ANALYSIS What does it mean when someone says you should run transportation like a business? Te es-
sence of the statement seems to suggest that a combination of competitive pressure and sound management principles can lead to better service at a lower cost. What are the core principles that transportation managers, both public and private, should focus on in running their transportation business? Cost control, innovation, and customer relations are three excellent places to start.
CONTROLLING COSTS IS MANAGING THE BUSINESS Te harsh reality of every transportation operation, whether public or private, is that without
Running
Transportation Like a Business By Tim Ammon
funding there is no operation. Tis basic fact makes maximizing the value of every dollar spent a key requirement of running your business. Given that people (especially drivers) are the biggest cost to all transportation operations, an extraordinary amount of effort should be focused on managing all aspects of how their time is used. Managing driver time includes designing runs and routes that minimize exposure to potential benefit costs, allocating field trips and extra trips in a way that avoids overtime, and monitoring “overhead time” such as pre- and post-trip inspections and fueling. Transportation also offers a large number of ancillary business functions that can be analyzed to
help control cost. Fleet maintenance services, purchasing practices, fuel procurement, accounting costs, and technology costs are all aspects of the business that are typically analyzed only when there is a problem. However, these costs generally represent between 25 and 45 percent of all costs so they are well worth management attention. Regularly analyzing items such as work order turn- around times, comeback rates, preventive maintenance compliance rates, and fuel transactions will greatly enhance your ability to understand and control these less obvious areas that can “leak” costs in a way that kills budgets and/or profitability.
INNOVATE OR DIE A basic principle of running a business is that you have to adapt to changing conditions or you
will eventually be unemployed. However, adaptation and innovation typically do not come easy in transportation. Evaluating all aspects of how you provide services to determine what changes might be possible and how they can influence costs and service delivery is the second key principle to managing your business. A full range of potential changes, from the revolutionary (e.g., consolidating services) to the evo-
lutionary (e.g., changing bell times or mixing grades) should be considered. Te goal of these options should be to inform business managers, superintendents and school boards of the level of service that can be provided assuming a particular level of funding. Developing these innovative options will be critical to ensuring that there is funding available to continue to operate your business.
UNDERSTAND YOUR CUSTOMERS Understanding your customer base is the final key principle that transportation managers should
consider. Tis understanding is also the fulcrum upon which our ability to balance the need to con- trol costs and our ability to innovate rests. Transportation managers should ask themselves if they really understand what parents, students and administrators really want and need from transporta- tion, and how much will you challenge these expectations before they will seek out an alternative? Understanding wants and needs is the clasp that links your ability to control costs with your
opportunities to innovate. Knowing whether your community would tolerate 20 percent longer ride times, for example, will be a key constraint in designing your alternatives to control costs. Te single best way to gather this data is through a series of both formal and informal solicitations of customer opinions. Surveys, meet-and-greet nights and scheduled meetings should be a regular part of your customer relationship management strategy in order to define and clarify expectations and “no-go” areas. Te understanding that these efforts bring will increase the likelihood that the alternative you present to keep the business you have will be viable. Running transportation like a business sounds trite and obnoxious to those of you dealing with severe
fiscal problems. However, the principles that underlie the sentiment can provide a framework for effec- tive transportation management. Vigorously controlling costs and innovations to meet financial and operational realities within the context of clearly defined service expectations will lead to more efficient and effective operations. Now more than ever the industry needs public and private sector managers to focus on these principles so we can continue to demonstrate the value of transportation services. ■
48 School Transportation News Magazine June 2010
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