Indian Institute of Management, Kozhikode Service Operations Management

Transport Services Sector Operational Issues

10th June, 2012

Prepared by:

Ashutosh Rastogi (ePGP-03-106) Abhra Debroy (ePGP-03-094) Nishan Iqbal Desai (ePGP-03-137) Pranav Gupta (ePGP-03-141) Girimurugan Natarajan (ePGP-03-030)

Submitted to:

Dr. Rupesh Kumar Pati Professor, Service Operations Management

Identify the operational issues in transport services sector and arrive at recommendations to solve those problems.

Contents
Executive Summary ................................................................................................................ 3 Transport Department Objectives ......................................................................................... 3 Transport Service Portfolio .................................................................................................... 3 Transport Service Package ..................................................................................................... 5 Transport Service Strategic Classification .............................................................................. 5 Service Encounter .................................................................................................................. 6 Problems @ Transport Department .................................................................................... 10 References ........................................................................................................................... 13 Appendix A ........................................................................................................................ 14 Appendix B ........................................................................................................................ 14

Executive Summary
With the growth of economy the contribution of the services sector to the Gross Domestic Product also grows. These organizations in service sector have to manage their day to day operations while keeping in mind the cost of operations, consistency of service quality and value addition to the customer. Service operations are different from manufacturing operations and that is due to the inherent nature of services intangible, inconsistent product definition, produced and consumed at same time, cannot be inventoried, no reselling, high customer interaction, site of facility important, non-shippable etc. We had an opportunity to study SAPs Transport Department and its operations. Transport department provide services to the employees of the company by ferrying them from their home to office and back again on weekdays and weekends. Being part of the system we never realized the complexity; however this study revealed what all transport departments does to manage its day to day service operations to ensure safe travel experience to SAP employees. We have also outlined some issues that the Transport department currently and their possible solutions.

Transport Department Objectives

Objectives of the transport department at SAP are: Ferrying employees from their home to office and back on all working days. Safe, comfortable and trouble free experience for employees and drivers. Business related transport services.

Transport Service Portfolio

Lets look at the service portfolio of the SAP travel department Shuttle Services - refers to services provided to pick-up employees from pre-designated pickup points to SAP Labs office. It includes dropping employees back to their respective places after office hours. Employees are provided with shuttle passes, which they are supposed to carry to avail the service. Shuttle passes store the employee and route information. Shuttle service is available at following hours during the day 1. Regular Morning Shuttles : 6:30am to 8:00am

2. Regular Evening Shuttles 3. Late Morning Shuttle 4. Late Evening Shuttle

: : :

515pm to 7pm 10:00am to 11:30am 7:00pm to 8:30pm.

Late Evening Services - refers to Late Evening cab services for all employees who have to work beyond the normal hours. It allows employees to avail transport service back to their residences after the regular shuttles have left. The facility is available from 9.30 p.m. every day and every one hour thereafter until 4:30AM. The cab booking cut off time for each departure is mentioned in the table below: 1. If Cab Departure Time is 9:30 PM, then booking cut-off time is 8:30 PM 2. If Cab Departure Time is 10:30 PM, then booking cut-off time is 9:30 PM 3. If Cab Departure Time is 11:30 PM - 4:30 AM, booking cut-off time is 10:30 PM The cab booking request must be raised before the cut off time mentioned above. Due to logistical constraints, the Transport team will not entertain any further requests after the cut off time is past. Requests on telephone/ e-mail are not entertained. The route/ departure details will be published 15 minutes before departure.

Weekend or Holiday Service - refers to the cab service available to employees on weekends or public holidays for travel from home to office and back for business reasons. Employee can avail the service by informing the travel department a day in advance after approval from their respective managers. Employees who are in job band E or above do not need any such approvals and can avail the facility any day. Business Travel Service - refers to the cab service that is available to employees while travelling from one place to another for official meetings, customer meetings, team outings and any other such business reasons. Employees can avail the service only after approval from their managers. Employees who are in job band E or above do not need any such approvals and can avail the facility anytime. Airport Transfer Service - This service refers to the cab service that is available to employees for pick-up and drop from airports, railway stations and bus stations while travelling on business reasons. The cabs can be booked by providing the travel information and the approval for business travel.

