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The Last Mile – An Opportunity for the Moving & Storage Industry?

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The professional moving industry may be maturing with shipment counts and volumes on a bit of a declining trend but there is still great demand for high quality, professional moving services.  Constantly faced with seasonality-related issues that compress about 60% of the moving volume into about 40% of the year, professional movers have always been interested in diversifying their business mix. 

Some of these diversifications have spun off into businesses that rival and surpass the moving industry itself, in size.  Records Management and Self-Storage services are two examples.  For some movers, these diversifications have turned into their main business.  Others who could not adapt and innovate have been unable to compete in such a rapidly changing business environment.

What is Last Mile Logistics?

There’s been a lot of buzz recently about Last Mile Logistics and much of it relates to package delivery.  Simply put, transport systems are efficient and fine-tuned for getting goods from the manufacturer to a local store or warehouse but when it comes to delivery to the customer’s door or providing delivery and setup in the customer’s home; that is another matter.

Growth in online retail sales driven by giants like Amazon and Walmart has created a new shopping paradigm.  It was only a few years ago when online shopping that started with books and spread logically to smaller household articles, electronics and appliances, became a thing. Back then, we might not have noticed the revolutionary changes that the apparel industry was undergoing.  Most consumers could not imagine buying clothes or shoes without touching, feeling and trying them on at a store.  Today, with the total market share of online retail sales higher than department stores, online shopping has become the way to shop.

I want it now.

Amazon Prime proved the power of one-day delivery in driving retail sales online but what about furniture and major appliances that not only require rapid delivery but also placement and installation in the home or office?  According to furnituretoday.com, a website focusing on furniture industry trends, online sales of furniture and bedding totaled US$15 billion in 2018, up 6.4% from 2017.  The same trends are affecting major appliance sales.  Stores are finding out that they can avoid the cost of carrying large inventory stocks by having a showroom instead of a retail store. This setup allows customers to choose colors, styles and options for custom-made furniture, delivery of which is fulfilled directly by the manufacturer.

E-commerce is also moving the purchasing of office and institutional furniture and fixtures (think hospitals, schools, etc.), online.  New online retailers unencumbered by rental, store staffing and related expenses are cutting out the middleman and offering new competition to brick-and-mortar establishments.  What they are discovering though is how important that last mile and in-home service skills are, in delivering total customer satisfaction. 

But wait, isn’t this that the core competency of professional movers?

The Opportunity

Movers have been providing furniture, fixture and equipment (FF&E) installation services for many years.  So, how is this a new opportunity? 

Many astute movers who have early on recognized the opportunity now have growing businesses offering final mile services in partnership with retailers and major logistics firms.  Opportunities are also forming for companies utilizing a van line agency type network to offer nationwide final mile services.

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While the territory seems like familiar turf to most movers, there are distinct differences for those that are serious about carving out a niche in this competitive market.  The first one is cost efficiency.  Traditional time, material and asset costing mechanisms employed by movers may not work.  The consumer is now conditioned to free or near-free shipping.  While the costs may be embedded in the product, the point is clear that there is not a lot of margin for error or unnecessary fat in the costing.

This means understanding how to make the process as streamlined, efficient and error-free as possible. This is where leveraging technology comes in.  A paper-based system just doesn’t cut it anymore.

Interoperability

There’s that word again.  In order to compete in this new world defined by Amazon Prime, systems must integrate and connect so that data can seamlessly flow between the disparate parts of the logistics chain including and perhaps especially for the final mile service provider.  A number of software and logistics solutions providers are offering systems that enable this connectivity, but none have enough traction and market share to establish a standard. 

Yes, Amazon is an online retailer, but its core competencies are technology and logistics.  If we want to compete in this world and not become relegated to being interchangeable parts in the supply chains of Amazon and Walmart, we must address the issues surrounding industry data standards and interoperability.  Unfortunately, the moving industry is in the same boat as the shipping and trucking industries.  We remain fragmented because of concerns about competitive advantage.  We look to our industry associations for leadership, but their actions understandably mirror and represent the fears of their own constituent members, resulting in gradual and very little forward momentum.

The Urgency

We need to recognize that the physical assets and services represented by the professional moving industry are in no danger of being displaced any time soon.  That is not the urgency.  What we need to recognize is that the control of our business will flow to the companies that implement and operate the near flawless technology that customers have begun to take for granted from companies with closed systems like Amazon, FedEx and UPS. 

We can choose to form or join a closed network capable of making the technology and process investments to compete in this new environment but this is not a model that is familiar or comfortable to the moving, transport and logistics industries which are primarily made up of small to medium-sized entrepreneurial companies. 

Or we can recognize the urgency and benefits of forming an industry alliance to tackle the issues of interoperability. 

Technology is not the barrier…the challenge is leadership.

Looking Forward

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One Opinion on Some Moving Industry Trends

As this decade ends and we usher in a new year and a new decade, it may be worth reviewing some history and perhaps conjecturing on what we might expect in this new decade.  Sources for consolidated data on the global moving, relocation and mobility services industry are hard to come by so we will have to refer to some incomplete but available data.  One source is the information compiled by the US Census Bureau.  While there are many caveats about how this data may be interpreted, the numbers may point to some trends.

Without factoring for the economy, real estate sales and changes in lifestyle, the trend line seems to be apparent.  The percentage of the US population that changes addresses each year is on a steady decline.

Reasons for Moving

Family related reasons for moving like changes in marital status or establishing new households seem to be on a declining trend line while job related reasons like a transfer for a new job, better commute, retirement are trending up.

Surveys conducted by the Worldwide Employee Relocation Council and major relocation firms confirm that millennials, who now make up the largest generation in the work force, are quite willing to relocate for job related reasons.  The low unemployment rate in the US coupled with changes in immigration policies may suggest that a war for talent may encourage corporations to loosen the budgetary belt tightening that affected relocation benefit packages in the last decade.  However, the relocation landscape has continued to make fundamental shifts.

Telework

Since 2005, regular work at home employees (non-self-employed) grew by over 173%.  50% of the US population now work at jobs that are at least partially compatible with telework options.  As this trend inevitably continues to accelerate, one of the prime triggers for moving may become irrelevant.  People may choose where they want to live not where they must work.

