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Improving Performance in

Transportation Protective Services

By Marc D. Boyle, President, Boyle Transportation I n his Op-Ed in the Wall Street Journal1 ,

now Deputy Secretary Ashton Carter outlined many prescriptions for the

Department of Defense (DOD), includ- ing the following: “to incentivize produc- tivity and innovation in industry, we must strengthen the connection between profit and performance in our business prac- tices.” His blueprint document, “Memo- randum to Acquisition Professionals” (September 14, 2010), further directed that “the Department should recognize and reward businesses and corporations that consistently demonstrate exemplary performance.” To illustrate this point, Dr. Carter cited a Defense Logistics Agency (DLA) program where “suppliers have their performance tracked via a vendor scorecard tool . . . and are eligible for pre- ferred status based upon these measures.” In applying these guidelines to the busi-

ness of Transportation Protective Services (TPS) for DOD shipments of arms, ammu- nition, explosives, classified material and other sensitive material, key questions arise: • What metrics should be included in an objective TPS carrier scorecard?

• What constitutes “exemplary perfor- mance” as opposed to minimum ac- ceptable standards?

• How can industry be incentivized to innovate?

The following is an industry perspec-

tive on how to best address these ques- tions for the business of providing TPS.

SCORECARDS Most experts agree that supplier score- cards help to focus the supplier’s attention on improving performance. Any discus- sion of TPS scorecards must start with the many specialized safety and security requirements designed to protect this ma- terial in normal operations. These protec-

8 | Defense Transportation Journal | JUNE 2012

tions provide limited insurance against low probability, high consequence events such as a terrorist obtaining materials, us- ing a hijacked vehicle in an attack, or a catastrophic highway accident. Accidents may result in a detonation that causes fa- talities and destroys property, or in the loss or exposure of weapons systems or classi- fied material. In storage, security-sensitive material can be safeguarded at a military facility through physical security mea- sures that isolate the material and restrict access. In transportation, exposure to the public cannot be avoided while travel- ing on highways and railways. Therefore, operating practices that emphasize safety and security are especially critical. Since safety and security are also the basis for the premium paid for this form of trans- portation, it makes sense to measure how well carriers are performing in these areas of service quality. It is essential to provide for constant at- tendance and surveillance of these secu- rity-sensitive materials while being trans- ported. Using a common sense, “trust but verify” approach, DOD measures a car- rier’s security compliance using covert, in- transit surveillance inspections. The find- ings from these inspections could form a basis for a security score. Safety performance measurements for carriers are readily available from the Department of Transportation’s website. Rather than reinvent the wheel with a different measurement system for car- rier safety performance, the Surface De- ployment and Distribution Command (SDDC) uses a “whole of government” approach, and accesses this existing infor- mation on carriers from violations found on roadside

inspections. According to

DOT, higher scores are correlated with higher incidences of crashes (like golf, lower scores are better). Carrier scores

from the Safety Management System across seven critical safety areas, (Unsafe driving, Fatigued driving, Driver fitness, Controlled substances and alcohol, Ve- hicle maintenance, Hazardous materials and Crash indicator) could easily be in- corporated into a scorecard. Other measures on a carrier scorecard might include on-time pickup and deliv- ery performance, and in-transit visibility reporting compliance. Supplier scorecards have been an im-

portant tool for supply chain managers for many years. Best practice dictates that ap- propriate weights are established in each category and that objective, numeric val- ues are used rather than subjective mea- sures (e.g., 90, 85, 67 vs. Grade A, B, C) in order to foster continuous improvement. While the scorecards themselves are

important, the only way to drive perfor- mance improvements is by linking incen- tives for suppliers in order to, as Dr. Cart- er stated, “. . . strengthen the connection between profit and performance . . .” One way to do this is to reward suppliers with “exemplary performance” with preferred status, resulting in more business volume ,as he referenced in the DLA program.

EXEMPLARY PERFORMANCE VS. MINIMUM ACCEPTABLE STANDARDS It’s important to distinguish between sup- pliers that deliver exemplary performance and those that meet only the minimum acceptable requirements, (i.e. “the lowest common denominator”) by keeping track of actual performance. Why? Consider an example from another industry—Internet service providers. Suppose an organiza- tion decides on a service level standard based on market research that provides for 99.5% uptime, and then awards business at its various locations to different provid- ers. The organization calculates the cost of

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