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Don’t Sacrifice Inventory Control in the Name of Efficiency

A waste hauling company developed a set of metrics to try to improve the efficiency of the drivers who deliver and pick-up large roll-off refuse containers.

The principal efficiency measure was ‘turns’, the number of containers a driver delivers and picks up each day. Management was confident they could improve ‘turns’ by making it a front and center measure of the driver’s performance.

The management team felt good about the new metric system, but a new situation developed as the metric system matured. The company was constantly short of refuse containers. Inventory that had previously sufficed to handle the level of business, was no longer enough. The management team couldn’t figure out why they never had enough inventory to satisfy new orders that were coming in. This was costing them revenue and hurting customer relationships, because they could not fulfill new orders. Buying additional containers was both very costly, and the lead time on new containers was weeks so the short term problem could not be solved.

In desperation, the management team began interviewing drivers to see if they had an answer. The interviews revealed that, in order to improve their turns metric, drivers were placing empty containers in strategic locations around the city. This enabled drivers to quickly deliver a container for a new order, without having to return to the yard. The new measurement system was the root cause of the container shortage! And, to add insult to injury, the drivers who used this strategy to game the system were perceived as the most efficient drivers in the system. They were praised for their performance at the weekly driver meetings!

The management team recognized that the drivers’ system did, indeed, improve efficiency, but that without a method of data collection that could provide the company with the location of its containers, it was not workable. So management looked for a system that could take advantage of the drivers’ innovation, while providing management with insight and control of the inventory.

With the help of an RFID system integrator they quickly developed such a system. They added passive RFID tags, Allied VX-MID tags, to their containers. The drivers were required to scan the tags with a handheld RFID reader when they retrieved a container or dropped one off. When the containers were scanned, the location was logged using GPS information. The location information for every container could then be mapped. The map of container locations became the key resource for all dispatchers and customer service representatives. Over time the system was implemented across their entire fleet and drivers bought into the program.

The new system provided multiple benefits:

  • Inventories are now accurate
  • The real-time location of containers is available to everyone
  • More revenue can be generated using the existing container inventory, because it is much more efficiently deployed.
  • Dispatchers and drivers are now collaborating on creative ways to increase turns
  • Customer satisfaction has improved because container delivery and pickup is more timely and predictable

Having more information about your business often uncovers issues of which management could not otherwise be aware. RFID enables the rapid, accurate and automated methods for collecting real time information about a business’ assets. Thus RFID systems reveal problems, and solutions, of which management was unaware until they have the high quality information the RFID system supplies.

What you don’t know, really can hurt you!

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