THE RIGHT TECHNOLOGY TOOLS INCREASE EFFICIENCY AND MORALE
By Charles Pattillo, General Manager, California Prison Industry Authority
The California Prison Industry Authority (CALPIA) has incorporated a technology solution that is bringing significant, and surprising, improvements to budgeting and enterprise management.
It was not always clear that the investment was necessary, or even desirable. Over the last 6 years, CALPIA’s annual sales grew from $140 million to more than $230 million. Steady sales growth and popular new product lines might suggest there is little cause to invest time and resources on improvement. Wrong! Sales are only one component
of success. No business can survive without seeking efficiencies that lower costs.
When we looked at the organization as a whole, the area that was most difficult to analyze turned out to be the one most in need of improvement – distribution.
Product distribution seems like a straightforward task. And, at first glance, this aspect of the business looked like it was performing well. Orders were consistently processed without error and customers were getting their products in a timely manner. But the information needed to perform a broad and inclusive assessment was not available.
A weak link in the chain of accounting and budgeting information was limiting CALPIA’s ability to see what changes were needed to make shipping more efficient.
While the old system served the needs of the customer, it provided no way for CALPIA to form a clear idea of the cost of distribution. CALPIA ships either from regional warehouses, or directly from individual factories throughout California. In
the first scenario, the shipping costs were billed back to the warehouse. In the latter, the shipping costs were distributed to the factories. As a result, some of our shipping costs were linked back to the point of production and the others were charged to the points of distribution.
This semi-centralized system exacerbated the difficulty of coming to grips with costs. We could not even anticipate what shipping costs would be. This resulted in lump sum budgeting to avoid shortfalls and we found that these were resources that could have been deployed elsewhere. Moreover, we were limited in our ability to detect costs associated with human error, like an accidental double-billing from a common carrier.
We needed a real time distribution tracking software solution that linked shipping costs all the way back to the production line for every product. We found that solution with Varipro Systems, a software product designed for the trucking industry. Its basic function is internet-based, realtime access to all shipping statewide, for every order.
Varipro allows CALPIA to provide each product with a number from the factory through distribution. This links all costs back to the factory. More importantly, our products will be distributed from a central control – not a physical location – but an internet-based system every factory uses to input data.
The surprising benefit is how this technology empowers staff with tools they can use to constantly improve performance.
Along with improved tracking and accounting, the analytical tools allow CALPIA to create reports with custom criteria. This ability to analyze costs in different ways will substantially change our shipping operations to run at much higher efficiency.
• Warehouses and factories can easily determine maximum loads by combining multiple
freights in each load, thus reducing the number of less-than-full-loads.
• For every shipment, we can compare the cost of a common carrier vs. our own, and
choose the most economical.
• We can determine disparate shipping costs for different food products, like perishable
items vs. non-perishable items.
We can also track shipping costs of individual enterprises, which is essential for knowing the profitability of each.
The surprising benefit is how this technology empowers staff with tools they can use to constantly improve performance. Along with giving managers a greater sense of being the “CEO” of their area of responsibility, mastering the software is another skill-set we can offer for employee development. Along with its practical benefits, this technology will enhance a culture of improvement and efficiency at CALPIA.