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coae 1 | | = HH H Modern Aor ring, ’and Dock M | Fra tical Ways to Cut ) Costs in Carqo Handled : a LA, Conducted by H.E.STOCKER e IN sgn Paving the Way tor Increased Profits By Judicious Expenditures LL expenditures should be con- A sidered as contributions to the production of profit. It is not a question of what the company can afford, but rather whether money can be expended on the organization and an adequate return obtained for the money so expended. It is a question of productivity. The traffic organiza- tion produces traffic, the accounting organization ‘produces’ lower costs by providing analytical records promptly. The operating department “produces” lower costs and the trans- portation service which the traffic department sells. That part of the operating depart- ment’s activities to which this sec- tion of the MARINE REvirw is devoted, particularly cargo handling, involves production of service in the prompt handling of cargo with a minimum of loss and damage at a minimum of expense. An expenditure for a trav- eling port superintendent of $4000 a year may stop damage to cargo and prevent the loss of valuable traffic; fifty tons a week at a five dollar a ton rate will more than pay his way. In addition his supervision of loading and discharging can result in savings exceeding his salary and expenses sev- eral times. Value of New Ideas This is true even in an organization which is managed with the highest de- gree of effectiveness. A few new ideas picked up by contacts with other operators will save money in the best managed cargo handling operation 48 By H. E. Stocker anywhere. The best managed organi- zation has not a monopoly on brains and hence not a monopoly on new profit producing ideas. The author recently supervised the discharging of a ship at an outport. The operation took one working day and in that time he saved the company over eight times his salary for that day and in addition obtained new business. for the line which equalled 50 per cent of the above saving. In another instance a ship was dis- charging at an outport and the com- pany economized by not having any- one supervise the operation because of the expense involved. As a _ direct result of this failure to understand the productive value of such an ex- pense, the company lost traffic which would have paid a traveling port superintendent’s salary and expenses several times. Letter writing is an imperfect means of supervision, so much so, that expenses for even long trips are justi- fied because of the greater results ob- tained by direct personal contact. Savings made by reduction of costs may be utilized to finance other say- ings. A saving of $10,000 a year in cargo handling costs may be the means of providing the money to pay a ship- yard for cutting sideports in a ship or two. This in turn results in addi- tional savings which may be consid- ered as profit or used to finance other improvements. One excellent point about this plan is that it is possible to cut cargo handling costs with little or no capital MARINE REvimw—April, 1934 expenditures. Either the reduction is obtained by supervision alone or the equipment whch is required is paid for from savings. Records are a vital tool to obtain good management. When compiled accurately they are statements of ex- perience. They help men to remem- ber accurately and assist greatly in preventing personal feelings and prejudices from causing unsound de- cisions. Cargo Handling Records The cargo handling records of many companies are inaccurate and incom- plete—and the reason, in some cases with which the author is familiar, is the desire to avoid the expense of employing a $35 a week clerk. It is considered an unproductive expense. This lack of clear understanding is to a large degree due to the customary division of expenses into productive and unproductive; the distinction be- ing between the expense incurred in the direct work of loading and dis- charging and keeping records about this loading and discharging. Modern management, however, realizes that adequate records improve the results obtained by the expenditures made di. rectly and are therefore themselves productive—productive of profit. Besides providing adequate person- nel so that these opportunities will not be missed, productivity of the organization can be increased in sev- eral other ways; wage incentive or bonus plans, developing the sense of craftsmanship, providing good light-