Flexible Relocation Policies

More corporations are offering flexible relocation policies which include lump sum allowances and core-flex options which allow the transferee more latitude in selecting relevant relocation benefits.  While lifestyle preferences which guide furniture and fixture investments may mature, most millennials may view personal possessions as more disposable in nature.  These trends may continue to evolve but the noticeable trend of lower household goods shipment counts and lower overall shipment sizes may not reverse soon. 

A related trend is that once a transferee has elected a lump sum package, they now act as a private moving consumer.  Such change offers opportunity to moving and relocation companies that are reinventing their services to appeal to the needs and requirements of a more technically adept millennial whose buying motivations are quite different from the corporate transferees of the past.

Industry Aggregation

Mirroring the business environment in general, the moving, relocation and mobility services industry continues to undergo consolidation as it matures.  In the US, it is estimated that there are over 7000 companies providing moving related services.  That number would more than double if we included mobility and transition related services.  The industry is made up primarily of small entrepreneurial businesses.  Most employ less than 5 people and only about 8.5% of moving companies employ more than 100 people. 

As second and third generation family companies struggle with succession planning, many are facing the decision of either making major investments to scale to the next level or putting their businesses up for sale.  Both scenarios are playing out, but this is an industry with a very low barrier to entry.  The industry continues to provide opportunities for new entrepreneurs that are successfully exploiting market niches or leveraging technology to disrupt the market altogether.

Relocation service companies are facing their own challenges.  Several high-profile mergers and acquisitions have taken place especially related to moving services companies that have tried to make the leap to become global mobility services providers with varying degrees of success.  Certainly, this segment of the industry may be subject to further consolidation activity in the new decade.

A few high-profile developments may justify attention.  One is the potential acquisition of Cartus by Sirva which has been announced by not consummated.  The aggregation of such volume within one organization may serve to create opportunity or force the rest of the industry to respond in order to compete. 

The US Department of Defense is marching purposefully forward with its plan to award a single source contract to one company to manage its global moving services.  With an estimated 400,000 moves, the US DoD is the single largest shipper of household goods in the world.  Imagine the consequences if Sirva, which is one of the potential bidders, receives this award.

Just Some of the Trends

Providing a more detailed opinion on the many trends affecting our industry and business in general would make this a book rather than a post.  Perhaps, we can explore some of the other interesting trends in future posts.  I’m sure that you have an opinion and I invite you to join the discussion.

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Why I Gave Up Being a NIMBL

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What do Artificial Intelligence, chatbots and automated self-service technologies have to do with the moving business?…and what the heck is a chatbot, anyway?  All this technology stuff was not supposed to happen until sometime in the future, like 2020 or so.

Oh, wait…2020 is now.

Perhaps you have been one of the NIMBLs.  Not In My Bloody Lifetime, so-I-don’t-have- to-worry-about-it kind of people. Well, sorry…it looks like it may happen in your lifetime. In fact, don’t look now but some of it has already happened.

What is a chatbot?

Here’s a clue from a Wikipedia listing.  (and no, we’re not going to explain what Wikipedia is, Google it).

“A chatbot is a computer program which conducts a conversation via auditory or textual methods. Such programs are often designed to convincingly simulate how a human would behave as a conversational partner, thereby passing the Turing test.”

Now, I remember seeing this silly little pop-up on one of those moving company websites.  As I started scrolling on the page, this message said “Hi, my name is Ethan.  Can I help you?”  I imagined my chat buddy was in Bangalore or Manila and asked whether local moving rates were regulated in Arlington.  The answer “Yes, we would be happy to quote on your local move.  Can I make a note of your name and e-mail, please?”

These Things are Hopeless….

Yes, the technology may not be quite there yet but before you dismiss it, think about this.  The pace of change and advances in technology are not linear; they are exponential.  If you think, chatbots are hopeless so I am safe being a NIMBL because they will never replace humans in customer service in my lifetime and certainly not in the moving business then consider facial recognition technology.

In the August 2007 issue of Discover Magazine, Jaren Lanier wrote “In at least one way, the smartest machines can’t match a baby.”  Jaren was writing about facial recognition technology.  Flash forward 11 years and I just paid for my groceries this morning by double-clicking my smartphone, staring into the screen and then waving my phone at the card reader.  Not only can the phone in my pocket recognize my face; I am willing to trust this technology with credit card payments. 

What is as remarkable as the technology is the pace of change and acceptance.  I now think nothing of this remarkable technology.  It has become ubiquitous and commonplace overnight.  I can’t impress anyone with my fancy phone and if it does not work properly or instantly, I will be downright indignant at Apple.

That chatbot may seem pretty hopeless right now but it is a machine running algorithms.  It can be taught or programmed and unlike people, once you teach it – it will retain that information in an exact and complete manner.  Oh, and have we considered machine learning, yet?  Where’s my Wikipedia?

“Machine learning is a field of computer science that gives computers the ability to learn without being explicitly programmed.”

Uh…, what?  Yes, they will teach themselves.  And no, they do not stop to eat, sleep and other things.

So Back to the Moving Business…

Yes, so that chatbot is kind of hopeless right now but the convergence of a few factors may make the idea of putting an excellent chatbot into your customer service department a possibility soon.  I can hear you now.  NIMBL!

A nicely programmed chatbot will ask one or two questions and based on that understanding will offer up resources that may address your need.  I’ve had the opportunity to use some and they hit the mark about 50% of the time.  If 50% of your customer inquiries could be addressed by efficiently routing the person to the right online resource, is that a bad thing?

Automated Teller Machines

Sure, these new technologies don’t always work gracefully at first.  Look at the ATMs that we now take for granted.

The first ATMs appeared in 1969.  By the 1980’s, they seemed to be everywhere.  There are lots of people that still won’t go near one but most of us have accepted the efficiency of slipping in a card and getting our cash to go.  ATMs and online banking services have replaced many of the functions performed by human bank tellers in the past.

Unemployment did not skyrocket.  We did not get dehumanized because we could not gossip with our bank teller.  ATMs are not immune to fraud and theft but neither are bank tellers.

Just as some of us are starting to get used to the idea, we have news.  ATMs are going to join fax machines and 8 track tapes as endangered or extinct technologies.  I can now authenticate myself to my bank through facial recognition and use Zelle to send money almost instantly to my colleague on my mobile phone.  Why do I need cash in my pocket?

