It's All About Efficiency

 
 
By Eric Lundquist  |  Posted 2008-06-27
 
 
 

Why do you invest in technology? I've always argued there are really two reasons. The first reason is to save some money as you make your company more efficient. The second reason is to accelerate your company's ability to grow. In an up economy, the investments usually favor the growth part of the equation. In a down economy, the pendulum swings to trying to save money. Right now, you are seeing the saving part of the equation come to the forefront.

I was reminded of the equation by the recent statements from two companies that depend on efficient transportation to feed their bottom lines. Both Federal Express and UPS need to keep finding more efficient ways to move packages from one location to another. In an era of $4-a-gallon gas, the need for efficiency changes from a nice-to-have to a must-have.

In a prepared statement accompanying the company's revenue results, Federal Express Chairman Fred Smith said, "Record high fuel prices and the weak U.S. economy dampened volume growth and substantially affected our bottom line." UPS also cited increasing fuel costs and a slowing U.S. economy as having a negative effect on the company.

But that quest for transportation efficiency is not the sole province of large companies. Any company that relies on moving goods and people, or that is affected by the rising cost of oil (and that is just about every company in the United States) is now trying to figure out if it is as efficient as its competitors and what it can do to wring more productivity out of the people, trucks and cars that keep the company moving.

While companies the size of UPS and FedEx can dedicate lots of resources to efficiency, the tech execs in smaller companies often solely bear the brunt of being the source for data to supply to the number crunchers. Fuel consumption figures are often buried in myriad expense forms from separate, unconnected departments. Information about delivery truck routing and load size is often kept on paper forms or, more commonly, in the heads of the drivers.

But a slowing economy and increasing fuel costs are going to drive a quest for efficiency that will not let up. It is time for tech execs to reprioritize their technology projects. Put the social network on the shelf for a while and replace that project with the development of the nitty-gritty information your company needs to analyze to increase efficiency.

Providing your company with the instruments to measure and monitor fuel costs, power consumption, and vehicle location and routing is definitely not as much fun as cooking up the cool social network or exciting Web site. But every company should pay attention to the warning of the big transportation companies to recognize that the time is now to capture the data upon which the company's survival depends.

Editor at large Eric Lundquist can be reached at elundquist@eweek.com.

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