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.