Meanwhile at the Grocery Store

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So, if you think this technology stuff is not going to catch up to the moving industry, take a look at what’s happened to grocery shopping.  I can cruise the aisles and pick out my items.  I then proceed to the self-checkout aisle where I scan my own items.  It’s a little clunky.  My lemons have a small sticker with a 4-digit code that I have to key in but it works pretty well most of the time.

Just like the ATMs, the checkout system is getting better very quickly.  I’m betting it won’t be long before the scanner will recognize the lemon.  And just like the ATM, before we get a chance to get used to it, this technology will be made redundant.

Amazon just bought Whole Foods, a US grocery store chain, and they are now offering an online service with 2-hour delivery in some markets.

And speaking of Amazon, I have been a loyal Prime member since 1997.  You want to study customer service?  These guys are rewriting the book on it.  You remember books, right? Those paper bound thingies we used to read before we got all our information on our mobile phone.

I won’t go on about Amazon other than to say that in today’s news (which I read on my phone…) reports are out that Amazon is now ready to compete with UPS and FedEx on shipping services.  Well, at least Amazon won’t be looking at moving services, right?  NIMBL?  Do a search for “Moving Services” on Amazon.

Where Is All This Headed?

As usual there are different schools of thought.

In December of 2017, Elon Musk, Tesla’s CEO, updated his prediction that the first fully autonomous driverless vehicles would be available by 2019.  He predicts that by 2020, these cars will drive better than humans.  On February 6, a company called Embark completed a US coast to coast run in a modified Peterbilt tractor trailer equipped with safety sensors and self-driving software.  How’s that NIMBL working you, now?

There are estimated to be 4 million truck drivers in the US. Throw in a few taxi and Uber drivers, maybe some bus drivers, too.  In a study issued by Goldman Sachs, there is a prediction that 300,000 truck drivers may lose their jobs per year starting in 2025.

Those aren’t the only jobs that are under threat from Artificial Intelligence.  Think about your last doctor’s visit for your annual checkup.  How much time did your doctor spend with you?  After 15 minutes, she sent you off for a battery of blood and other tests.

People are currently wearing bands around their wrist that are measuring your vital signs 24 hours a day.  Remember that urine test from the annual checkup.  Your smart toilet connected to the internet of things will soon be monitoring those vital signs on daily basis.  That information and much more will be streamed by your mobile phone to a computer that is wired to the world wide web which will measure slight variations in your vital signs and compare them against all the past diagnoses in its database as well as current reports streaming in from the world.  You won’t be visiting the doctor when your feel bad anymore. Dr. Siri will tell you that you will be feeling bad in approximately 27 hours unless you take the following steps.

What Will All These Unemployed People Do?

An author named Yuval Harari has written two books which talk about the history of homo sapiens in order to understand the possible future of humans.  He writes about the possibility of a class of Useless Humans who may literally have no useful work abilities. Others, and I’m in this group, are more positive. 

With every major evolutionary step for humankind as we went from hunter-gatherers to the cognitive revolution, the agricultural revolution and the scientific revolution; some have predicted massive human displacement and dehumanization.  At each step, mankind has been able to reinvent itself and move forward.

What you make of technology, just as what you choose to make of a longer life span is up to each of us.  For some, both represent negative possibilities.  Others will see opportunity and positive possibilities.

So, what does all this have to do with the moving business?  Our industry is subject to the same pace of change, disruption and perhaps opportunities as the rest of the word.  Those that would ignore this do it at their own peril.  What we choose to do about it is totally up to us.  Some will embrace change and even attempt to be at the leading edge of it.  Others will choose a steadier approach.  I believe there is ample room for both approaches.

There are many customers who still appreciate and want a hand-crafted personal service approach with the human touch.  Others will appreciate a more flexible, self-serve approach. The market can still accommodate both.  For those that are still feeling a bit NIMBL, I hope this article shows that change is inevitable, constant and here now; but what we choose to make of it, is up to us.

Understanding Data Analytics in the Moving Industry

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Understanding Data Analytics in the Moving Industry

We sometimes refer to our business as being a basic services industry.  Some suggest that the essence or most important element in building a successful service business is just that, service excellence.  Who can argue that the entrepreneurial, owner-operator model can and often does produce some of the best examples of personal service.

When an entrepreneur first opens a simple restaurant, she may be the receptionist, cook, waitress and business administrator.  In those first days of the business, the owner greets every customer personally, attends to them personally and provides a level of personalized service that is hard to match as the enterprise grows larger.  As businesses grown and a structure is implemented to allow it to scale, we lose some of that personal touch.

In this context, a discussion about the benefits of understanding data analytics as a way to better manage our business and growth strategy may not seem intuitive.  Indeed, we should start the discussion by saying that if the first and most important building block of service excellence does not permeate the organization, no amount of analysis will help.  You may be able to drive inquiry and even business to your door through marketing, advertising and analytics but only service excellence will grow goodwill and ultimately your business.

It is a Basic Services Industry

Even though our business may seem simple at its most basic levels, there are also levels of complexity depending on the service lines that we choose to focus on and of course the size, service scope and geographic scale of our business.  As the industry continues to mature, we can find the complexity of multinational, even global companies engaged in moving, relocation, logistics and outsourced mobility services.  The business, however, is still primarily made up of small to medium sized entrepreneurial enterprises (SME) which cooperate closely together.

We will leave the sophisticated analysis to the larger corporations in our business and limit our discussion here to the kind of analytics that might benefit the SMEs.

Data Gathering & Data Integrity

In order to analyze data and turn it into useful business information; you first have to gather the data.  With many SMEs, this can present a challenge.  There is a cost to collecting data and ensuring the integrity of that data.  In some cases, those costs are higher than the potential benefits that the business may derive from analyzing the data.  Each business must weigh that balance carefully and ensure that they focus their limited resources to the aspects of the business that will benefit it the most.

Most companies use automated computer systems to help manage their business.  If these systems are designed and implemented well, then valuable data is a natural byproduct of the company’s operational activities.  If staff members feel that they are inputting data into systems just so management can have access to information, the chances of achieving timely and accurate data input are reduced.  The optimum is to design and implement systems so that you achieve efficiency, accuracy and provide staff easy access to the information they need to succeed in serving the customer.

