Quality Assessment and Improvement Practices in the U.S. Railroad Industry

INTRODUCTION Competition in the U.S. among rail carriers and between rail and other modes of transportation has increased dramatically over the past twenty years, due in part to deregulation of the transportation industry, and more recently to the growing demands among shippers for intermodal and other transportation services (Assoc. of American Railroads 1998). Efforts to improve competitiveness, service, cost, and ultimately profit performance have led most railroads to consider their service capabilities and ways to improve or increase them. Quality assessment and improvement efforts in the U.S. manufacturing sector have been the focus of many research efforts and the results achieved by these companies have been well documented (see for example Cusumano 1988; Finch 1986; Garvin 1983; Im and Lee 1989; Krafcik 1988). Conversely, research concerning quality assessment and improvement strategies of U.S. railroads has been quite limited, even though this industry is experiencing a substantial increase in service demands from shippers, and quality improvement efforts are prevalent throughout the industry. In the transportation sector in general, and in particular the railroads, very little substantive research has appeared describing quality practices from the carriers' perspective. The objectives of our research were to review the relevant transportation and railroad-specific quality literature, address the apparent gap in the empirical quality improvement literature through use of a survey sent to railroads and other transportation companies, compare quality improvement practices within the railroad industry, and provide suitable benchmarks of quality improvement practices and programs to transportation company managers. Since service quality practices are somewhat generalizable, managers of all transportation companies should find the information useful. The survey utilized for this paper investigated various elements of the quality improvement programs and practices employed by rail carriers, the design of these program s, and the successes attributed to them. Related areas in need of further research are also discussed. A REVIEW OF THE RELEVANT QUALITY IMPROVEMENT LITERATURE To date, the few articles dealing with the subject of transportation quality, regardless of mode, have largely tended to be anecdotal, with little or no empirical data to accompany the discussions. In this review, articles discussing quality-related topics from the transportation industry in general will be reviewed first, followed by those more specific to the rail industry. Service quality within the transportation industry in general has been the subject of several articles. Chow and Poist (1984) surveyed shippers to determine if and how they measured carrier service quality. They found six factors that many of the respondents measured and formally recorded (transportation costs, freight loss and damage experience, claims processing experience, transit time reliability or consistency, experience with carrier in negotiating rate changes, and shipment tracing). Brown's (1989) conceptual article discussed the economic implications of freight service quality, namely that optimal service quality policies should minimize the sum of total shipping costs for both carriers and shippers. Other research studied the service-intensive transportation requirements of Just-In-Time (JIT) manufacturers. Bagchi, Raghunathan, and Bardi (1987) compared JIT and non-JIT manufacturers and found that the JIT respondents placed significantly greater importance on the willingness to negotiate rate changes, equipment availability, frequency of service, shipment expediting, scheduling flexibility, and the willingness of carriers to negotiate service changes. In somewhat similar studies, Lieb and Millen (1988) and Harper and Goodner (1990) found more use of contract and common motor carriers, less use of rail, use of fewer carriers coupled with a greater requirement for on-time performance, greater responsiveness to short term needs, shipment tracing capabilities, greater use of specialized equipment, and more frequent communication among the JIT-oriented respondents. …