Largest U.S. automotive distributor applies performance management methods to reduce damage claims and turnover while earning top quality honors.
The largest automotive distributor in North America used Performance Managment (PM) methods to cut product damage claims by half within one year (a $4 million dollar savings), reduce driver turnover to an unprecedented level, and win quality honors from Ford Motor Company, Toyota and the National Automobile Transporters Association (NATA).
This thriving automobile transporter wanted to address typical annual damage claims in excess of $8 million. The smallest nick or scratch on the new automobiles they delivered could be highly expensive. Occasionally damages did occur due to loading, tying and unloading errors, but the carrier was also liable for repairing any pre-existing damage not noted during the pre-loading inspection. Despite a successful history as a carrier for every automobile manufacturer in the world and as a transporter of over 11 million vehicles per year, the company had reached a stalemate in its attempts to reduce product damage. The company also wanted to address the behavioral aspects of on-the-job accidents as well as customer service and quality concerns in its 121 terminal locations throughout the United States and Canada.
PM technology helped management understand why previous improvement programs had been short-lived due to vague performance expectations, one-time recognition for reaching short-term goals, absence of program maintenance, and lack of employee ownership and management support. After training in PM, supervisors and managers developed a rating system aimed at achieving 100 percent delivery of “perfect products.” Drivers and terminal managers received regular data regarding damage claims and costs, and every performer worked with a matrix of pinpointed behaviors and results for ensuring internal and external customer satisfaction. The system included safe driving behaviors, pre- and post-inspection checklists as well as specific customer requirements for securing, loading and tying down each type of vehicle transported. Drivers could work through a series of performance levels to earn tangible rewards and social recognition for reaching measurable outstanding performance levels. Middle management and administrative personnel were included in the performance reward loop so that the quality initiative became an ingrained, rather than a temporary effort. Today, after 20 years, the PM system remains vibrant. The executive team credits the process for continued success in customer retention, quality service, safety, the receipt of a multitude of industry awards and the high-performing workforce that makes it all possible.
Results of Intervention:
- $4 million savings in paid-out damage claims within one year
- Annual driver turnover rate of 3 to 4 percent compared to an industry standard of 100 percent
- Named preferred carrier for the National Automobile Transporters Association (NATA)
- Recognized by Ford Motor Company as the best damage-prevention carrier
- Received (from Toyota) the President’s Award for Logistics Excellence
- Retains first and major customer after six decades
In every location, every terminal, we have success story after success story.
We’re successful because we’ve taken the PL strategy and applied it every day.
– Assistant Vice President
What we’ve got now is a system that works and pays off!
– Vice Chairman of the Board
This system has definitely made a positive impact on the bottom line.
– Damage Prevention Analyst