1. Metrics Based Management
Mark Tomasetti, Sr. Project Manager
David Schabel, Sr. Project Manager
Allison Malecki, Project Manager

2. Agenda What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

3. “What gets measured, gets managed.”
Peter Drucker
Similarly, author Chet Holmes states that “People respect what you inspect”; so if you want to effect positive change, pick 3 – 5 goals to hold people accountable to achieve, and then follow-up!

4. If You Can’t Measure It, You Can’t Control It…
Metrics Based Management is a performance management system that relies on 3 components, each of which must be qualitatively and quantitatively expressed
Current State: The baseline measures of your organization’s current performance
Desired State: What your organization wants to achieve with regard to current priorities – Goal Planning
Action Plan: How you are going to bridge the gaps and move your organization to achieve the desired performance
Well-built metrics provide a foundation for your organization to build an action plan that helps you to achieve your goals

5. Metrics Driving Control Loops

6. Agenda Selecting the Right Metrics for Your Business
What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

7. Getting Started – Establishing Your Baseline
Starting is often the most difficult part
Take advantage of the measuring systems and reporting capabilities that you already have
You will likely need to upgrade your capabilities
Takes time and money – you need to grow into it
You will learn how to improve your measures and reports by working with them
Look back historically
Assess the quality of the data you have available
Is it a good marker for your operations?
Do you have a single version of the truth for quantitative results?
Establish trends from the historical data you have, where possible
Publish your baseline immediately so that your organization begins to get comfortable with your starting point

8. Moving Away from “Opinion” Based Management
Establish a formal planning process
Tie back to long-term business plans and annual operating plans
Involve all levels of the organization
Executive Level
Department Heads / Operational Managers
Operational Staff Members
Map metrics into the strategic objectives for departments
Every department should understand how their specific operations connect to the overall organization’s goals

9. Selecting the Right Metrics for Your Business
Metric Owners (Tiers)
Executives
Decrease Costs
Increase Revenues
Improve Driver Retention
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Managers Directly impact Executives’ Metrics
Increase Driver Satisfaction
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Support Staff Directly impact Managers’ Metrics
Let’s look into how Selecting the Right Metrics looks across tiers. As an example, let’s use Driver Retention as a timely example.
“Shares in Swift Transportation, the largest truckload carrier in North America, were down 14% Friday after management warned it was going to have to invest more to address a driver shortage.
The New Jersey-based firm now says it's going to have to spend more on wages and training to hold onto and attract more drivers.
‘...We were constrained in the truckload and (central refrigerated systems)  segments by the challenging driver market. Our driver turnover and unseated truck count were higher than anticipated. Therefore, we sold more trucks in the second quarter to offset the impact of idle equipment, which drove additional gains on sale of equipment this period. After assessing the current and expected environment, we believe the best investment we can make at this time, for all of our stakeholders, is in our drivers. Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money.’
It now sees "cost headwinds" going into the second half of the year.
The American Trucking Association has warned the country is short 30,000 drivers, and that the gap could climb to 200,000 in the next decade.

10. How to Deliver Against Metrics
Levers
Decrease Costs
Driver Retention
Improve Driver Retention
Driver Satisfaction
Dispatch Efficiency
Increase Driver Satisfaction
Safety
Fulfillment
Provide examples to show levers to pull and communicating how this is understood and cascaded down the tiers to drive the change
Levers: Levers are either sub-metrics that change the way a process is defined and measured OR they may often generate a mini-project to fix a root cause issue.
Driver Satisfaction – Understand why they leave and what can be done about it (project). Levers are mini-projects.
Pay / benefits
Fulfillment / ownership (not micromanaged; on-time performance; career progression)
Safety & working conditions (training; holistic scheduling; route planning, etc.)
Flexibility

11. Four Perspectives – Balanced Scorecards
Financial Performance
Customer Performance
Organizational Innovation
Internal Operations

12. Agenda Components of Good Metrics What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

13. Components of Good Metrics: SMART
Specific – e.g., shipping will reduce empty miles by 20% by using software and revised business processes within 6 months of implementation; vs. "decrease costs"
Measurable – i.e., mechanisms are in place to quantifiably track progress
Achievable – i.e., realistic with resources available, though may be aggressive; e.g., if empty miles have been increasing 2% /yr., decreasing by 20% in months may be too aggressive
Relevant – i.e., directly supports overall company objectives and worthy of resources. This requires the company to be aligned on 3-5 overarching metrics
Time-bound – i.e., a deadline is assigned to gauge success in meeting the objective. This is critical for continuous improvement and proper allocation of resources.
The S.M.A.R.T. concept originated with George T. Doran in November 1981 in Management Review.
The “Specific” characteristic should answer:
Who is involved
What will be accomplished
Where will it occur (i.e., department; region, etc.)
How it will be achieved

14. Components of Good Metrics: SMART
Good Goals
Good Metrics
Reduce Empty Miles
Reduce Empty Miles by 10% through Lane-by-Lane Analysis by 12/31/14
Improve Customer Satisfaction
Maintain 98% On-time Delivery Performance
Improve Driver Retention
Increase Driver Retention by 20% Within 2 Quarters

