INDUSTRIAL ENGINEERING APPLICATIONS IN TRANSPORTATION:QUALITY IN TRANSPORTATION

QUALITY IN TRANSPORTATION

Companies that specialize in the transportation of goods must manage their costs, growth, and quality in order to remain competitive. However, without the appropriate measures and the systems to support performance measurement, it is practically impossible to manage any transportation system. In mea- suring quality in the freight-transportation industry several questions arise. First, of course, is the definition of quality itself. In this industry, quality is viewed differently at different steps in the transportation process. Shippers have different requirements from those of the receivers. Different internal processes have different views of quality and its measurement. However, we can summarize these requirements into five categories:

1. Damages: Was the shipment damaged in the process?

2. On-time performance: Were all service guarantees met?

3. Accuracy: Was the shipment delivered to the correct destination?

4. Shipment integrity: Were all the items in a shipment delivered together?

5. Information integrity: Was the information associated with a shipment available at all times?

The primary objective of the transportation-planning activity is to design processes that maintain high levels of performance in all five categories. Let’s explore these requirements further:

• Damages: Of all the quality factors discussed, damages are perhaps one of the most important indicators of quality in both the receiver’s and the shipper’s view. When the freight- transportation company damages the merchandise being moved, the shipper, the receiver, and the transportation company itself are affected. Costs associated with insurance, returns, product replacement, and lost productivity are all a result of damaged goods. All transportation processes must be designed to prevent damaging the goods. Usually, every step in the transportation process has procedures to measure the number of damages created in any period of time. These procedures are used to establish accountability practices and to identify process-improvement opportunities.

• On-time performance: Freight-transportation companies compete on the basis of service per- formance and cost. In order to support the needs of the complex supply chains that exist today, high levels of on-time delivery reliability are expected from the transportation company. Several external and internal factors can have a direct impact on on-time delivery performance. External factors such as weather, traffic conditions, and subcontractor labor relations can have a direct impact on the ability of the transportation company to meet service commitments. With proper planning, transportation companies manage to minimize the impact of some of these factors. On the other hand, the one internal factor that will always have a negative impact on on-time delivery is lack of planning or, quite simply, poor planning. If the organization is not prepared to handle seasonal variations in pickup and delivery volumes or does not have contingency plans to deal with unexpected events, on-time delivery performance will be affected.

• Accuracy: Delivering to the correct destination is expected every time for every shipment. However, there are instances in which the transportation system fails to satisfy this basic re- quirement. Two major causes contribute to this type of service failure: missing or incorrect information and inadequate planning. For example, when the wrong address is attached to a shipment, the probability of making delivery mistakes increases substantially. Today, transpor- tation companies offer a variety of services aimed at providing continuous shipment tracking and improved information quality. As indicated before, labor is usually the highest cost variable in the profitability equation of a transportation company. Labor is also the primary driver of quality in these organizations. When companies fail to develop staffing and training plans prop- erly, delivery accuracy and reliability will be impacted.

• Shipment integrity: Receivers expect to receive all the items (e.g., packages) in a shipment on the same day and at the same time. It is the responsibility of the freight-transportation company to maintain the integrity of all shipments. The transportation system must be capable of using shipment information in its different processes to ensure the integrity of every shipment.

• Information integrity: As indicated earlier in this chapter, the information about a shipment is as important, in today’s supply chains, as the movement of the shipment itself. Since shipment information is offered to shippers and receivers as a value-added service, the effectiveness with which this information is provided to them must be monitored and measured. Systems to ef- fectively capture, store, and provide shipment information are critical in today’s freight trans- portation business models. The freight-transportation industry will continue to be an information-based industry. Therefore, maintaining high levels of information accuracy and in- tegrity will continue to be an important measure of performance.

Now that some basic measures have been defined, let’s look into the quality-improvement process. Like other industries, freight-transportation companies make use of well-established quality- improvement techniques. Without a clear understanding of the facts and figures that affect the quality of the services offered, management cannot control and improve the processes involved. Remember that there are four continuous phases in the quality improvement process: Plan, Do, Check, and Act. Together, these phases are known as the Deming circle. Transportation processes must be designed and performance targets must be defined. As activities are completed throughout the different pro- cesses, regular checks must take place as the processes are monitored and controlled. The information gathered from these checks must be used to improve the process continuously.