One of the most influential books that I have read is Michael Gerber’s The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It. Essentially, Gerber suggested that a business should be designed around systems rather than around people. He used franchises as an example. The vast majority (75%) of franchises succeed, compared to non-franchise businesses, which mostly fail. The reason franchises thrive is because they have clear operations manuals and procedures that specify every detail of running the business. I thought about applying this strategy to shipping operations.
Many naïve executives have the misconception that shipping is simple. Over my 35-year career of observing thousands of shipping operations, I have come to the conclusion that no two shipping operations are the same. It is true that the majority of companies have to accomplish the same basic functions of packing, weighing and labeling. But every organization does it slightly different. It is in the nuances that mistakes are easily made. As the architect Ludwig Mies van der Rohe said, “God is in the details.” A company can earn an exceptional reputation by exceeding customers’ expectations or ruin its reputation by failing to satisfy its customers. What some people fail to realize is that in shipping, a single miscommunication or one wrong keystroke can result in an error. Shipping is the last chance to make a good lasting impression with a customer.
Shipping mistakes are costly. Research at Texas A&M University found that the average shipping error costs $50 to correct, on both the shipping and receiving ends. This does not take into account the added costs of damaged customer relations. As Warren Buffet said, “It takes 20 years to build a reputation and five minutes to lose it.” A typical business often discovers that it is spending $30,000 or more annually to correct inaccurate shipments. Fixing mistakes could mean picking up freight charges, manually adjusting invoices, handling customer service calls, issuing call tags, and paying for lost goods.
Many businesses simply cannot afford to make a single mistake in the shipping department. Some companies are shipping parts needed for emergency repair or kits for timed events where an error can cost thousands of dollars. Other organizations ship surgical instruments directly to hospitals for operations; in some of these cases, a missed shipment can mean life or death.
Shipping managers are often faced with high turnover, seasonal peaks and temporary employees. Shipping personnel are not the highest paid employees, and English is often their second language. Maintaining accuracy, consistency, and reliability can be difficult with a staff that may not understand a company’s standard practices. One of the shipping manager’s biggest concerns is eliminating mistakes, and given this environment, it can be a daunting task.
People are not perfect. Humans make mistakes. Every error is an opportunity to design and implement a better shipping system. Gerber’s strategy is to note every problem. Each time a frustration presents itself, write it down on a master list. If possible, quantify the cost of the problem, prioritize the list, and look for answers that can be solved with a systems solution. The ultimate goal is a perfect operation that an unskilled person could master with little or no training.
One of the best practices is to leverage technology. When I evaluate a shipping operation, I look for what can be done with a computerized shipping system, eliminating the opportunity to make mistakes. I look for sticky notes on the computer monitor that detail rules for specific customers. Every company has exceptions. Some customers pay for freight and others do not. Some shipments are sent collect, while others are prepaid. Some customers want their shipping billed to their accounts. How many of these special shipping rules are actually written down? What standard operating procedures are only known by the shipping clerk? What if that person leaves, gets sick or goes on vacation? Systemizing shipping operations prevents mistakes.
Shipping programs are reliable and consistent. The greatest benefit of technology is that it can perfectly and quickly accomplish tasks that can take humans several hours. Technology is not a flawless cure; it is a tool. Using tools is what makes us human. Technology needs to serve us. The payoff for change is that technology, when properly implemented, can make your life easier, increase productivity, reduce errors, improve profits and decrease the level of stress in your life.
Mark Taylor, MBA, DLP, is the President of TAYLOR Systems Engineering Corporation and the Chief Logistics Officer of RedRoller.com. He is the author of Computerized Shipping Systems: Increasing Profit & Productivity through Technology. Taylor has been named a Distinguished Logistics Professional (DLP) by the American Society of Transportation & Logistics in recognition of the contributions he has made to the field of logistics during his 30-year career. He can be reached via email at mtaylortec@aol.com.
