The Roemer Report February 1987

Special Perspective Issue: The Shipper Service Imperative

THE SURVIVAL ROAD: In a nutshell, you can call it customer obsessive service. This month's report focuses on what we see as a vital issue for the effective and profitable trucking outfits of the future. First, let's explain the role of service within today's shipping market. You've got intense competition, particularly with relentless rate pressure. Sure, you've got to be cost competitive. But, even that's not enough sometimes. How can an outfit preserve respectable margins in such an environment? Rule one is to position or "differentiate" youroutfit in areas other than price.If cheap rates are your primary attraction, lots of luck. Somebody will always be willing to haul freight cheaper. Service is the key. Innovation runs second. But, we're not talking about good service. We're talking about genuine excellence, the sort of intense, obsessive focus on service that puts the customer at the top of your organization. We believe that the ability of trucking companies to project themselves into a higher level of customer service will be the primary road to survival in today's new trucking environment.

HOW SERVICEBUILDSREVENUE: When was the last time youtookareally intense look at service quality? Improving service quality can beamorepotent revenue builder for your outfit than sales promotion. But it'strickytomanage, troublesome to track. How do you bring it off? Well, some great new terms like "customer obsession" and "customer intimacy" grab the idea of it. It means getting in so close to your shippers that you can sense their problems and needs almost from minute to minute. Everybody in the organization--and especially the top managers--gets caught up with the idea of putting the customer first. Look at the successful examples. Everybody is awed by IBM's tenacious grip on its market. But fast, efficient service isa commitment that's kept Big Blue out in front ever since the days ofThomas J. Watson, Jr.McDonald's founder Ray Kroc pushed quality and cleanliness standards so relentlessly that it borders on fanaticism. It keeps millions of customers rushing back for their Big Mac attacks. Boeing has a reputation for doing anything to get a customer out of a pinch. And Boeing leaves lots of competitors behind in its jet stream. So take a long look at how you and your associates are really serving your customers. You can't overdose on an obsession with service quality.

GOING BEYOND CUSTOMERSERVICERHETORIC: RememberIn Search of Excellence?TomPeters, the co-author of that blockbuster book, steps up his push for the "customer-obsessed enterprise" in a new pamphlet from his consulting group. It's called "The Promises" and it will be the basis of a new book due out this summer. There's a new urgency to the old ideas of putting the customer first. It's not just growth that's on the line. Every organization's right to a continued existence, Peters says, flows from the continuing relationship with the customer.He calls for hard-nosed, systematic evaluations of the customer satisfaction we are all producing. It even makes sense to make customer satisfaction the primary basis of evaluating everybody's performance, regardless of function or level. Peters even believes you're in serious trouble if customer rsatisfaction can't be quantified for your job!"Live quality in your every action," he continues, and he cites Milliken & Co. as arguably the one with the best quality program in America. Their secret is "religiously devoting" the first four hours of every monthly President's meeting to progress on the quality front. As a transportation executive, you see lots of companies. Think of those you admire most. What is it about them that is different? Chances are that service is a big part of it. Consider the financial track record of the one unshakable service fanatic in transportation. UPS hasn't done too bad on this simple philosophy. Highly profitable Worthington Industries requires managers to spend a quarter of their time in the field with customers. Customer satisfaction is something that gets "in the air" of the company that really practices giving it. "Customer­ obsessed enterprise" may sound like overkill. But as customers, we love it--and find our way back for repeatbusiness.

A CUSTOMER SERVICE CHECKLIST: We're hearing lots of complaints about great new products that aren't properly serviced. Or restaurants where the food is fine, but the service is horrible. Consider Time magazine's recent cover story on poor service. All this grumbling translates into lost business for somebody and rich opportunities for people who really get in step with customers' needs. Successful managers know how to produce service quality. And they keep working to improve it. We also found some solid thoughts about raising service quality in a recent issue of International Management. They're from Professor Jacques Horovitz, an authority on strategy and management. (1)One need is to defineaneffective servicestrategyandletyourcustomers knowyoumeanit.(2)Havemeasurablequality standards. (3) Design efficient delivery systems and make them work. (4) Get all this across to your employees so they support it. (5) Strive for zero defects and have a system for measuring progress. (6)Get feedback from your customers to see how you're doing. (7) Innovate--always be coming up with more.Keep going over this checklist and keep asking yourself if the current level of excellence is adequate. Your customers are always the judge, and its performance--not words--that count. And remember, improvement in service quality could be your best route to more business.

UNCOMMON STYLE--COMMON VALOR: Leadership styles can be as varied as the weather. Still,certaincommondenominatorsseparatetheadministratorfromtherealleader.Theyaretestedmostin times of change and ambiguity. Excellent leaders are hard-nosed, demanding. clear. persistent and inter­focused about where they want to take their organizations. Zero in ginon one or two critical goals is a key. Allowing others in the organization to stray off track is unacceptable. Rapid change can test, the commitment of others to these goals or raise questions about their appropriateness, this is often a pivotal point where the artful human skills of real leaders come forth. "Leaders Are Not Pussycats" is the way Nancy Austin describes this leadership tenacity in Success! magazine. She emphasizes the need for a leader to maintain a strong "fix" on a desirable future state. Here are some leadership tips that can help you maintain a sharp organizational focus in times of ambiguity:(1) Constantly reiterate your main thrustwith day to day slogans and metaphors...not defects, no long waits, no long-term debt, etc. (2) Get excited about small steps toward the goal. Recognize your people and understand that total organization progress may come in many small individual doses. (3) Persistence!... With the vision and the followers. (4) Drama with a message. When kicking off a goal, revise or target in corporate symbols and strategies of high visibility. (5) Don't let the dominant obsession with a goal flow over to dominance of people. Drawing a bold vision and igniting a spirit of support with people in the organization is a universal strength in all successful leaders.

TRUCKING & A MANUFACTURING COMEBACK: The current assumption is that traditional manufacturing is now the province of Japan, Korea and others. The domestic auto industry seems to be pointing the way. Less visible is the quiet revolution that is going on at many smaller domesticmanufacturing outfits...positive changes that suggest that production does, indeed, have a big future inthis country.The domestic winners are playing under an entirely new set of rules and priorities. The January 12 issue of Industry Week carries an excellent article on this new manufacturing environment. These new realities will largely dictate the future of manufacturing in this country. They include: (1) Elevating quality to the role of a survival imperative. Ford calls it Job #1 and they are right on the button.Take a look at its balance sheet for the proof. (2) Huge cost cutting. Manufacturing cost cuts of 30% or more are now the standard in many manufacturing sectors. This requires a level of manufacturing competence and leanness that is far beyond the comprehension of many tradition-bound managers in industry. (3) The enlightened involvement of workers as positive contributors is improving the manufacturing process. Concurrent with this is an imperative for streamlining what has become a bloated, inefficient and often impersonal plant management process. (4)There realization that computers and automation are only one small aspect in globally competitive manufacturing. Japanese are beating us by out-managing us, not by out-spending us. Again and again, they have shown that their concept to how to manage workers is immensely more effective and productive than our traditional hierarchical approach. (5) Labor costs are being over-emphasized in importance by many domestic firms. Manufacturing consultant Robert L. Callahan explains in the Industry Week article that labor costs really are only about 10% of the cost problem in domestic manufacturing. The other 90% is in the flow of materials. Here is the key to what many suggest may well usher in a revival in domestic manufacturing. Distribution costs are perhaps the last frontier of huge savings available to global manufacturers. The trucking industry will be at the vortex of this. Shrewd outfits will get in on the ground floor, consulting with manufacturers in reducing materials flow costs. This will mean new services other than just hauling freight.