We will jump into the subject of data analytics with a discussion about the Cost of Customer Acquisition.

Cost of Customer Acquisition

The chart below suggests what the estimated costs of acquiring a customer may be.  Now, you may intuitively know whether the estimated numbers below are in the ball park for your business but how many businesses actually measure and analyze this data?  More importantly, how do we do it and why do we need to?

Customer Acquisition Cost

The sheet below provides one very simple way to calculate CAC.  We add the costs related to Prospective Customer Inquiry (PCI) generation and processing.  These are the total costs we might spend in a year to generate leads (PCI).  In this example, you see the various costs for Advertising, Internet (website), Inside Sales staff and Moving Consultant.  We have purposely kept it very simple.  You can get as detailed as you want in your analysis.

Now we can take that Total Cost of Customer Acquisition and divide it by the different stages of PCI processing.  Initially, we are estimating that we have generated 5000 inquiries for the year for the $105,000 investment.  We can now set up a spreadsheet and divide the CAC by these stages.

So, we see in this example that each inquiry is costing us $21.  Each Opportunity (when we get the chance to quote and provide a proposal) is costing $233.  When we actually book a job, we have secured a customer and we see in this example, the CAC divided by the number of customers is costing us $778 per customer.  The example goes on to estimate the gross margin per customer and we see that after deducting our CAC, we are generating $122 in net margin.  That is not money we can take to the bank, we still have to pay for the rent, utilities, etc., etc.

So, the company in this example for the business line that is being analyzed may not have a sustainable business model.  The CAC is too high.  Or the conversion rates are too low.  Or the margin is too low.  Something needs attention.  I say, for this business line, because business lines like local moving, interstate moving, office moving, fine art moving all have a different CAC.  In some business lines like corporate moving, the CAC may be very high but once the customer is acquired, we can count on repeat business.  So, each type of business will be subject to its own CAC calculation.

Now What?

Data analysis by itself may not help your business but if you use the information as a basis for business decisions, we may achieve great results.  It is important to implement your data gathering and analysis structure so that you can periodically test your assumptions.  This periodic comparison process can point to fine tuning and adjustments that can further amplify good results.

In this example, we have determined that the CAC is too high for the net margin that is produced.  Resist the urge to reach for the obvious reaction which could be to reduce the CAC.  In this example, simply adjusting from the conversion rate from 9% to 11% without any other changes could drastically change this company’s fortunes.

In this fictitious example, it turns out that this may be quite achievable by simply reducing the time taken between inquiry receipt to initial contact from the average of 96 hours to 1 hour.  It turns out that our industry may not be great at responding to customer inquiry on an urgent basis but that will be the subject we will reserve for another discussion.

This all sounds good but how do we get the Data?

Yes, that is a very good question.  In order to perform this simple CAC calculation and implement a solution we would need data on:

  • Total inquiries received by the company
  • Number of Inquiries that convert to Opportunities
  • Number of Opportunities that convert to Customers
  • Revenue generated
  • Margin generated
  • Cost of marketing related to inquiries
  • Cost of sales related to inquiries

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Some of you reading this will say that you already have all this available and in place at your company.  In fact, some of you already know your CAC very well and use such analytic tools to adjust your marketing and sales process.  Others may face some challenges relative to structuring a disciplined process to gather good data before you can even get started.

For some, implementation may require a few small adjustments. For others, especially those without an automated operational system; it may represent a major effort.  Each company must decide whether the potential benefits of this kind of analysis warrant implementing a disciplined data gathering structure.

Summary and Conclusions

A major factor in determining whether this kind of analysis is right for your company has to do with the phase of development your company is in.  In an entrepreneurial startup, the owner-operator is so close to every aspect of her business that she knows intuitively by touch and feel what adjustments need to be made.  As the business matures, there may come a time when the structure and processes that have developed over a period of time need to be revisited and fine-tuned.  You will know best when the time is right for your company.

This is just one example of how we can effectively apply data analytics to understand our business better and apply a data driven approach to decision making.  The automated systems that we use to operate our businesses collect a great deal of data as a by product of managing every tasks.  The information is already there but in many companies, it is locked up in the system without easy access.  Understanding what data is available is important but knowing how to turn this into valuable information that can help us to manage our business may be beyond the abilities of many small to medium sized enterprises.

Do you know your:

  • Margin by business line?
  • Margin by traffic lane?
  • Margin by client?
  • Margin by Moving Consultant?

Those are just some easy examples.  If you don’t have data analytics to answer these questions, you are either at that entrepreneurial stage of development where you intuitively know what do or you are flying blind and hoping for the best without a clear understanding whether your business is operating at its optimum potential.

One answer is to take the first steps and teach yourself a bit about the subject.  Apply a few steps incrementally and adjust from there.

Another approach is to task someone within the company who has an aptitude to develop such skills or perhaps it may be time to hire someone who has such skills.  Some engage consultants.  The good consultants can lend their experience and knowledge to short cut the process of achieving tangible results.

In future articles, we will delve deeper into this topic of data analytics and explore other aspects of learning to use the information within your business as a basis for better decision making.

Supplier Relationship Management

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Other than purely local transactions, our business relies on varying degrees of Supplier Relationship Management.  We may not know it as SRM and we may not recognize it as that discipline but if we have ever entrusted the care of a valued customer into the hands of a trusted supplier, then we were engaging in SRM.

For some of us in the relocation industry that act as forwarders, transportation service providers, move management or relocation management companies, the quality of our SRM  defines the quality of our service.  The larger Relocation Management Companies may have led the way but the strategic selection, monitoring and management of supplier relationships has become critical to success for most companies.

For corporate clients that sponsor mobility services on behalf of their transferees, the critical importance of SRM is obvious.   Our joint mission is to deliver focused, productive and engaged staff members to their new assignment and the best examples of success in delivering on this mission are also the best examples of partnership between client and supplier.

Some of the critical steps towards ensuring success in a supplier relationship are:

Embedding SRM into the procurement process

Pricing, quality determinants, capability, financial stability and experience are all important criteria in the purchasing decision but what weight is given to the characteristics of an organization relative to their suitability and sustainability for a long term, mutually successful relationship?  New supplier selection is a costly investment.  Ongoing process, efficiency and quality improvements drive the dividends from those investments.