Transport Service Package

Here we look at the service portfolio from the service package perspective: Supporting Facility These are the physical resources used by SAP transport department. This will include all the buses, taxis, telecom equipments, GPS and RFID infrastructure etc. Facilitating Goods These are the resources consumed by the buyer and provided by the provider. In case of transport services this would probably be the ID cards issued to employees, daily route plan sheets circulated to employees etc. Information Operations data that is provided by consumers for efficient and customized operations. In case of transport services this will probably be the travel time information that employees communicate to transport department, gender information (females are escorted with security guards), type of cab required etc. Explicit Services These are the benefits readily observable by the senses. In case of transport services this would be the ferrying of employees from one place to another for business reasons or daily transport needs. Music and air conditioning in the vehicle. Implicit Services - Psychological benefits or extrinsic features which the consumer may sense only vaguely. In case of transport services this would include the peace of mind in daily traffic, feeling of safety and security, clean and tidy environment, timeliness, convenience etc.

Transport Service Strategic Classification

To understand the nature of the service provided by the transport department, we would classify the services using strategic classification approach. Classification head
Nature of Service Act Direct recipient of services Nature of Service Delivery Type of Relationships Service providers judgment Service characterization customization Extent to which supply is constraint

Options Tangible, Intangible People, Things Continuous, Discrete Membership, Informal High, Low High, Low

Evaluation Tangible People Continuous Membership High Low

Peak Demand, Exceed Exceed Capacity Capacity

Extent of demand fluctuation overtime Interaction organization between customer

Wide, Narrow
& Customer

Narrow to

travels to Provider travels firm, Provider travels customer to customer, Arms length transaction Single site site,

Availability of service outlets

Multiple Multiple site (one at each SAP labs office)

Service Encounter
Service encounter is actually the moment of truth. It occurs whenever an SAP employee interacts with any aspect of transport department and gets an impression about the quality of the service they provide. It can potentially be critical for the appraisal of transport staff and future vendor contracts. Let us understand the service encounter for an employee at SAP labs with transport department services in terms of elements of service encounter.

Customer Employees perception of the service quality and overall satisfaction with the transport services all depends on a large extent on service encounter. Service encounter for an employee starts from the moment when he/she reports for a pickup, gets picked up from the spot/office, when seated in the transport vehicle and usually ends when gets dropped off at the destination point. Service encounter also happens when an employee speaks to transport staff on phone and makes his/her booking or provides travel information. Service encounter also happens when an employee visit the travel portal and make travel or cab bookings (Appendix A provides a snapshot of the travel portal at SAP).

In case of transport services employees can be classified as Convenience Customers out of the four classification types economizing, ethical, personalizing, convenience.

Contact Personnel / Transport Staff

Transport staff includes the transport scheduler along with his assistants and the vehicle drivers. They are responsible for the entire interaction with the employees and provide flawless execution of daily transport services. When we spoke to the staff members about their daily work we could come up with following: Transport scheduler and his assistants needs good communication and interpersonal skills as they need to interact with employees on a daily basis. They need to have empathy for employees to understand and serve their unique needs better. They must have ability to monitor the situation and take quick decisions when required. Vehicle drivers on the other hand need to have good driving skills, should be patient and composed in their interaction with travelling customers, and disciplined enough to follow the traffic rules and transport department policies.

Delivery System Delivery system consists of equipments, supplies, processes, programs, rules, regulations and procedures. The delivery system is to ensure the flawless execution of services without any ambiguity in the mind of customers. Transport department has setup the following delivery system: Following set of policies have been defined to remove the ambiguity from the system. Shuttle pass policy - To avail shuttle services in Bangalore, Labs India employees must hold a valid RFID tagged shuttle pass issued by the Admin department. Employees who do not hold a valid shuttle pass will not be permitted to board the shuttles and will have to make their own arrangements Route Planning Policy - The smooth operation of shuttle service depends upon a proper route planning and an optimal deployment of vehicles. For instance one of the rules is that daily transport will be provided for areas within city limits up to a maximum of 30 km from SAP Campus. Transport Travel Time Policy - Transport department defines travel time as the duration which an employee spends in the shuttle vehicle while traveling from home to office or back. One of the items in this policy is the travel time for an employee should not exceed more than 90 minutes. Travel Security Policy This policy includes security and employee safety related transport guidelines. One of the items in this policy is that females should always be escorted with security guards while travelling alone between 8 PM to 8 AM.

