2013 Retrospective - A Year of Change at Matheson

Transition Focuses on Profitability, Reorganization and Re-Engineering Operations, Sales Departments

Mar 11, 2014, 06:00 ET from Matheson

SACRAMENTO, Calif., March 11, 2014 /PRNewswire/ -- Change occurs in every business, especially in the shipping industry, where internal operations must be re-evaluated continuously to see if they are appropriate or if modifications are required.  2013 was a year of transition at Matheson.

New Leadership:  Last year senior management saw the need for fresh thinking and new leadership in the company's Matheson Flight Extenders (MFE) division. Glen Gates was named division president of MFE.

Mr. Gates has over 30 years of experience in air cargo and airline operations.  He spent two years with the United States Postal Service (USPS) in Washington, D.C. where he designed e-commerce systems as well as digital communications, performance measurement and financial control applications.  He was also responsible for the development of strategic business plans for purchased air capacity objectives for shared and peak season air networks.

Unit Cost & Revenue Study:  Starting with a focus on profitability in a shrinking first class mail Postal market, Mr. Gates initiated a study of unit cost and revenue along with an evaluation of the variance between weight of mail processed and payments received. He also initiated a comprehensive review of manpower requirements -- with strong emphasis on productivity standards and cost drivers. It became apparent that the MFE field management team needed training and incentives to improve productivity and increase profitability.

Daily Tracker Reports:  At the same time, a concerted effort was made to record and capture unit cost data and relate it to revenue (published in the company's Daily Tracker). The latest Daily Tracker update, the 17th iteration of the continuous improvement cost and revenue analysis report, shows where managers' efforts at controlling costs and meeting profitability targets are being met, or not met, on a daily basis.

Pieces-Per-Man-Hour:  A closer look at productivity showed that, while managers were starting to understand unit costs, the most important element of the mail handling process -- pieces-per-man-hour (PPMH) -- was not being measured.  According to Mr. Gates, "PPMH is where the rubber meets the road in a manually intensive, high-piece count industrial process. Industrial engineering time-and-motion studies have proven to major package handlers that PPMH drives profitability."

Matheson Flight Extenders introduced PPMH into its daily operational round table meeting with field staff. Specialized training and documentation procedures were introduced at each city station, PPMH was rolled out and station managers were re-tasked to channel their efforts toward meeting PPMH standards. Managers were further incentivized to set and achieve PPMH goals related to each unique operating environment.

All city stations in the Matheson Terminal Handling network are set up in three distinct operating environments:  (1) Tug and dollie floor load, (2) Tug and dollie ball deck and,  (3) Roller bed and ball deck. Each of these environments has its own unique transportation, sorting, scanning and material handling industrial processes. As a consequence, each has its own individual PPMH productivity targets.

IT, Data Collection, Reporting & Scan Costs:  At the same time, MFE evaluated its I.T. data collection, reporting processes and scanning costs. This study revealed many opportunities for improvement, especially with regard to scanning integrity, missing scan data and labels, improper labeling, mutilated labels, incorrect weights, the failures of payment systems to recognize missing weights, and so forth.  

$200,000 "Found Money":  MFE developed scan data analysis tools and discovered payments processing software glitches that resulted in a positive $200,000 "mail weight variance" payment to MFE from a customer in September 2013 that would not have been caught without these analytics.

Introduction of CORE:  This analysis was aided by the acquisition of state-of-the-art, third-generation CORE scanners. This technology was adopted and became a high priority requirement for managers to utilize for use/match data systems -- where raw scan data was visible and could be compared to the scanned mail payments application.

Maintenance Action Plan:  Matheson also instituted an aggressive GSE (Ground Service Equipment) Maintenance Action Plan to ensure that preventive, scheduled maintenance is performed in a timely and cost-effective manner. Station GSE inventory was "right-sized," increased or decreased, to match productivity goals. Managers are held accountable for inventory under their control. Obsolete equipment and items beyond economic repair, are sold or scrapped.

Depreciation & Acquisition Options Review:  A complete review of depreciation, the "buy vs. rent vs. lease vs. repair" mindset and accompanying financial responsibility, was instituted for GSE maintenance, since it is the second highest cost sector, after labor, to the company.

Safety:  A new safety awareness and accident prevention program was instituted system wide. It soon produced favorable results in terms of a reduction in year-over-year claims and injuries.  

Proposal Development Team: A new proposal generation team was established to create responses to solicitations or Requests For Quotes (RFQ's). The team includes subject matter experts in security, real estate, industrial warehouse build-out, mail processing, airport operations, government contracts, technical writers, graphic artists, proposal writers and content editors. This team developed a three-volume, 7,000 page proposal for the company's USPS Terminal Handling Services (THS) contract in response to a solicitation issued in June 2013. This three-month effort blended the best of Matheson's experience and history as a USPS contractor with SALENTIS International-based expertise in proposal generation.

"These are just a few of the ways Matheson is making continuous improvements to keep pace with changing times, as well as economic and market conditions, with an emphasis on improving productivity, profitability and maintaining superior customer service," Mr. Gates said.

[Visit Matheson's booth #38 at the IATA World Cargo Symposium, Los Angeles, March 11-13, 2014]

SOURCE Matheson