While some organizations may go through an infrequent RFP selection process, other organizations must make partner selection decisions daily due to the ever changing nature of their business.  Effective tools must be identified to search, filter, diligently qualify and document before engaging new suppliers.

The process only starts with selection.  Onboarding a new supplier partner is as important as the process of onboarding a new client if we are to take a long term, relationship-based approach to supplier management.

Aligning enterprise objectives into the supplier relationship

Clearly articulate these objectives into measurable determinants which are reflected in Service Level Agreements.  Incentivize performance through favorable business distribution to the partner that best meets enterprise objectives.

The client and the supplier must commit to disciplined and effective communication to reconcile objectives to the measurements of key performance metrics with a goal of ongoing improvement.  Quarterly reviews must not degenerate into rote, required exercises.  It takes leadership to keep the focus on continuous process and quality improvement by investing in the relationship.

Leveraging Technology & Process

In order to achieve continuous improvements, the participants cannot get mired down in the mechanics of monitoring, measurement and reporting.  Implementing technology to enhance efficiencies requires a tremendous commitment on the part of the client in the relationship.  The supplier partner has a role to play and may even be required to drive the technology and process improvements but the client cannot take a passive role.  They must be just as committed to participating in the process in the spirit of true partnership.

In conclusion:

The ability to communicate openly and honestly is one of the qualities inherent in most successful relationships and successful SRM is dependent on it.  It may be time to make a brutally honest assessment of your SRM program, especially the communication part.

  • When was the last time that you communicated?
  • What was the nature of the communication?
  • Was there an effort to establish a personal connection and enhance the relationship in support of your enterprise objectives?

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If you are honest and you are like most of us, you will see some immediate opportunities.

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Risk Avoidance and Omotenashi

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It took the good folks at Updater, a relocation technology company that seeks to take some of the pain and tediousness out of moving, to teach me a bit about Omotenashi.  If you’re like me and have never heard about Omotenashi before, then you may want to check out Updater’s slide deck prepared for the American Moving & Storage Association:

http://get.updater.com/amsa-education-session.html

The Japanese term relates to a way of treating a guest.  In Japan, there is no distinction between customer and guest.  Omotenahsi speaks of anticipating a guest’s need before they ask for it.  The aim is to exceed the customer’s expectations and perhaps surprise and delight them with the service experience.  The good news is that not only are industry service partners like Updater helping us understand such aspirations but that many of us are actually implementing such service practices.

The bad news is that we still struggle with an embedded culture of risk avoidance that colors the public’s perception of our industry.  For those that are relatively new to our business, a little history lesson may help our understanding.  You see, our heritage stems back to an age of regulation where Federal law mandated that common carriers must adhere rigidly to published tariff rules without exception.  Back then, our rates were the same, we all had the same tariff.  While service was the competitive differentiation, the rules of service engagement were very exact.  Not only were those rules in writing, we were taught that going above and beyond service requirements was actually a violation of tariff guidelines.

As an example, when I was learning the business in the late 1970’s, I was told that adjusting a claim for more than the carrier’s maximum stated liability or paying an inconvenience claim beyond what was allowed in our tariff could be construed as a rebate and was against the law.  In those days, anticipating a customer’s needs and delivering beyond their expectations was not common practice.

As a salesperson, I was taught to review the legal terms of the contract for carriage with my customer with special emphasis on liability and responsibilities.  We needed to obtain customer acknowledgement in the form of initials and signatures at all the critical places on our Order for Service.  I am reminded of flight attendants who state that their utmost priority is our safety, and by inference that service is not a real priority.  In our business, compliance to the legal terms of the contract was the priority.  If we got the customer to initial the clause, then we were covered.  In my opinion, that is where we inherited this vestigial tail of risk avoidance which is still too prevalent in our business.

So, how do we evolve?  Imagine what delivering beyond customer expectations with an aim to delight looks like?  Contrast:

– Point out that service will not proceed until the customer agrees to pay extra for failure to complete all the packing which customer has committed and signed for, to do.

+ Instead, we place a certain average cushion in our rates that allows us to complete the packing with a smile acknowledging that moving is a stressful time and we understand.
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– Apologize when the customer calls because our crew has not arrived per advised schedule.

+ Instead, we text the customer when the crew leaves the yard.  We send a courtesy text when we are 15 minutes away.  If there is a delay, we advise as soon as we realize it with a new estimated arrival time.

– Respond to an angry customer call regarding damages with instructions on how to obtain estimates that will support their claim.

+ Instead, we schedule an appointment for our claims specialist who is also a trained, well-equipped handyman. He will take pictures, document the claim and handle simple repairs or assembly on-the-spot, when possible.

I could go on, but I think you get the idea.  The great thing is that there are so many companies that have already implemented these practices.  The industry is changing but are we doing it fast enough?  Are some of us still hiding behind our compliance and liability-based business practices?

It may be time to examine that vestigial tail, does it actually serve no purpose or is it actually tripping us up and annoying our customers?  The compliance-based, risk-averse contracts and business practices may need to be reexamined while we are at it.

“Omotenashi” is hard to define, but the Japanese use it to describe what they believe is their unique approach to hospitality. “Omotenashi” involves the subjugation of self in service to a guest, without being “servile”.

The Value of Customer Satisfaction Surveys

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Customer Satisfaction Surveys (CSS) have become so prevalent that we sometimes lose sight of their original purpose.

  1. Understand the experience from the customer’s perspective to fine-tune service delivery and service offerings.
  2. Assess the performance of our staff so that we can address service delivery gaps and reward exemplary performance.

We might have started off with the right idea but the CSS programs’ primary focus at some companies has certainly evolved over a period of time, driven by different objectives.  Here are some of the results:

Selective Survey

Some companies sample the customer satisfaction level at various service delivery milestones.  While the original goal was to address service deficiencies as they occur and recover from potentially damaging service failures, it soon became about eliminating dissatisfied customers from the survey pool as a means of keeping the negative reviews away.

If you have had a faulty car dealership experience recently, you may relate to this.  In the beginning, you are assured top service by your salesman and a guarantee that come survey time, you will be perfectly happy to give him a 5 (highest score). You are reminded periodically that your satisfaction is paramount and your comments and remarks, valuable. If things go irreparably wrong, however, the reminders stop and the survey never materializes.