Responsibilities have been defined for both transport department staff and the employees. This helps to set the expectations from the service delivery system. Few of the procedures are as follows: All the shuttles vehicles reach their first pick up point as well as depart from the office at their scheduled time. All shuttles are parked in an organized manner for departures from office, to facilitate an ease of access, locating and boarding. The relief vehicle is arranged within 1 hour from the time of reporting the incident (depending upon the traffic condition) Proper vehicles are deployed by the transport service provider. A team of trained, disciplined and responsible drivers is maintained.

Physical Evidence This includes all tangible aspects of the service or the service organization that a customer experiences. In case of transport department services this would be The quality and the condition of the fleet of buses used for daily transport of employees from their home to office. The usability, user experience, performance and the functional correctness of the travel portal available to employees for travel bookings. The quality/material of the bus route cards given to employees for identification. The router i.e. format and comprehensibility of the schedule information provided to the employees traveling on ad-hoc basis.

Transport department at SAP has invested in the latest technology as RFID (Radio Frequency Identification) and GPS (Global Positioning System) to make the transport system more efficient and effective: Every bus and cab used by the transport system is tied to the Global Positioning System. The GPS system allows the transport department to o Track the current location of the vehicles o Gather speed report of the vehicle throughout its journey o Track the arrival and departure of the shuttles

Employees using shuttle service are provided with radio frequency identification (RFID) enabled shuttle passes which are non-transferable. Employees are required to possess a valid shuttle pass to board the bus. These passes enable the transport department to o Track the capacity utilization of the shuttles on different routes o Track that employees are travelling by shuttle they are assigned to o Track If any employee has not been using the service for more than 15 days without intimation.

Other Customers Management can establish the role of customers to enable a pleasant encounter. Transport department has also setup the employee responsibilities and set of employee behavior to ensure a smooth service encounter: Employees are requested to be present at the designated pick up point 5 min prior to the scheduled departure time. The shuttles are meant for transportation of only SAP Labs India employees, and cannot be used for commuting friends, relatives etc. or carrying goods that are not of a business nature. Misbehavior/bad conduct from any co-passengers must be reported to the Admin department. Employees are requested not to indulge into arguments or fights with copassengers. Smoking, consumption of alcohol, gambling and any other illegal activities are strictly prohibited on board. Employees are responsible for their personal belongings (mobiles, wallets, purses, bags or any other items) while commuting in the shuttles. The transport service provider/ Admin department are not responsible for the loss of any personal belongings. Employees should not try to influence/force the driver to divert/extend the shuttle from the pre-designated route. They are also requested not to instigate the shuttle driver to drive above the speed limits or violate traffic laws Employees should not make the shuttle to wait for any commuters who comes late to the scheduled stop Employees are requested to immediately bring to notice of the Transport Helpdesk about any misconduct, misuse of resources, violations and any other disobedience of

the company laid rules and to not indulge into arguments with the driver/ vendor on the same.

The shuttle will have an RFID reader and all the commuters have to flash their RFID tagged shuttle pass.

Problems @ Transport Department

Transport department at SAP is managing the vehicle movements effectively. However, still there are some problems that are often faced by them in the area of execution. In this section we outline some of the issues faced by SAP Transport Department and subsequently suggest possible solutions to these issues.

A. RFID Compliance:
Several employees do not flash their RFID cards regularly. Many a times employees who do not carry RFID cards do flash employee cards and due to the similarity between the cards the usage of the correct card cannot be detected visually. At times RFID card readers in the vehicles are also not working. This has led to inaccurate estimations of the capacity required which results in undesired experiences such as employees have to travel standing, many seats remain vacant on certain routes etc. We analyzed this issue further with the help of some basic Quality Control tools (such as a refined check sheet, histogram). Following is the report that provides the data about the compliance of RFID devices those working and not working for the first 2 weeks of January 2011
Total number of Vehicles 106 106 106 106 106 106 106 106 106 106 Number of devices Working 100 96 96 99 101 95 101 103 103 103 Number of devices not working 6 10 10 7 5 11 5 3 3 3

Date % Compliance 03.01.11 94% 04.01.11 91% 05.01.11 91% 06.01.11 93% 07.01.11 95% 10.01.11 90% 11.01.11 95% 12.01.11 97% 13.01.11 97% 14.01.11 97%

