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Lesson #4: Put Your Money Where Your Mouth Is

Article Overview: “It’s not like we’re carrying sand and gravel,” says Smith. “We’re carrying chemotherapy drugs, and important manuscripts, and electronic parts, and pieces for airplanes that are grounded. So when we pick it up and say, ‘We’re going to have it there early the next morning,’ I mean we have to deliver. There’s nothing else to it.”

Lesson #4: Put Your Money Where Your Mouth Is

“It’s not like we’re carrying sand and gravel,” says Smith. “We’re carrying chemotherapy drugs, and important manuscripts, and electronic parts, and pieces for airplanes that are grounded. So when we pick it up and say, ‘We’re going to have it there early the next morning,’ I mean we have to deliver. There’s nothing else to it.”

From day one, Smith has understood that if his business was going to succeed, he would have to put his money where his mouth. That is why, today, Federal Express offers money-back guarantees on both national and international shipments. If the company misses its quoted delivery time by even 60 seconds on international shipments, it will offer a refund. Putting the guarantee in place was much more important internally than it was externally,” says Smith. “Because most of our customers – based on the experience they've had with us – they believe we'll do it. But it's when we said to all of the employees, ‘This is guaranteed. If we don't get it there, we don't get paid.’”

That is the faith with which Smith runs his operations. However, it is not blind faith; Smith has worked hard to ensure efficiency and promptness in all of his company’s activities. “The fundamental principle behind fast cycle or express transportation is that you are substituting your services for other processes,” says Smith. “If an electronics manufacturer is going to operate without inventory, or field service engineers are not going to have the parts and pieces to fix things rat-holed in the trunk of their car, then when they need the part or piece, or they need the item delivered to the customer, you've got to perform. You've got to be able to let them know where this item is all the time.”

In order to continue guaranteeing quality service, Smith has built his management system around continuous quality improvement. “We decided a long time ago that percentages were not acceptable to our customers,” says Smith. “In other words, 99% sounds great, unless you’re the one percent who we don’t deliver for. So, we never talk about percentages.”

Instead, as he has grown his company, Smith has oriented the management system towards looking at problems on an absolute basis. “The secret is, as traffic or volume increases, the number of complaints have to go down on an absolute basis,” says Smith. “In other words, we’ve got to get better and better year after year.”

It is to this end that Smith continues to devote a large portion of his company’s budget towards research and development. “We spend a huge amount of money, particularly on the technology, to allow us incremental improvements in every part of the operation year after year, month after month,” says Smith. “That was a big part of our success.”

Smith understood the large extent to which people would invest their faith and their valued possessions into his company’s hands. For that reason, he invested an equal amount of hard work and dedication into making sure he could meet his customer’s expectations.

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Article Tags: airplanes, blind faith, chemotherapy, continuous quality improvement, delivery time, efficiency, electronics manufacturer, faith smith, federal express, field service engineers, fundamental principle, international shipments, long time, management system, manuscripts, next morning, percentages, promptness, quality service, sand and gravel



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