There is a demographic tsunami that is about to hit many industries throughout North America including the transportation and logistics industries. For those who were born immediately after World War 2, age 65 is just a few months or years away. There were 76 million Americans (and probably about 7 to 8 million Canadians) born between 1946 and 1964.

Much has been said and written about the high percentage of truck drivers who are 55 years of age and over. That is just one segment of the industry. There are many managers, executives and CEO/owners of trucking companies who are approaching baby boomer status.

Here are a few observations I would like to make on this subject. The economic challenges of the past few years have eroded the nest eggs and value of baby boomers’ properties. While unemployment is very high and possibly going higher in the United States and Canada, many baby boomers need and want to keep working. This generation of seniors is probably healthier than any previous generation. The thought that many baby boomers are ready to step aside and make room for the next generation of workers is not realistic. For those folks thinking that the retirement of baby boomers will solve the unemployment problem, this is not a realistic scenario.

For those baby boomers who will want to keep working past age 65, forward thinking companies should be planning on how to best use these resources. For many companies, this pool of employees represents its most knowledgeable and experienced workforce. The departure of these employees without a sound succession plan could be a ticket to disaster.

Many “boomers” will be looking to remain in their current capacity well into their late 60’s. Some baby boomers will be happy with part time employment or interim assignments (e.g. 3 days a week). Under this scenario, the next level of talent can be mentored, trained and coached so it can take on more senior responsibilities. A good succession plan should include these components:

1. Make sure that junior managers or the so-called “junior seniors” get the breadth of experience they will need when they get to the top.
2. Rotate these folks through multiple assignments in various disciplines.
3. Provide these managers with overseas experience.
4. Establish phased retirement plans that give the company time find replacements and train them properly.
5. Provide “high achievers” with attractive compensation programs so they remain with the company.

Other “boomers” may contemplate re-careering, either in the non-profit or for profit sectors. In order to rebuild their wealth, many seniors will be looking for positions in the corporate world, possibly in start-ups or new business ventures. Some “boomers” may provide their skills as educators or consultants. In the latter capacity, they can be re-hired to provide the coaching needed to elevate the capabilities of their replacements.

For the lucky ones who have the resources to retire without remaining in the workforce in any capacity, they will be a healthy, large and active generation. This segment of baby boomers will create marketing opportunities (e.g. travel, lifestyle, home downsizing, and education) for proactive companies. They will be active in volunteer work and can provide valuable coaching and mentoring skills.

This is the time for companies to review their manpower planning for the next five years. It is time to assess the needs and requirements of your “boomer” workforce and of their eventual replacements to make sure there is a well thought out transition, educational transfer and replacement strategy.

Every manufacturer and retailer is searching for ways to improve productivity, particularly during these economically challenging times. It may take several quarters or years before the economy and freight flows return to the levels experienced in the mid 2000’s. One of the best ways to remain a financially viable company during the resetting of the economy is to be as efficient and productive as possible. While there are multiple productivity measurements, the best indicator of high productivity is sustained exceptional financial performance.

Companies that achieve consistent high productivity tend to be companies that have developed and implemented processes and procedures throughout their organizations that produce superior results. Rather than one shot staff reductions or cost cutting measures that generate one or two strong quarterly results, these are processes that are learned and repeated over time. These processes are often called Best Practices.

To be able to raise productivity, companies need to learn the Best Practices in each sector of the business. They need to discover and use Best Practices appropriate for their business and their workplace. That means knowing that a certain process or solution has been tried, tested and proven to be work extremely well over time.

There are several keys to implementing Best Practices in any organization. They consist of:

• Identifying Best Practices for each segment of the Business

There are a range of Best Practices that correspond with each of the key functions of freight management (e.g. Procurement, Dock management, Yard Management etc.).

• Understanding the gaps between current processes and Best Practices

This is challenge since we live in a very competitive world. It is difficult to find out if what one company deems a Best Practice is in fact superior to the processes in place in other organizations. This is where taking courses or attending conferences such as CSCMP can be helpful so as to learn how other organizations are performing certain tasks.

• Determining the financial benefit of migrating from current Practices to Best Practices

This is also difficult since it is often only after the fact, after a new process has been implemented (e.g. new RFP process), that a company can see the true financial benefit, or lack thereof.

• Teaching the Best Practices to Employees

Any new Best Practice must be documented and taught to the employees who are entrusted with performing that specific set of tasks. Many organizations have captured these Best Practices in operating manuals.