Following is the Shuttle pass flashing report for the first 2 weeks of the January 2011 month (data in percentage):

Based on this data, it is evident that even though the RFID device compliance is satisfactory, there is an issue with the percentage of employees flashing their respective cards. This needs immediate attention. Recommendations: Some suggestions to solve this issue of non-compliance are as follows: RFID card to be combined and integrated with employees Access and ID card this ensures that employees need not carry an additional RFID card. Reader technology should allow entry to the vehicles only for valid Corporate Access card and valid RFID card holders; otherwise a beep signal should alert the transport staff. In order to achieve 100% compliance for RFID devices, frequent maintenance for RFID readers is mandatory; an additional reader in each bus is also an option to consider. End-Of-Day checks for every RFID reader can increase the probability of its availability the next day.

B. Route selection variations:

Another issue faced by the SAP transport department is the frequent variations in the routes employees choose to travel on. Average age of employees at SAP is around 27-28 and many of them are not married and stay alone or with friends. On several days, especially Friday

evenings or Monday mornings, employees choose to get picked up/ dropped at points other than their usual pickup or drop locations. This at times has created capacity constraints on some of the popular routes in Bangalore such as the one that go towards MG Road, Koramangala etc. In order to handle this Demand Variation we suggest the following: Recommendations: They should track employee travel data pattern to identify the routes that exceed the deployed capacity at certain occasions. This would help the transport department to come up with an improved forecast to handle peak demand. Based on the aforementioned data, additional capacity can be maintained at popular routes by choosing to deploy bigger or more vehicles on days where such a behavior is observed (e.g. Fridays or Mondays).

C. External Factors:
Often existence of several external factors adversely affects the quality of services offered by the transport department. Traffic congestion and the frequently changing road conditions at Bangalore also affect the punctuality levels of the shuttles departing and arriving. Often heavy downpour during evening hours have caused the traffic to move at snails pace and disrupted the shuttle timings. Also, in case of any accident on any of the major roads, the shuttles movement drastically gets slowed down. Recommendations:
Transport department should collaborate with traffic police department to get alerts on Bangalore traffic situation and leverage this information while defining travel routes. Smaller vehicles should be given preference for congested routes than others. Transport department should collaborate with high technology companies that can provide the real time visual feed for the traffic situations across the city. In order to avoid disruption in the schedule of outgoing shuttles, an optimal buffer fleet should be maintained by the transport department. This would reduce dependency to the incoming shuttles/buses and hence reduce impact of such delays.

D. Diverse customers:
SAP employees come from diverse backgrounds (from different parts of India, travelling foreign employees) and speak different languages. Transport department at SAP usually works with local staff recruited from different parts of Karnataka who can speak only Kanadda

language fluently. This has at times created communication problems between employees and transport department staff, and hence an unpleasant service encounter. Recommendations: Travel staff should be provided with basic English communication training. Proactively identify the profile of the customer and assignment of the travel staff (cab) should
be done accordingly.

A fact list should be created for the employees in order to reduce the amount of interaction between employee and the travel staff.

E. Process Delays:
There are certain process delays between various departments that contribute to the delay in certain aspects of the transport departments services. As an example, SAP employees travelling from different locations and also new Joinees to SAP, do not get the RFID card immediately. There is a process to be followed till all formalities are completed, at times the delay has been more than few days. During this period employees cannot use the shuttle services without any fault of theirs that might lead to an unpleasant service encounter. Recommendations: All employees travelling to different SAP locations should be provided with RFID cards on the
same day for the duration of their travel in case they wish to use the shuttles.

New Joinees should be provided with RFID integrated corporate access cards along with their joining kits. We recommend using an online tool that not only helps in a seamless induction process but also helps collaborate between different departments.

Hence after this detailed analysis of the transport department we conclude that though quality for majority of the services is good, there are certain areas that the department should look into. This would definitely benefit the transport department to further improve its service operations.

References
1. SAP Labs India Transport Department 2. James A. Fitzsimmons (2011), Services Management. 3. SAP Labs Corporate Portal.

Appendix A
As discussed in the Services Encounter section, the transport uses an internal online tool to handle cab requests. Snapshot of this tool is provided below:

Appendix B
This section provides the images related to RFID technology usage at the organization:

Shuttle Pass

RFID Reader