Yellow Transportation and Innovation in Logistics and Transportation Case Study
- Length: 6 pages
- Sources: 5
- Subject: Business
- Type: Case Study
- Paper: #98025535
Excerpt from Case Study :
1926, Yellow had been in the transportation industry. The deregulation of the transport industry saw the company decline in revenue because of the introduction of smaller and flrxible competitors. As an old company, it followed a non-viable method of operation and was run like a family business, with a degree of autocracy. The company had no vision, a narrow focus and lacked customer-orientation.
To counter the declining business opportunity as a result of inefficient operations, the company undertook system-wide changes to improve on the provision of better quality services. It adapted the use of technology. It specifically focused on the internet to help turn around faster and reinvent newer operations and logistics to meet the demands of the new economy. With the technological advancement, the company was able to focus on customer orientation in order to be competitive in positioning. It came to the realization that the key to growth of a business is enhancing customer orientation, which will take into account all aspects including adopting advanced technology to serve customers even better.
Tapscott and Williams (2006), explain that old ways of doing business are giving way to new and dynamic economy, it is either one changes or sinks along with the old economy methods of business and innovation. Since 1926, Yellow had been in the transportation industry. With age the company had become resistant to change maintaining old business methods. The business had been run like a famly business under Powell since 1950s. With time, the transport industry became deregulated, but still the company did not understand the implications and this led to a decline of performance. The company had little idea of how to continue amidst all the confusion. It had taken no effort in adjusting the services to suit the market needs.When customers wanted service, the company told them whether it could undertake that service or not therefore, customers whose request were turned down, were forced to look for alternatives. This was a case of lack scope for flexibility to meet market demands. In addition, the company never gave estimated delivery time neither was there a guarantee that shipment would arrive on time. Most shipment were delivered late, damaged or lost.
To counter the situation, the company undertook system wide changes using technology. The company put in place the system using the power of technology and the Internet. This turned around the company to meet the demands of the new economy. Yellow, with these changes, became a leading company in the transportation industry and accelerating the deployment of technology and improving relationships with customers.
Old economy companies share certain characteristics; they follow a non-viable method of in new economies, they are resistant to change maintaining old ways of doing business and they ran like a family business, with a degree of autocracy. These lead to a limited vision, narrow focus, and more often lack of customer-orientation. Such companies need to sharpen their focus on customers and quality of service and one way of doing this is by making extensive use of technology to reinvent the company.
Yellow Corporation brought about system-wide changes to improve on the provision of better quality services. To achieve this it made extensive use of technology. By harnessing the power of technology and the Internet, the company was able to turn around faster and reinvent operations and logistics to meet the demands of the new economy. The company took several steps to meet these demands including the following;
The Corporation established Yellow Technologies to help in developing technological initiatives that would improve the operational processes. Yellow Technologies adopted stringent measures in undertaking the company's activities such as, no initiative was to take more that 12 months to develop and each produced program was to yield a minimum of 15% return on investment.
Yellow Corporation developed My Yellow, a web portal that assisted it in hastening the adoption of Internet technology. This initiative under Yellow Technologies helped the company increase the number of applications. The website was enhanced making it more comprehensive and consequently, more helpful to online users. The web portal allowed a diverse customer base to communicate with other Yellow companies using internet instant messaging as well as voice over internet protocol. In addition, other services available included online bill of lading service and an online filing of damage claims. This portal became popular widening the user base from 4300 in 2001 to well over 50,000 by early 2003.
This website was a Business-to-Business (B2B) exchange portal. The website-enabled participants obtain several services including
Receipt of instant project quotes,
Matching shippers with carriers,
Tracking shipment status,
Finding consulting services,
Buying and selling used equipment
The website was instrumental in helping trucking companies' economies on resources by synchronizing routes and payloads from different points, leading to a lowering of the cost of each shipment (PR Newswire, 1999).
1-800-MY-Y EL LOW
This was the company's call center. This system was automated, when placing an order for shipment; it accessed a customer profile stored during the first call, which corresponded with the caller's number. This system simplified the process of placing orders. It only took 15 seconds to place an order as the customer service representatives did not have to waste time noting down routine details.
Wireless Mobile Data Terminals (MDT)
This device was helpful in handling logistics in the company. Before the truck carrying the shipment arrived at a hub, the worker was able to identify what was on board the truck, as well as details about the destination of the shipment. This simplified the unloading process and enabled the company to give the staff closest to the customers, the necessary information to help them tackle problems quickly, thus improving the quality of service.
This was the company's traffic control tower. It provided a detailed arrangement of each day's shipping activity on a map of the United States of America. In the control room, operators were busy routing customers and their loads electronically. The system was instrumental in provision of trucking information such as the trailer number, the precise number of pounds it was carrying, what it was carrying, where it was going and details about the customer. It enabled the company to regularly manage worker at the loading docks depending on the predictions of labor demand. With this system, Yellow saved on costs by allowing it to employ number of workers that could effectively perform required tasks in a given period.
This system enabled Yellow Corporation handle receivables more effectively. With the system, the company established a pattern for managing receivables enabling it to monitor payments. The company was able to see the customers who paid on time as well as those who were eligible for discounts. The system was critical in reducing late payments and as a result, the earlier late payments average of 32 days was reduced to 30 days, and this resulted in a 10% increase in cash flow, which in turn reduced the company's bad debts.
The company's success in developing in house technological advancements was made possible with the information technology environment. This set up was developed using IBM S/390 mainframes that had the capacity to handle the critical data processing. For this reason, the company saved on the cost of establishing a separate infrastructure, or hiring new integrators to support these technologies. This instead allowed the company time to improve on performance. Having streamlined the logistics as a critical factor, the company's transportation began to gain more importance.
The advent of Internet seemed to herald the beginning of a "New Economy." In this era, innovation in information and communication technology is the gateway to economic prosperity (Lazonick, 2005). Old economy companies can adopt this viable technology to meet the demands of the current dynamic market. In addition, the 'New Economy' demands prioritization of customer needs.
With the current challenging markets, it is critical to focus on customer orientation in order to be competitive in positioning (JP-Consulting & Training GmbH, 2012 JP-Consulting & Training GmbH). Therefore, the key to growth of a business is enhancing customer orientation, which will take into account all aspects including adopting advanced technology to serve customers even better.
Collier, P.M. (2003). Accounting for Managers:Interpreting accounting information for decision-making. Wiley.
JP-Consulting & Training GmbH. (2012 JP-Consulting & Training GmbH). Customer orientation. Retrieved from www.jp-consulting.org: http://www.jp-consulting.org/ManagementConsulting-Services-Customer-orientation/Customer-orientation-E1294.htm
Lazonick, W. (2005). Evolution of the New Economy Business Model . Retrieved from http://www.hsofmich.org/~business/bhcweb/publications/BEHonline/2005/lazonick.pdf
PR Newswire. (1999, August 23). Yel low Corporation Named One of 100 Top Technology Companies by CIO Magazine. PR Newswire.
Tapscott, D., & Williams, A. (2006). Wikinomics: How Mass Collaboration Changes Everything. Portfolio.
1. After the trucking industry was deregulated in the U.S., Yellow began to experience a decline in performance. Comment on the company's model of operations and the reasons why it faced problems after deregulation.
After the many years of operating within a regulated environment, the company had adopted a sense of complacency. The…