• Installing these Best Practices in a company such that they continue to be repeated over time

As employees leave the organization, new hires must receive the same training. Otherwise a company will slip back to old or less satisfactory processes.

• Monitoring performance over time and taking corrective action when performance dips below acceptable levels

A set of KPI’s (Key Performance Indicators) must be developed for each Best Practice. They must be quantitative in nature and be directly related to the company’s bottom line. A scorecard must be developed and the results shared with all levels of management. The executive accountable for the company’s freight management KPI’s must ensure corrective action is taken each time the results dip below acceptable levels. This will often involve discussions with other departments. For example, if freight costs as a percent of revenue increase, this may be a result of Production (e.g. late production requiring expedited shipping) or an over-commitment by Sales (e.g. next day delivery rather than two or three day service) or Transportation (e.g. using wrong carrier in Routing Guide).

The temptation for many companies during these tough times has been to take shortcuts in an effort to reduce costs. Another misconception is that over time, we will return to the “good old days” and everything will be fine. Our world is continuing to evolve and change and it will likely be very different in the years ahead. The implication is that Best Practices must continually be re-evaluated and revised over time to make the processes relevant and appropriate to the company’s external environment and its workplace.

Companies that exhibit Best Practices in Transportation tend to be those that are led and managed by excellent people who part of a well planned organization structure. Transportation is one of the pillars of Supply Chain Management. In small organizations the leader of the transportation function needs to be well schooled in the key elements of Supply Chain Management. These include distribution, inventory control, customer service and of course, transportation management. In larger organizations these various functions can be separated under Director or V.P. level individuals.

The Supply Chain leader should be of equal stature with his or her counterparts in Sales and Marketing, Production, Operations, Purchasing and Finance. An effective supply chain strategy can be a key differentiator for a company. To be effective, it must align with customer delivery requirements, production capabilities and profitable pricing levels. In other words, the organization needs to have the linkages or matrices in place so the various functional areas collaborate and work together to meet the needs of customers and shareholders.

In leading edge organizations, the Transportation leader has full or shared responsibility for both inbound and outbound transportation. Leaving inbound transportation under Purchasing robs the company of the opportunity to fully leverage their freight with carriers so as to achieve maximum cost savings. It limits or deprives the company of the prospect of creating round trips and continuous moves that can produce synergies and cost savings.

Shippers from companies with sales greater than $3 billion, who responded to this year’s Logistics Management Master’s of Logistics survey, reported that they are “moving to a more defined logistics and supply chain organizational structure than other size firms. They also extensively use cross-functional teams for managing transportation and logistics activities. An example would be procurement and inbound transportation that meets regularly to discuss strategic issues for both areas as opposed to other size firms where procurement decisions drive inbound transportation execution. The study findings imply that the organizational changes have enabled the Masters to improve performance relative to supply chain velocity (as measured by inventory turns) and customer service. In addition, policy decisions for the Masters are becoming more centralized across a variety of activities including raw materials and finished goods inventory, packaging and managing freight forwarding relationships.”

Companies with multi plant facilities require centralized control and oversight. This will ensure that there is an overall transportation strategy that guides the leveraging of the company’s total freight volumes. The centralized team examines the impact on transportation from shifting production or distribution from one facility to another and the opportunities to use pool points to consolidate freight in transit to improve efficiencies, reduce costs and increase customer satisfaction. These companies will likely have transportation management personnel in place in each plant to ensure there is decentralized approach to executing and managing the freight management function at the local level.

The top Transportation executive should have a formal education in logistics and transportation, at least at the undergraduate level if not Master’s degree level. If the individual has not achieved this level of education, he or she should be sent to a well respected institution (such as the CITT or York University, Schulich School of Business Master’s Certificate in Supply Chain and Logistics in Toronto). There are similar programs available from various universities throughout North America. Beware of sending executives to “quickie” logistics courses that provide only a superficial level of knowledge and do not equip one to deal with the challenges of the position.

Professional recruiting processes should be put in place to ensure that new hires to the transportation department have been properly screened and vetted. They have the required skills and knowledge, preferably with industry experience. They are team players who are flexible and have strong interpersonal skills. Rather than hiring clones of the leader, new team members bring expertise in areas where there is a lack of depth.

Some companies rely on a front line transportation expert who may commonly be a Traffic Manager, Dispatcher or Transportation Supervisor. There are several weaknesses with this approach. The individual may be very knowledgeable in such areas as the local carriers and rates but may not be able to see the opportunities that exist by looking at the “big picture.” Some of these individuals are placed in the role of executing the business strategy but have limited input into the design of the strategy. The Traffic Manager may be tasked with moving the freight that comes off the assembly line but may not have the authority or stature in the company to challenge poorly designed processes that result in late deliveries or excessive expedited freight charges.

