1. The productivity measure of shipments per day per truck is still useful, but it needs to be factored together with the customer service standards that Smith wants incorporated. Rather than shipments per day per truck, he might choose to measure productivity in terms of dollars per day per truck or cumulative dollars for each customer. For example, the fact that a truck has 20 shipments per day is not as useful as knowing that Customer A ships items virtually every workday, while Customer B ships items approximately once a month. If Smith tracks the frequency of shipment per customer and factors in the dollars of profit he is making, he will arrive at a more useful measure of profitability that can tell him whether he can afford to¨and should¨increase his costs for more trucks and drivers.
On the other hand, Smith might consider changing the way he is operating in lieu of adding more trucks and drivers. He might be able to reorganize his pick-up and delivery services to permit fewer drivers to service customers more efficiently. Rather than having a driver give the customer boxes to pack and paperwork to fill out, then wait while this is done, the drop-off of supplies can be done while packages are being delivered, earlier in the day. Then on the return trip to pick up packages, the driver can pick up the completed paperwork and already-packed boxes much more quickly without having to worry about rushing the customer.
2. To reduce the variability in daily pick-up call-ins, customers can be encouraged to have a standing pick-up order if they will be shipping packages daily or on the same day every week. This way, there can be a standard route that never varies, making it an express route, and other routes for unexpected pick-ups. The standard, scheduled pick-up would be serviced at a lower cost than unexpected pick-ups, offering an incentive to customers to develop a routine and consistent schedule for th