5.6 Importance of Quality to transport services
With globalisation of production, complementary manufacturing, increase in international trade, reduction in size but increase in the frequency of transport (brought about by JIT and keeping low inventories), the demand has grown for increasingly complex and sophisticated logistical services, complemented by very high levels of information exchange between the shipper, carrier, regulatory bodies, modal inter-change points, the receiver and commercial interests (banks, etc.). This, in turn, increases the need for control and systematising transport processes.
The design of the logistics service needs to take into account all the factors that the consumer of the service looks for as well as the characteristics of the goods handled. This includes the value-density of the goods, the hazardous nature of the goods (if applicable), and the risks involved in transporting, time sensitivity of the operation and the ability to provide the required service. Overall, the process of providing a service may be described as:
- management developing the concept of the service to be provided, including the equipment and manpower to be used, and budgetary planning and control to be exercised;
- operations executed as planned, feedback received from the staff involved as well as from customers, comparing the levels of service performed with the standards set and identifying areas for improvement; and
- follow-up to the performance of the service, which will help improve standards and, possibly, develop new services. Budgetary planning and control, in conjunction with the feedback received, is an important factor in assessing not only the continued ability to provide the service but in identifying the margins available to improve and enhance it.
The quality of the service performed depends not only upon the design and control of procedures involved but also upon the human factor - the commitment of the staff actually performing the service.
Commercially, organisations may control the total service under one management or set up separate elements of the service as independent entities with the aim of identifying - or in response to having identified - profit or loss making elements (e.g. equipment maintenance, market research, or operational staff management may be contracted out). The organisation, in providing a complete service is therefore actually providing a collective input of various service providers (sub-contractors) and managing this assembly into a single output. Quality systems can form an excellent base on which to build this management control. The main organisation becomes a partner with its sub-contractors in the quality of the performance of its operations. The importance of these "quality partnerships" has been realised by both large and small organisations as shown in the transport industry every day.
Research carried out by Nedlloyd, quoted by Drewry (1992), divided their clients into three categories:
40% interested in price, minimal interest in quality of service;
20% interested in some additional features;
40% looking for a long term partnership.
Another report, by Japan Maritime Research Institute (JAMRI) quoted by Drewry states that shipping is capital intensive when compared to land based transport, which tends to be labour intensive. The comparison may be extended to air which, like shipping, in its transport function, is capital intensive and labour subdued in that both these modes have a very low proportion of manpower utilisation to operate very capital intensive assets and move large volumes of cargo.
In conclusion, the focus of the business decision making mechanism must rest on the cost effectiveness of quality efforts. Keen competition in the transport industry has kept service rates low. To some extent, this has resulted in the polarisation of the supply side of the market - the merging of operations of large organisations (e.g., Maersk and Sealand, P&O and Nedlloyd,) to keep or increase market share on the one hand, and the small operator (e.g., driver-owner road haulier) on the other. As far as the customer is concerned, quality of service is expected not as an optional extra but as a standard.
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