The field of transportation has gone through profound changes over the past decade and more specifically over the past two years. These changes require Transportation leaders and managers at all levels to think “out of the box,” to challenge existing paradigms, to explore modes of transport that have not had much utilization in the past. Effective transportation organizations are learning organizations. They encourage continuous improvement and subsidize participation in workshops, conferences and courses that provide upgraded skills and tools. Following these Best Practices can help your organization build a leading edge transportation organization.

One of the most frequently repeated lines in business is that you can only manage what you measure. This well known business principle applies just as well to freight transportation. To effectively manage freight transportation, there are a number of key data elements that need to be captured.

The most fundamental building blocks are the individual boxes, parcels, envelopes, cartons, drums or pallets. Each individual item must be properly classified, dimensions measured (e.g. height, length and width), weighed and photographed. Any other distinguishing features such as type of material (e.g. hazardous), the state in which it must be maintained (e.g. dry, frozen, chilled etc.), freight handling requirements (e.g. forklifts, pallet jacks) and loading requirements (e.g. do not load with chemicals) must also be documented. Capturing this data correctly and completely allows each shipper to address such fundamental issues as the type of container to be used, space occupied, loading plan etc. This data is also critical when conducting an RFP as a means to selecting the appropriate modes and carriers.

The data that each shipper maintains must contain certain data elements in order to be useful for analysis and planning purposes. The following data fields are essential.

Shipment number
Pick up date
Origin zip code/postal code
Origin city
Origin province or state
Product description
Shipment weight
Unit of loading (e.g. box, pallet etc.)
Carrier name
Mode (e.g. courier, LTL, truckload, carload etc.)
Destination zip code/postal code
Destination City
Destination province or state
Delivery date
Line haul rate
Fuel surcharge
Other accessorial charges
Shortages or damages

Shippers with private fleets must also maintain detailed records on each piece of equipment such as equipment type, dimensions, manufacturer, date purchased, miles driven, maintenance schedule, etc. The location of each vehicle should be specfied through good Yard Management practices. In addition, there is a requirement to track such items as loaded and empty miles, revenue per trip, direct and overhead costs per trip, fuel costs and driver name. This way the fleet can be managed as a profit centre. Similarly the location of all vehicles (e.g. in yard, at customer's premises, en route) must be tracked so as to ensure that these assets are being utilized as productively as possible.

The data must be audited on an ongoing basis to make sure that it is accurate and complete. A clerical error (e.g. inserting 100,000 instead of 100 pounds or leaving a block of fields blank) can throw off a year’s worth of data and lead to an erroneous analysis. Data auditing leads to data cleansing. Erroneous data must be corrected; data for missing fields must be gathered and entered into the data template. The source of the errors must be identified and fixed.

A number of analyses must be performed on an ongoing basis to monitor trends. Among the key items to be tracked are:

Total annual freight costs
Percent increase/decrease in annual freight costs
Fuel surcharges as a percent of total freight costs
Freight costs as a percent of supply chain costs
Freight costs as a percent of revenue
Percent of freight costs by mode
Freights costs in descending order by carrier
Percent of freight given to each carrier by mode of transport
Percent changes year/year in freight costs by mode
On time service by carrier
Claims cost as a percent of revenue
Billing accuracy

The data must then be scrutinized and managed on a consistent basis. Deviations (e.g. increase in expedited freight costs, late deliveries, load refusals) must be identified, challenged and corrected. The appropriate management and non-management individuals must be tasked with meeting objectives (e.g. freight KPI’s) in order help the company achieve its bottom line. Following these best practices is another step in that direction.

Another important area of freight data management that is sometimes overlooked is Carrier Management. It is very important to maintain complete and accurate files on each of your carriers across all modes. The file should include a questionnaire that captures the salient characteristics about each carrier (e.g. key contacts, safety rating, fleet size, special certificates and capabilities, (e.g. HACCP, refrigerated service etc.).

Finally there should be scorecards and dashboards in place to track performance. A scorecard is often an historical document that contains snapshots of data, at specific points in time, on the company’s key transportation related KPI’s. Dashboards are often used as advance warning tools. They highlight missed pickups and potential late deliveries and can be used to trigger corrective action and to give customers a “heads up” in advance of any service failures. Best Practice is to consistently measure the right variables at the right time so as to ensure a smooth running, cost effective supply chain.