¶ … Improvement
How is process improvement important to achieving transportation excellence? How might process improvement be extended to other areas of logistics planning?
Process improvements are predicated on cost reduction. Costs, irrespective of company size, often hinder business progress as company profit growth is inhibited. Through the use of process improvements, company's can achieve efficiencies they otherwise may not have attained due to system optimization. Process improvements can come in a litany of different forms depending on the size of the company and the industry in which it operates. For large companies in commodity businesses, process improvements are integral in reducing overall product prices. In commodity businesses with little differentiation, cost is ultimately the determining factor in regards to consumer purchasing behavior. A consumer shopping for an apple for instance is concerned with the overall price of the apple rather than any differentiating factor. As such, the producers of this commodity must optimize its systems and processes to lower production costs, which ultimately lower consumer costs. In many instances, the cost savings incurred through process improvements can help improve gross margins for commodity type businesses as they become the low cost producer in their respective industry. The same occurs within the transportation industry which is directly impacted on commodity...
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