Rethinking profitable growth in the transportation industry
When efficiency is no longer enough
The transportation industry has not been immune to the macroeconomic pressures that are compressing operating margins for companies across nearly every sector. For many firms, the gut reaction is to cut costs. However, current trends, which seem to be putting pressure on the transportation industry, may provide the impetus for companies to re-examine their business models, identify critical capabilities, and revise their operating structures.
In a tough economy, cutting costs by reducing headcount and restructuring labor contracts is a common practice. However, these measures largely focus on bottom-line improvement through increased efficiency without extending to the other end of the strategic spectrum: enhanced capabilities through improved effectiveness and operating model transformation.
The current market situation offers a compelling opportunity for transportation enterprises to revamp their operating models and transform their capabilities to drive profitable growth. A longer-term view that uses both efficiency and effectiveness as a platform for operating model transformation tends to produce bigger and more sustainable results.