National Air Express Case Study

He is very concerned about adding capital expense to the operation, to meet the demands of current customers, when business has not increased appreciably. According to the case, this has been the worst first quarter Smith recalls, primarily due to weather conditions. He has asked Martha Lewis, his field services supervisor, to help him review the available data and offer possible solutions.

In the Case Study of the National Air Express, Smith and Lewis manage a fleet of 24 trucks In Chattanooga, TN.

The service which Is being provided In the ease study Is door-to-door overnight air-express delivery within the united States. Routes are assigned by area, usually delineated by zip code boundaries, major streets, or key geographical features, such as the Tennessee River. The majority of customers in this area have pickups scheduled between 3:00 p.m. And 6:00p.m.

, Monday through Friday. Most call-in customers are wanting pickups as late as possible, Just before closing.

When the driver arrives at each pick up location, he or she provides supplies as necessary and must receive completed air waybill for each package. Because industry is extremely competitive, a professional, courteous driver is essential to retaining customers. Therefore, Smith has always been concerned that drivers not rush a customer to complete his or her package and paperwork.

It appears that Frank Smith and his field service supervisor, Martha Lewis, have looked at the budget considerations. Many customers’ needs have not been met, meaning the drivers were unable to meet the scheduled pickups requested. Overall, there has not been an increase in the number of pickups, and they do not feel it is financially responsible for another truck and driver to be hired, which would be at a cost of $1,200 a week.

From what was discussed in the case study, it does not appear that any action has been taken thus far to resolve the customer dies-satisfaction regarding pickups.

National Air Express has seen a lag in their overall productivity over the past quarter. Smith recognizes the problem in his budget report as he is contemplating the addition of ewe capital expenditures to help increase operations. The concept of adding new capital expenditures needs to be evaluated and Justified based on the current operations and whether or not the company can take on new expenses. In my position, It Is necessary to provide all details that are pertinent to purchase the new capital. Part of the details should Include why the capital Is needed, how It will affect the operations, and how the cost will be recovered.

If there is not sufficient reason for tens large expense, SSL,U a week, ten company will most Kelly not approve ten transaction. I recommend that National Air Express conduct a customer satisfaction survey as a method to evaluate the performance of its drivers. Measurable questions can be asked where a satisfaction ration can be counted to seek the better performance initiatives and standards for its drivers. This way, drivers with a good performance rating can be encouraged by incentives to keep up the good work, and others will be motivated to perform better. The feedback can also be used to help generate new ways of conducting business operations and identify areas for improvement in current processes.

Case questions:

1.

Is the productivity measure of shipments per day per truck still useful? Are there alternatives that might be effective?

The productivity measure of shipments per day per truck is a very useful tool in determining how effective each truck can be. The fleet consists of 24 trucks, this can be used to determine the productivity ratio of each truck of the number of shipments received per day.

While the productivity measure of shipments per day per truck is still useful, it needs to be factored together with the customer service standards that Smith wants incorporated. Rather than shipments per day per truck, he might choose to measure productivity in terms of dollars per day per truck or cumulative dollars for each customer. For example, the fact that a truck has two shipments per day is not as useful as knowing that Customer A ships items virtually every workday, while Customer B ships items approximately once a month.

If Smith tracks the frequency of shipment per customer and factors in the dollars of profit he is making, he will arrive at a more useful measure of profitability that can tell him whether he can afford to-and should-increase his costs for more ruckus and drivers. On the other hand, Smith might consider changing the way he is operating in lieu of adding more trucks and drivers. He might be able to reorganize his pick-up and delivery services to permit fewer drivers to service customers more efficiently.

Rather than having a driver give the customer boxes to pack and paperwork to fill out, then wait while this is done, the drop-off of supplies can be done while packages are being delivered, earlier in the day. In this way, drivers could pick up a great many more packages at around 5:00p.m.

Than they are currently owing-especially since, by dropping off materials and papers beforehand on their morning delivery route, drivers can ensure that the packaging and paperwork will already be done when they arrive for pick-up. Then, on the return trip to pick up packages, the driver can pick up the completed paperwork and already-packed boxes much more quickly without having to worry about rushing the customer.

2. What, if anything, can be done to reduce the daily variability in pickup call-ins? Can the driver be expected to be at several locations at once at 5:00p.m.

?

To reduce the variability n daily pick-up call-ins, customers can be encouraged to have a standing pick-up order if they will be shipping packages daily or on the same day every week. This way, there can be a standard route that never varies, making it an express route, and other routes for unexpected pick-ups. The standard, scheduled pick-up would be serviced at a lower cost than unexpected pick-ups, offering an incentive to customers to develop a routine and consistent schedule for their shipping. Although the case study notes Tanat most customers “want as late a plucks as possible, Just Detour losing”, the driver cannot, of course, be at several places at once at 5:00 p.m.

To skirt this issue, Smith can try a couple of options. One is for customers to leave packages in a secure area for the driver to pick up. Some businesses have a locked area that only the owner and the driver have a key to. Since many businesses would not have the appropriate locked area, however, another option might be for Smith to utilize the reorganization of pick- ups and deliveries so that all deliveries are made in the morning and afternoon and al pick-ups are made from shortly after 5:00 p.m. And throughout the evening until all pick-ups were made.

This would allow Smith to utilize all of his drivers for evening pick-ups rather than having some of them delivering packages at that time.

3. How should package pickup performance be measured? Are standards useful in an environment that is affected by the weather, traffic, and other random variables? Are other companies having similar problems?

Package pick-up performance should be measured in terms of the number of packages picked up per hour in normal weather conditions. Performance will naturally decline in inclement weather. Although weather, traffic, and other variables do affect performance, this does not make standards obsolete. Drivers need a benchmark to strive toward, and Smith needs a benchmark for measuring the impact of adverse conditions against.

It is assumed that other companies are having similar problems in terms of traffic and weather, since these affect everyone, but their pick-up and delivery services may be organized in a more efficient manner, so Smith cannot assume that they are having the same productivity issues that he is having.