Selectively removing your CSS from the survey pool, removes the possibility of a potentially damaging score.  The incentives which can run into millions of dollars with some CSS programs are too attractive to risk losing. Likewise, the very important perception that you consistently do excellent work. Why jeopardize both by sending a disgruntled customer the survey sheet that he doesn’t necessarily have to see?

Is it manipulation if you don’t send a survey to a customer that you know is displeased with your service?  How about if you send a survey but just don’t remind them?  Is it wrong to send repeated reminders and encouragements to customers that you know have had a favorable experience?

It is not so black-or-white and I don’t believe there is anything wrong with fine-tuning results for the best CSS score possible as long as we do not lose sight of the real program objectives.

Encouraging a Good Score

Certainly, it is not wrong to manage the customer experience toward an end result that achieves customer satisfaction and if receiving a good score motivates that behavior, why not?  The customer can win from such an equation where service staff are empowered to “make things right” within certain guidelines and limits while reinforcing the motivation to earn a good score.

Perhaps this is one of the good byproducts of the focus on managing Customer Satisfaction Scores.  Is it wrong for some customers to receive a different level of service and attention because a particular incentive hangs in the balance of the score?However, it’s not true as viruses are not the only threats and source of infection in diabetic men is http://www.wouroud.com/order-1826 viagra for sale india a possibility. You will definitely find that we really deal s you could try this out viagra prices with good medicine and superb services. That is the reason, it is necessary to know about the generic viagra pros and cons is required before jumping into buying a product for you. Whose bright idea was it to hamstring the Senate with a rule that a bill cannot be brought to the floor for a order cialis online vote, even though most measures only actually require a majority vote.

In some scenarios, one customer score can literally decide whether the CSS score qualifies the company for huge business incentives.  In other scenarios, the company may recognize that no further scores regardless of how good they are will move the needle toward the incentive.  Will those customers receive a different level of service and will staff be limited in their empowerment to achieve customer satisfaction when the score “will not count”?  The answer is yes, the stakes are so high in some cases and the level of sophistication in managing scores is becoming so precise that such decisions are being made.

Virtuous Circle

Government organizations, corporate accounts, and global relocation companies are aware of these opportunities and potentials for abusing score management.  Yet, they do not always move quickly to prevent such abuse.  In fact, some organizations actually benefit when CSS scores show positive improvement trends regardless of how this is achieved.  Think about it, if your organization manages the mobility program well, then the end result is quality improvement as evidenced in the CSS scores.  We all answer to our customers, our managers and our stakeholders.

When organizations choose not to recognize the manipulations, it can make some of us question the value and legitimacy of these programs.  Take one aspect in our business which relates to filing rates in a program under separate aliases.  In some government and relocation company programs, forwarders are allowed to file under multiple Transportation Service Provider entities.  These entities may actually be owned or in some cases managed under common financial and administrative control.

In one such program, the business is dominated by companies that control over 100 Transportation Service Provider entities each.  This allows them to file stacked rates which effectively gives them control to manage the pricing offered.  In peak periods, they can “blackout” low filed entities due to lack of capacity favoring the higher filed entities.  This is not underhanded, it is simply applying the principles of supply and demand.  During peak periods, underlying transport and service infrastructure will seek optimum rate levels so the stacking of rates allows this supply/demand equation to work.

It does make you wonder why the organizations sponsoring such programs require this sleight of hand rather than simply recognizing market forces.  The capacity of the industry is severely limited in peak periods and rate mechanisms must allow for seasonal adjustments to increase capacity.

What may be a bit more questionable is the strategy of “trashing” and “rebuilding” the scores of these entities.  During peak periods, the companies employ a strategy of channeling high volumes of business to an entity that has filed high rates knowing that the score of that entity will be “trashed”.  In other words, handling that kind of volume during peak periods will inevitably trash the score ranking of that entity. Some shipments will get trashed and some customers will be disillusioned in the process.  These companies know it, they allow for it, they build the cost into the program.  In the wings, the company has parked certain entities into a rebuild mode where the scores are closely managed to achieve a high CSS score for the next cycle.

The systems that these companies have developed are sophisticated enough to cycle through the rate filings and scores to achieve some stability and hopefully growth in their businesses.  An interesting fallout of this system is that small single entity forwarders are simply not able to compete effectively as they cannot afford to deploy the staffing and systems required.  The end result is that the small businesses that the programs were meant to protect in order to promote competition are capitulating and handing over their forwarders to be managed by these larger companies.  In a way, these companies are just adapting successfully to the business environment.  These companies are aggregating volume, creating efficiencies and as discussed, in some cases, actually improving quality.

As long as we are aware and mindful of the potentials for manipulation, perhaps we can build on this foundation.

Quality at What Cost?

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The cost of quality is defined by some as the costs incurred in producing a quality product or service.  There is another way to look at it.  The cost of quality can refer to costs related to failure to produce a quality product or service.

In the book, “Principles of Quality Costs: Principles, Implementation, and Use” published by the American Society for Quality, the following are the costs associated with quality:

  • Prevention Costs—The costs of activities specifically designed to prevent poor quality in products or services.
  • Appraisal Costs—The costs associated with measuring, evaluating, or auditing products or services to ensure conformance to quality standards and performance requirements.
  • Failure Costs—The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories.
  • Internal Failure Costs—Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer.
  • External Failure Costs—Failure costs occurring after delivery or shipment of the product —and during or after furnishing of a service—to the customer.
  • Total Quality Costs—The sum of the above costs. This represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products, or defects in their manufacture.

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Any reputable company associated with the Mobility Services Industry is focused on quality improvement. As an industry, we continue to makes strides in understanding how to set reasonable customer expectations and how to consistently deliver on those expectations.

This article explores one important aspect of the numerous issues surrounding quality: how each business balances the costs of quality versus the needs to remain competitive, produce a reasonable profit for the stakeholders and allow for reinvestment to sustain and grow the business.

It may help to define the extremes.  One side of the scale may be a company that values quality above any cost consideration.  In other words, if the company cannot produce a result that is consistent with their definition of a quality transaction, they simply do not engage in that transaction or service line.  They only accept business when they know they can deliver on their quality promise, period.

