Whose Business is Process Improvement Anyway?

Whose Business is Process Improvement Anyway?

Business and IT are locked in a struggle over who controls the management of business process improvements. CIOs who seek to lead the charge have their work cut out for them


Last September, MTC Holdings hired Larry Grotte as its first CIO. The stevedoring company created the position because it needed someone to oversee the implementation of best practices and technologies to streamline terminal operations and increase revenue through productivity improvements at its seven operating companies. Currently, each of the operating companies that run terminals has its own processes for doing so. Grotte is charged with reconciling the operating companies' disparate processes with standard technology. His top priority? Shepherding a pilot program of new processes and technologies for moving trucks in and out of MTC's terminals at the port of Los Angeles and the port of Long Beach, the second busiest port in the US. The new process will eventually roll out to other MTC terminals.

MTC competes in the stevedoring world on the basis of how efficiently it runs its terminals. The faster its operating companies can load and unload shipping containers and the faster they can get 18-wheelers in and out of their terminals, the more business they can do and the more money they can make from unloading cargo from ships and charging terminal entrance fees to truckers.

"If you have a terminal that's X number of acres sitting on a piece of dirt in the Pacific Ocean, you can't grow its acreage but you can grow its throughput: You can either stack containers higher or move them faster. We have to keep pushing more throughput at our terminals," says Grotte.

At MTC's Long Beach terminals, truck traffic was a nightmare. Terminal operators had no way to keep tabs on trucks inside their facility. There was no process for admitting trucks, which were all vying for entry during the peak daytime hours of 3am to 6pm, or for moving them around the terminal. This hampered productivity, created congestion and heightened security risks.

To improve operations at the two Long Beach terminals, Grotte developed a system that identifies trucks as soon as they enter the terminal's gate and directs the drivers from point to point while they're inside the terminal. Terminal operators now affix GPS devices to trucks as soon as they enter the facility. The GPS devices, each of which has a unique identifier, connect to the terminal operating system. Traffic controllers inside the terminal use the system to monitor congestion and to tell truckers where to go next. Truckers must also now schedule appointments to enter MTC's Long Beach terminals during peak hours. Those appointments are tracked in a new system MTC developed called VoyagerTrack.

To further increase productivity and reduce congestion at the Long Beach port and on neighbouring highways, MTC and an alliance of marine terminal operators in Southern California expanded their operations to 24 hours a day and created incentives to get truckers to enter their terminals at night. They offered reduced entrance fees for after-hours arrivals and charged trucking companies that continued to operate during normal business hours a "traffic mitigation fee" to offset the cost of operating during off-peak hours from 6pm to 3am. Off-peak appointments are scheduled in a new system called PierPass.

Knowing truckers earn their keep based on the number of containers they move, Grotte and the West Coast Marine Terminal Operators convinced the drivers that following the new procedures would increase their productivity and profitability. For example, if they made appointments to enter the terminal - day or night - they wouldn't have to wait in line to get in. Thus, truckers could get in and out of terminals faster, giving them the opportunity to earn more revenue by transporting more cargo and making more trips.

"By moving their same fixed fleets faster, trucking companies improve their profitability and their return on assets," says Grotte. And those truckers who switch to the night shift experience the added benefit of smoother traffic through the terminals. In this manner, Grotte got nearly 99 percent of the trucking community on board with VoyagerTrack at MTC's Long Beach terminal. "These trucker communities and marine terminal communities know they need to constantly cannibalize their processes just to stay with the game," says Grotte.

Since deploying those new processes and technologies, Grotte estimates that MTC has increased the productivity of its Long Beach terminals by 25 percent and reduced traffic congestion during the day by 30 percent. Grotte plans to roll out the new system to MTC terminals around the United States.

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