Mahindra Logistics

Cost optimization possibilities in shared mobility for Corporates

Cost optimization possibilities in shared mobility

Corporate people transportation is a unique facility provided by the Indian Corporates for their employees as an added hygiene factor for moving the employees from their residence to the place of work. Majority of the employees who are being provided such services are from IT / ITES / KPO / Consulting / Manufacturing industries. This is not just an employee welfare activity but also a good productivity tool as all corporates expect their employees to be fresh and active during the working hours so that they can contribute to better quality work.

As a fall out of cost reduction initiatives of IT / ITES companies, employee transportation is being reviewed closely as it comes in the top 5 elements of the cost structure of any IT / ITES company. The prospect of better public infrastructure in terms of Metro rails, better roads with A/C buses by state transport authorities coming into play gave raise to hopes that there are alternative modes of commuting to the workplace during day time.

 IT / ITES companies were contemplating on optimizing their costs during day time by stopping company provided transportation services to their employees and asking them to come by public transport services like metro rails / RTC buses and the like. Given the fact that for these knowledge workers, time and productivity are critical components of the workplace, it just didn’t work out for many of the companies that tried to go this route as it had an adverse effect on the productivity and morale aspects of their employees.

Given the above scenarios, what can be done to optimize the costs without compromising the service aspects that corporates would like to provide for their employees is the million-dollar question that we are trying to address with following options:

 

  • Site / Workplace level Optimization:

Most of the big companies have deployed technology to manage the routing and scheduling aspects of their employees, that optimize resources at a site/workplace level – based on various constraints that are put in place by the site management. This definitely allowed them to optimize and get the low handing fruits of route and fleet optimization with transaction visibility. To take this to the next level, we need to take a leaf out of the Supply Chain Management aspects of optimizing at a network level rather than at an individual company level. This means outsourcing transportation to 3PL companies who can manage the network across companies in the city and not just look at company/site level optimization. Of course, this calls for software that can optimize resources at the city level and also build capability to bill at an employee level from the current vehicle level billing aspects. For e.g, during lean shifts, the occupancy levels are very low and that leads to a lot of underutilization of vehicle capacity. If that can be improved by consolidating the demand in the neighborhood with other companies, it will help drive the occupancy levels up and the cost could be shared across the companies. 

  • Fleet Utilization:

With IoT looming large and the vehicles becoming smarter by the day, the possibility of using the car location with the location of employees/passengers (based on phone locations – app-based logistics) for routing the vehicle on a real-time basis becomes a very real possibility in the immediate future. With AI / ML being used to predict the possible routing options one can plan in advance for meeting these needs by mobilizing fleet accordingly.

This predictive analytics capability will enable fleet deployment at the right place at the right time to ensure that the idle time of the vehicle is reduced as well as capacity utilization of the vehicle is ensured with route optimization engines.

With the above context, the fleet can be used for corporate people transportation as well as retail ride-hail services during nonpeak hours to increase the utilization of the vehicle. Possibility of using personal cars during the peak hours for fleet augmentation and capacity utilization purposes (akin to carpooling) can be explored subject to change in MV act and related laws, especially with reference to Private and commercial usage as well as putting mechanism to ensure safety of passengers travelling by these vehicles  by putting in-vehicle cameras, driver & vehicle compliance checks, Driver background verification etc.  

In this case, even differentiated services can be offered based on individual preference to the type of vehicle, a number of co-passengers they would want to travel with and other associated service aspects with online payment options by individuals or corporates.

 

  • Electric Vehicles Deployment: 

If we can achieve the elements of Fleet utilization and Route & Capacity optimization, then electric vehicles deployment in these services can be a very cost-effective solution. If we can run the vehicle around 350 – 400 kms in a day, then the total cost of operation of an electric vehicle will be lesser than the ICE vehicle. This is again subject to charging infrastructure constraints, single charge mileage (120 – 140 kms) of current commercial EVs, as well as fast charge time constraints (90 – 120 mins), improving with in the next few quarters.

In order to achieve the above aspects, we need to address the Compliance, Safety & Security and legal framework.

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