This type of strategy may limit the growth prospects of the business and, in our industry, if applied to the extreme may affect the sustainability of the business.  The fact is that there is another balancing mechanism which applies to the cost of producing a quality service versus the price that customers are willing to pay.  Just look at the size of the First Class cabin on most flights.  The service is better up front but only a few are willing to pay the price.

If asked, most of us would say that we could redesign and staff our services to drastically reduce the risk of service failures but most of us would also say that the associated costs could not be passed on through price increases.  We can add one very critical element to this discussion and that is the seasonality of our business.

We may be properly staffed, equipped and resourced to deliver a quality service but what happens when the floodgates of customer demand literally open up during an ever increasingly compressed period of the year?  Is it as simple as understanding that we can only handle X number of transactions before we clearly know that we are increasing the risks of service failures with each and every transaction we continue to accept?  Is it as simple as facing soberly what level of increased risk and associated consequences are acceptable to the business?

Let’s define the other end of the quality scale spectrum.  A company may be willing to take on additional business and new service lines without regard to cost of quality.  Certainly, this is not a sustainable business model but we can all think of companies that have survived way too long and caused significant hardship to customers and damage to the reputation of our industry in the process.  I once heard an anecdote relating to a company principal that said in jest, “I don’t need repeat business.  In the US, 15 million families move a year, I don’t even need one tenth of one percent to have a great business.  I don’t want to move my customers more than once, so why invest in quality?”

Think of the two ends of the quality cost spectrum that we have defined here as a slider mechanism.  Move the slider too far one way or the other and the respective impacts on your business will be felt.  I believe responsible companies in our industry are very aware of this need to balance the costs of quality and we are constantly fine-tuning those controls to achieve quality improvement.  Some industry members are becoming quite sophisticated in developing the mechanisms that measure and control performance which opens up a topic that we will discuss in a follow-up to this post.

This sophistication extends to managing and perhaps even manipulating the mechanisms that measure customer satisfaction.  The question is whether these methods actually improve quality and customer satisfaction or just the perception of quality as measured in those quality indexes.  Or is that one and the same thing?

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Imagine

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Imagine

On April 26, 1956, less than 1 year after I was born, a converted World War II tanker named Ideal X, made its maiden voyage from Newark to Houston carrying the first 58 metal shipping containers.  By the time it docked in Houston some six days later, Malcolm McLean was already taking orders to ship goods back to Port Newark in containers.

Just 5 years later in 1961, the International Organization for Standards (ISO) set the standards for these most commonly used steamship containers, the same containers we use to this day.  There were many challenges along the way.  Imagine setting standards for chassis, container chassis locks, and gantry cranes.  Imagine overcoming the opposition raised by existing equipment owners and organized labor. Imagine facing the huge risks financing these costly containers posed.

What we know is that it took more than a great idea. It took great men, great leaders to triumph over every obstacle, every objection.  It took courage to financially back the idea and vision to work collaboratively to share the standards that would create the global system that we use today.

Imagine for a moment what the world would look like today if this standardization had not taken place.  Almost every facet of our lives and daily commerce that we take for granted would be affected.  We truly owe those visionaries and leaders a great debt of gratitude.

Containerization & The Domestic Household Goods Moving Industry

Interestingly, containerization in our domestic moving industry has been around almost as long.  Recent realities like driver shortages, environmental issues and the erosion of our market share to self storage, portable storage, Do IT Yourself and non traditional containerized transport operators are causing us to look at containerization again for domestic long distance moving solutions, hopefully with a different view this time.

Perhaps this time, we might look at it with the benefit of hindsight and consider the successful models used by steamship and rail lines.  We really don’t have to reinvent this wheel.

In fact, I suggest that we should piggyback on those successful models, which already form the backbone of our transportation infrastructure.  If we are looking for modular standards that will help us deploy existing truck, rail and ocean freight capacities in favor of our current model of a single power unit pulling a single moving trailer, then let’s start by understanding that successful models already exist.

Since we are examining existing wheels which seem to work very successfully, let us not forget that hundreds of thousands of international moves are being handled every year utilizing ISO-standard ocean and rail containers.  Transit insurance companies will tell you that the claims incidence is not any worse than domestic blanket-wrapped shipments in specially equipped air ride suspension vans with tiedowns.  In fact, they might even say that the claims experience and packing standards are better.  Yes, the skill sets in loading an international shipment are different but let us leave that subject to the side while we imagine.

Speaking of successful working models, what about the US military and US Department of State moving programs which mandate that shipments be packed in fairly standard-sized lift vans?  Again, hundreds of thousands of shipments every year are moved fairly efficiently with not much difference in claims rates.  Curiously, the standard size seems to be modular.  10 will fit quite neatly with not too much waste in a standard ISO 40 foot container.

Yes, it is true that not all household items will fit in those lift vans but the industry has adapted successfully.  Just ask the hundreds of thousands of customers that were moved in such containers last year.

Imagine

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Let us suspend disbelief for a few moments and imagine a world in which our industry leaders could take those cards pressed so closely to their chests for competitive advantage to loosen their grip in favor of collaboration and common benefit.  Perhaps with the spirit of those pioneers who paved the way for standardization in the ocean freight industry, we could sit down together and put those cards on the table.

I think we would be surprised to see how similar our cards are and hopefully we could take one step toward collaborating on a modular industry standard that would allow for the economies of scale, interchangeability and efficiency required to overcome the high asset cost, asset tracking and container repositioning issues which have caused repeated failures in the past.

Hopefully, we could hold back the emotions that seem to color the discussions about paper pad-wrapped shipments in ISO containers or lift vans transported intermodally.  The conclusions that these methods are too expensive or that the claims ratios are too high are just not supported by the hundreds of thousands of international shipments that move in exactly that way.

Conclusion

If we fail to collaborate toward global industry standards, the danger is that we will continue down the path of cannibalizing our own businesses. Efficiency gains are the only answer and we have extracted enough concessions from our Owner Operators.  They are now voting with their feet.

While it is clear that the traditional professional moving market has contracted, there is a great deal to be optimistic about.  The skills that we have as final mile operators are unique.  We know how to pack and load.  We own a great deal of infrastructure in the form of warehouses and trucks.  We have trained staff that know how to deal with the world collapsing around Mrs. Jones during one of the most stressful times in her life.

