4 ways to reduce the Transport Cost per Employee
On average Transport cost per employee per month varies from Rs. 3,500 – Rs. 10,000 depending on the city and scale of operation. Irrespective of the size and scale, companies can take steps to reduce the per employee transport cost which ultimately reduces the overall transportation and administration expense. Let us look at 4 actionable items that can lead to a reduction in expense.
In a manual operation, the creation of routes consumes several man-hours and the output is not optimized for efficiency. Some transport managers may argue that our routes are evolved through years of experience and knowledge of every nook, corner, and lane in the city. While that may be true, knowledge of geography does not translate into mathematical precision and efficiencies. After all, Garry Kasparov was beaten by Deep Blue in the mid-1990s. In our engagements with 60+ companies, we have found that there is scope for at least 3% efficiency gains going up to 12% in some cases. How the routing produces optimized output is a topic for another day. But broadly algorithms construct a distance matrix identifying the distance between one employee and the rest and similarly among all employees and generates a combination of routes. These routes are further refined to the most optimal ones (least distance and maximum seat utilization) subject to various constraints such as max distance deviation, max time, and available fleet mix. With cloud computing, this complex task is executed in a couple of minutes and the transport supervisors can quickly proceed to deploy vehicles to the generated routes. This not only saves significant time but also reduces the number of trips, vehicles, and overall KMs, thereby reducing the overall cost.
Renegotiation of Contracts
With automated routing transport managers possess an important arsenal to generate a myriad combination of routes by varying the applied constraints such as distance deviation, max distance, max time, and available fleet mix and algorithm type – distance, zone, and cluster. The output can then be analyzed and compared with the past trips and expenses and the one that offers the maximum efficiency without sacrificing employee convenience can be narrowed down to. Armed with this insight transport managers can now go back to transport vendors to restructure and renegotiate contracts that offer them the most value and benefits.
Reduction of Manpower
With end-to-end automation, companies achieve significant efficiency in every step of the transport operation, be it Rostering, Routing, Tracking, Trip deployment, etc. Where several resources were handling routing, MIS, employee queries, vendor management, etc can be reduced to one or two resources as a result of an automated system. In a large-scale operation, up to 40% of manpower can be reduced generating reasonable savings for the company.
Reduce Stationary and Telephony cost
While these may not be as big an expense, any reduction achieved can augment the overall efficiency and savings. With an automated system, up to 80% of the stationary and outgoing calls can be avoided contributing to the overall reduction in transport expense. From an organizational perspective, reduction of paper usage enables the facility teams to contribute to the organization's green policy and initiatives.