For those working in Japan's logistics industry, it is not news that the trucking industry is facing a perfect storm of high fuel prices, tightening environmental restrictions, driver shortages, low pricing power, and growing competition due to deregulation--all placing unprecedented pressure on profit margins, especially for the small- to mid-sized players leaning heavily on their trucking business to sustain revenues. As a result, the Ministry of Land, Infrastructure and Transport has been running a series of research seminars aimed at "up-and-coming" trucking managers.
One of the recent reports from the participants in this seminar series is titled "Prescription for the Profitable Success of Small- to Mid-sized Trucking Businesses" and a summary appears in the 7/31 issue of Logistics Japan (as you might have noticed, there are many interesting articles in this issue). The report attempts to lay out points and hints for success and presents a stance and countermeasures aimed at profitability improvement. It bases its direction on three areas:
- Improvement of transportation profitability and onsite, logistics facility management
- Advancement in customer business and rationalization of customer-aimed logistics
- Acquisition and cultivation of talent
In the thumbnail to the left, the major themes are illustrated (in Japanese). Basically, the goals of strengthening competitive ability in transportation and improving profitability as well as added-value are at center. Extending from this center are specific activities:
- Creating a specialized strategy around core competencies; grabbing a niche market
- Acquisition and segmentation of winning customers
- Planning together with similarly positioned companies and customer strategies
- Creating alliances with similarly positioned companies
- Creating higly profitable transportation/distribution operations; optimization of via integration
- Improving strategic skills; improving value added
- Application of information systems
One of the things further emphasized was the need for an ability to make proposals that illustrate a service portfolio rather than separate proposals for different services. In this way, the firm must show the strength of their ground operations in addition to the ability to integrate the handling of various goods from a number of different customers.
In terms of people and talent, what was introduced is a successful business example showing how drivers were given an "existence in the firm that enabled them to grasp the keys to improving the value-added of transportation services." In this instance, a system had been deployed designed to increase motivation and the wide range of training leadership. An interesting addition were ideas discussed on the issue of Japan's aging population and bridging the gaps related to utilizing female employees as drivers.
Despite the fairly difficult operating environment for these small- to mid-sized transportation firms, the Ministry suggests that "there are certainly niches in the transportation market where such firms can be profitable and where larger firms won't venture." In the end, the Ministry asks these firms to "bear down and make the effort."
I believe these targeted areas for improvement are very important, but I believe this initiative ignores a critical component to succeeding with the implementation of these initiatives. That component is every firm's leadership and the strength of that leadership's vision and will towards bring about organizational change.
Firms in the face of difficult circumstances, especially small- to mid-sized firms in Japan's transportation sector, may find their natural reaction to be in making decisions that seek to recover past performance and in the process attempt to preserve the long-standing organizational culture. This is the conservative approach and a strategy mismatch for volatile periods, certain to prolong harder and more dramatic choices for another day. This is a strategy for no change.
Yet, even if the primary leadership of these smaller transportation firms has the vision and will for dramatic and positive change, without the proper management tools in place to enable the change strategy, employees will not know what the strategy explicity means for the role in the organization and how via their daily responsibilities they can contribute to positive outcomes for the firm, their department and themselves.
Convincing a smaller Japanese firm of this criticality will be particularly difficult if the critical mass of a firm's leadership is entrenched in a status quo enshrined many years in the past. In such a scenario, the firm will be prepared to defend the status quo via "this is the way the industry works" excuses rather than engage in vigorous and objective self-reflection that challenges such long entrenched assumptions and practices.
For the change agents looking to drive transformation in this sector of the transportation industry, the key will be in maintaining a solid patience while developing the ability to identify those industry leaders with the true vision and will to bring about positive change via transformative decision-making. Combining the change agent's tools and knowledge with the experience of these industry leaders will provide a foundational start to a potentially disruptive yet positive development for Japan's transportation future.