15. The End Result
If this is all done well, then you should achieve… 1. Clear agreement on strategy among senior management 2. Effective communication of strategy throughout the organization 3. Good cooperation and teamwork among management 4. Information is shared within the organization openly and candidly 5. Unit performance measures are linked to strategic organizational measures 6. Individual performance measures are linked to unit measures 7. High levels of self-monitoring by employees

16. Agenda Using Metrics in Your Daily Operations
What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

17. Organizational Perspectives
Moving from Metrics to Control is all about people…
Continuous communication is essential
Assign data owners in each department
What does your bulletin board say?
What do your HR systems say about your commitment?
Moving from Metrics to Control is all about people…
Continuous communication is essential
Review metrics frequently
Weekly staff meetings / Monthly management meetings / Quarterly team meetings
Assign data owners in each department
Collect data regularly
Validate data quality
Communicate the findings and recommendations
What does your bulletin board say?
What do your HR systems say about your commitment?
Are metrics tied to performance evaluation?
Are metrics tied to compensation?

18. Best Perspectives
Respect: Do not create an administrative burden on your people. Make sure the goals and metrics are easy to report. Use automation where possible.
Commitment: Once you’ve set your company and subsequent tier objectives, do not readily deviate from plan; give them time to bear fruit and don’t be changing with the wind
Accuracy: Make sure the data is coming from a single source of truth and is not variable
Follow-through: Regularly monitor progress and, if the goals are not being achieved, assess the action plan designed to meet the objective before changing the objective itself
Incentivize: Most people respond better to sticks (e.g., performance evaluations or components of pay) than carrots (e.g., goodwill, pizza parties)
If I’m ahead, analyze how I got ahead, and deliberate actions between reporting cycles: MANAGEMENT
Respect: Subtle tie in to ResultsNow
Commitment: Subtle tie in to TMW as the system of record

19. Four Cornerstones Benchmarking & Performance Targets
Key Performance Indicators (KPI)
Management Dashboards & Alerts
Routine Operational & Management Reports

20. Think about your data… Data Collection Method Data Source
Data Scale / Formula / Assessment Method
How Often / When / For How Long to Collect Data
Who Collects the Data
If I’m ahead, analyze how I got ahead, and deliberate actions between reporting cycles: MANAGEMENT
Respect: Subtle tie in to ResultsNow
Commitment: Subtle tie in to TMW as the system of record

21. Documentation Tools and Techniques – ResultsNow
For Illustrative
Purposes Only
SAMPLE

22. Documentation Tools and Techniques – The Dawg
For Illustrative
Purposes Only
SAMPLE

23. When Done Well…
A client was training and working with TMW on Revenue metrics, specifically Line Haul and Unbilled Revenues
The Unbilled Revenue report processed 6 months of past transactions
The client noticed it had approximately $0.5M in unbilled revenue
Upon seeing the data portrayed in ResultsNow, the client:
Was made aware of a previously unknown revenue gap
Investigated the root causes to determine why certain customers had not been billed
Invoiced the unbilled orders
To prevent this scenario from repeating, TMW configured a Dawg alert to look for any order that had completed and had not been billed in a predefined number of days

24. Agenda Sample Industry KPIs What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

25. Sample KPIs – Transportation
Orders/Shipments
Total number orders
Average revenue per order
Average margin per order
Average volume (measured by either weight, piece count, pallet count, etc.)
Customers
Total active customer count
% new customers
% lost customers
Average revenue per customer
Average margin per customer
Average volume per customer

26. Sample KPIs – Transportation (cont’d)
Dispatches
Total number of dispatches
Average revenue per dispatch
Average revenue per mile
Average revenue per hour
% empty miles
Dispatchers
Average # of dispatches
Average Errors per dispatcher
Average revenue per mile by dispatcher
Average margin per mile by dispatcher
% empty miles by dispatcher

27. Sample KPIs – Transportation (cont’d)
Equipment
Average miles per gallon
Average cost per mile to operate
Count # out of compliance incidents
Drivers
Average number of trips
Average cost per hour
Average hours and miles
Average OT hours
Count incidents (tickets, accidents, damaged freight, out of compliance, etc.)
Average cost per incident

28. Agenda Tying it All Together What Gets Measured Gets Managed
Selecting the Right Metrics for Your Business
Components of Good Metrics
Using Metrics in Your Daily Operations
Sample Industry KPIs
Tying it All Together

29. Those who write down, communicate, and regularly monitor goals are, on average, 33% more successful in achieving their stated goals than those who merely think about them
Dr. Gail Matthews, Psychology professor
Source:

30. Getting Started Working Session

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33. T H A N K Y O U
Mark Tomasetti Sr. Project Manager, TMW Systems
p: e:
Allison Malecki Project Manager, TMW Systems
p: e:
M O V I N G Y O U F O R W A R D
David Schabel Sr. Project Manager, TMW Systems
p: e:
T H A N K Y O U

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