How the Management System is key to Structural Growth and Improving Fleet Performance
Carpedia was invited to conduct an analysis at Caravan’s Oakville facility to determine whether opportunity existed to improve the performance of their fleet. Furthermore, the analysis focused on the organizational structure and its ability to accommodate future growth with a secondary focus on enhancing internal performance reporting. Lastly, the analysis team was tasked with identifying opportunities associated with invoicing cycle time.
The concept behind improving the fleet performance primarily revolved around identifying key performance levers. This meant that historical trips had to be analyzed and new scenarios created to gain a better understanding of how to influence and improve fleet performance.
With an anticipated growth rate of 15% year over year, the existing organizational structure had to be further refined. Observations revealed that the selling and buying of loads performed by operations had conflicting interests. Furthermore, operations was found to be conducting results oriented discussions on an infrequent basis, lacked elaborate understanding of the market trending, and lacked adequate planning horizons in order to capitalize on buying and selling of loads at preferred rates.
The final hurdle was to develop a method for improving invoicing cycle time. The team was tasked with reducing invoicing timelines in order to capitalize on a one time working capital increase. This required a detailed understanding of the invoicing process from the time a load is delivered to the time an invoice is issued to the customer.
In order to address the fore mentioned challenges, Carpedia and Caravan engaged in an 18 calendar week project to analyze and develop improvements to processes, management systems, and management behaviors through the organization.
Process, System, and Behavioral changes were implemented throughout the organization. The results were as follows:
- Empty miles incurred on a trip by trip basis improved by 19.1% over the base period.
- Revenue/mile improved by $0.02/mile representing a 1.2% improvement over the base period.
- 50% reduction in invoicing cycle time, yielding 125% attainment of the promised results.
- A new organizational structure was instituted to accommodate future growth and allow the operations. team to have improved visibility to market trends.
- A holistic performance scorecard was created that is directly tied to the financials and incorporates key performance metrics from all areas of the business.
- Daily Operating Reports were created with a balanced set of operational indicators to provide functional area leaders with the understanding of key area metrics.
- Leaders were trained and behavior models developed to help guide continuous improvement initiatives during and post project.
- The staff were also trained to be able to clearly articulate reasons for variance and apply a problem-solving mindset.
- The above initiatives coupled with an organizational willingness to adopt change allowed Caravan Logistics to become a more performance driven entity capable of substantial growth.
The Client Experience:
“Our project with Carpedia met the expected results within our organization and the sustained improvement to our process is bringing positive change to our company’s culture and contributing to our bottom line.”
President, Caravan Logistics Inc.