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Management Side
Week of 12 February 2018: Using Transportation Costs as a KPI

Email Jim at jthompson@taii.com

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KPI, in case you have been living under a rock, means "Key Performance Indicator." KPI's have been all the rage for a number of years. Everyone has been looking for the Holy Grail of KPI's for a very long time.

I'll submit I have found it.

But before I reveal it, you'll have to suffer through one of my stories. Back in the '80s, a mill that is almost in the middle of Iowa reported to me. There aren't many mills there, so you should be able to identify it pretty quickly. I didn't live there, but I was on top of their numbers every day. They had slowed down due to a frayed belt on a dewatering device. They did not have one in stock. They had ordered one from the belt maker, but it had not arrived.

Being young, brash and full of vim and vinegar, I decided to fly out there and take charge of the situation. As it turned out, by the time I got there, the belt, or wire if you prefer, was sitting in a transportation company's warehouse in Milwaukee, about 300 miles away. It was scheduled to be delivered in a week or two. Infuriated, I got the length of the wire roll (about 12 feet if I remember correctly), went to the nearest town, rented a U-Haul van of a size that would hold it, and drove to Milwaukee and got the blasted thing. Took about fifteen hours round trip, if I remember correctly.

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And within this story lies the KPI. It is not likely you are going to find a senior manager who will do what I did. No, you will spend more money and "Hot Shot" your problem: use an exclusive truck with two drivers that can take a load straight through without stopping. Fedex Ground has made a beautiful business out of such mistakes and copyrighted the name "Custom Critical" for such shipments. They have trucks with "Custom Critical" markings and sleeper cabs just for this service. Sounds much classier than "Hot Shot", don't you think?

I referenced these as mistakes and that is exactly what they are. If you find yourself "hot shotting" spare parts into your facility, somewhere in your system you are out of control. Hot shotting loads to your customers may need further examination--this could either be your problem--you missed a production date promise; or your customer's problem--they failed to order your products in time.

Hot shotting should set off alarm bells. For unless it is an act of nature (tornado, flood, and so forth) hot shotting indicates someone made a management mistake. Yet, if we are going to use this as a KPI, what are the acceptable boundary limits? I think if I were in such a management position again, more than one inbound hot shot per quarter would raise alarm bells for me. That's just a guess, and it would require examination of the circumstances.

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Jim Thompson is back again...with a new book on a taboo subject: the personalities in the pulp & paper industry. Jim has written in the past on many subjects based on his four plus decades in the worldwide pulp and paper industry. This new book is packed full of information valuable to the senior member of the industry as well as the recent entrant. A must for every pulp and paper library.

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It is not the apparent costs of the hot shot that concerns me--that is, it is not the extra costs of the specialized transportation. It is the hidden costs...what went wrong in our planning, our allocation of maintenance costs and capital, our analysis of machine reliability and on and on and on. The extra transportation costs are just the tip of the iceberg. The balance of the chaos and its costs that caused this situation are far more interesting.

What do you think? I would like to hear from you.

From a safety standpoint, if you are hot shotting, you are in a position of being particularly vulnerable to safety problems. People are in a high state of agitation, and it is easy to make a mistake.

Be safe and we will talk next week.
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EMPLOYMENT OPPORTUNITIES:

* An expanding company is looking for a Corporate Industrial Electro-Mechanical Engineer near Allentown, PA. Relocation is available. Do you have a storied list of unique electrical and mechanical engineering skills you're ready to take to the next level? Do you envision yourself in a corporate-level leadership role that your experience finally merits? And do you relish any opportunity to troubleshoot and solve real-time problems, all while designing and installing new services and systems that will not only ensure safety, but also turn a potentially hazardous work environment into a continuously thriving one? If you are interested or would like more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

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* We are a large automation company that has a line of consistency transmitters, sample valves and sheet break detectors that are marketed through a rep. network. We are seeking someone with a strong background in consistency control to facilitate start-ups, provide troubleshooting and technical advice. The individual should have experience in all major types of consistency measurement technologies (blade, rotary, microwave and optical). Knowledge of sheet break detection technology is desirable as well. Willingness to travel to paper production facilities across the US is a must. Travel & Living Expenses to be reimbursed along with an agreed upon daily per diem rate. For more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412.

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