argued that next generation supply chains will look different. They will have:

• Advanced Measurement Systems: The companies that are closest to “world class” status have more advanced metrics than the laggard companies. They more frequently provide a “perfect delivery” to their customers.

Implications for logistics organizations: World class companies utilize more effective scorecards and dashboards. They are better able to track performance and to ensure that their freight arrives consistently on time.

• Overall Performance: Manufacturers at or near world-class status are far more likely to identify their supply chains as advanced extended enterprises. They feature real-time communication of demand and their entire supply chains are flexible to demand spikes. Standard delivery times are consistently met and these companies maintain just-in-time inventories.

Implications for logistics organizations: World class companies feature better shipper/carrier communication. They are better equipped to proactively inform their partners of demand changes so they have sufficient trucking capacity in place to handle fluctuations in demand.

• Responsiveness: A higher percentage of world class companies report that “strategic suppliers and customers are active participants” in operations versus those companies that are not at this level.

Implications for logistics organizations: World class companies collaborate more effectively with their supply chain partners. They work with their partners to achieve superior results.

World class companies hire better, train better and perform better. Their employees have a better understanding of how their companies make money and how they each contribute to the bottom line. The compensation of their employees is tied directly to their financial performance. As we gradually exit the recession, these are important principles that companies should attempt to emulate in their management processes to enhance their opportunities for success.