Professional movers handle less than 27% of the US moving market and we are giving up precious market share every day to new competitors.  There are new markets that are perfect for our unique skill sets but we first need to solve this critical infrastructure problem and turn this adversity into a competitive advantage for our industry.  I believe we are at an important inflection point in the history of our industry.  We can continue to stand alone and jealously guard our respective competitive advantage or we can come together as an industry to solve this critical infrastructure issue.

Gratefully, we can benefit and learn from the vision and leadership of great men like Malcolm McLean who helped to revolutionize shipping and changed life as we know it in the process.  So, take a moment.  Imagine our industry continuing down its current path and envision what our world will look like 10 years from now.

Now, think what would happen if we come together cooperatively as an industry to solve this critical issue – together.

Just imagine.

Technology – What Return on Investment?

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Technology – What Return on Investment?

As an industry, we are not necessarily known for technological innovation.  While mobility services can be considered a fairly basic service industry, there is an amazing level of complexity that can surround our business.  Some of that complexity results from our own convoluted legacy processes but some of it is also related to the high-touch, one-off, very personalized nature of our business.

While consolidation in our industry continues to create businesses large enough in scale to justify proper investments in information technology, most of us are small to medium-sized enterprises that find it difficult to afford the investments that are necessary.  Gordon Moore, cofounder of Intel, observed in 1965 that the number of transistors per square inch had doubled every year since the integrated circuits that power our computers were first invented.  While the pace may have slowed recently, customer expectations based on this observation have not.  Consumers expect faster, smaller, more powerful products at ever lower prices.  That expectation is not limited to computers and smartphones.

The Role of Technology in our Business

In our hyper competitive business environment, our customers have come to the conclusion that service excellence is no longer a unique differentiator.  With the increasing availability of information systems connected through the Internet, customers view themselves as sophisticated shoppers able to quickly filter their choices down to a list of relevant suppliers.  Price has logically become an obvious, important determinant.  In order to avoid becoming commoditized, we have to understand what differentiates companies in the minds of this new class of customers that turns to Google rather than the Yellow Pages.

Increasingly becoming more and more important is both an understanding and investment in technology in creating this differentiation.  Corporate customers, for example, view service excellence as the cost for admission to contend for their RFPs.  Service delivery no longer differentiates but information about service delivery does, i.e., the application of technology to play back relevant information that is useful in gauging the value and quality of the service delivery.  Technology that enables work processes to become more transparent and efficient spells the difference.

The industry is not shy about making the promise to deliver such differentiations.  The actual results have been mixed not just because of shortcomings in our ability to adapt to new technology.  The failures are often related to inertia on the client side.  Customers “buy” the high-tech gimmicks but often fail to commit when it is time to implement and actually use the technology.

On the private customer side, things are changing as well.  A new generation of consumers that  has grown up with the World Wide Web now expect service and information, online 24 hours a day, 7 days a week.  They are more comfortable with technology capable of helping them do their own survey online.  Consumers who are used to shopping and banking on the Internet may rather compare movers online and instantly book their transaction with a credit card than entertain 3 separate Moving Consultants with appointments that require days to return with a proposal.

While the traditional business models in our industry are in no danger of disappearing immediately, anyone that does not see these trends and understand their effects on our business may be closing their eyes to opportunity.  Yes, there is opportunity and if you look around closely, you can see new online business models being established – some successfully.

Investment Required

For small to medium-sized enterprises, keeping up with the pace of technological change and related consumer demands is too big of an investment.  Off-the-shelf software solutions created for the industry have helped in reducing this investment cost but the mistake often made is that (having gotten over the tough decision to invest in a new operating software), most companies typically underinvest or fail to invest at all in a proper, disciplined implementation that includes a strong commitment to user training and support.

Consultants speak of Total Cost of Ownership as it relates to software and there is no agreement on the right ratios but by way of example, one formula shows that software cost should be some 22% of overall spend on the system.And your company has always treated me well and saved me the trouble of running all over town to get a prescription from your doctor first if you want to get over this disorder then use this very effective product called as cialis prescription sildenafil citrate pill . cialis is said to be useful in treating impotence. The real thing starts from below: Research – Acquire as much cialis viagra levitra information as possible on this topic. It is considered a disease, the third levitra prices most basic reason for death for adolescents. cute-n-tiny.com cost cialis viagra What is Erectile Dysfunction or ED? Erectile Dysfunction is common , and that everyone goes through it at certain moments of life.

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In my experience with large, medium and smaller enterprises in our industry, I have consistently noted a failure, in these companies, to recognize the importance of investments beyond the software, itself. I have often seen failed implementations resulting in tremendous disappointment, decreased productivity, business disruption and disillusionment all associated with this fundamental misunderstanding of technology investment.

Many companies in our industry are running their businesses and forcing their staff to work on crippled systems due to improper implementation.  Owners are quick to blame a faulty software but in many cases, the software may not be the issue at all.

When considering new operating system software, do a proper Total Cost of Ownership analysis.  If this is a skill set that you do not have within your company, it may be worth engaging a consultant that is experienced in this type of evaluation.  Understanding the total investment necessary in order to arrange a successful implementation and creating a plan that emphasizes the necessary user training and support can greatly improve the chances of success.

Conclusions

The good news is that our industry is starting to make some sense of the importance of wise technology investments.  Systems like RedSky which seek to serve a closed network, (UniGroup – in RedSky’s case) are making progress in connecting user companies and in using a collaborative, shared approach to IT-related investment.

Using such a collaborative approach within a closed network is a sound idea, in my opinion.  Much of the efficiency that can be gained from technology relates to the sharing of information and common resources.  Such sharing can only go so far in an open environment.  Even within closed networks, companies are reluctant to share too much information, a characteristic that points to why our industry remains too fragmented and inefficient.  While there are some great examples of organizations putting aside their own self interests for a moment in favor of the benefits of collaboration, we are sometimes too suspicious and too quick to dismiss great ideas that require cooperation.

Like it or not, technology is not a passing fad as some may have hoped.  Those who embrace it and learn how to leverage it to enhance their businesses and service offerings have a better chance of success.  Those who understand how to invest properly in technology will get better returns on their investment.

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