Fleet optimisation is not a magic trick, but a targeted business process
Fleet optimisation is often imagined as a magic trick, in which a mysterious algorithm solves any problem like a silver bullet – optimally, of course.
In reality, everyday life is everyday life, understanding is the trump card in optimisation too, and there are no magical algorithms that solve everything.
The variables involved in producing transport services are countless: financial targets, the available fleet, the interests of drivers and transport companies, the volume of orders and how they are spread over time and geography, the road network, and the quality targets and requirements for customer service, to name just a few. In a changing environment the goal keeps moving, and a one-trick "algorithm pony" doesn't properly solve a single problem. What's needed is a solution far more complex than an algorithm, one that requires deep knowledge of the industry.
The goals of a passenger transport operation can be roughly divided between four stakeholder groups:
- Passenger: the passenger hopes for, or is promised, a certain level of service.
- Driver / transport company: the professional or business owner earns fair pay for their time and, in the worst case, votes with their feet – or their car – if they don't get it.
- Service provider: the dispatch centre or transport company responsible for delivering the whole service, aiming to make a profit or minimise costs – or, ideally, both.
- Buyer: present mainly in public services; responsible for organising the transport service, either by outsourcing it or producing it in-house.
The optimum for a transport operation depends on how the interests of these four parties are weighted and what they are at any given time. For example, pursuing cost efficiency rarely pulls in the same direction as, say, a high level of customer service, because the former requires flexibility from the latter. The indirect effects of optimisation can, however, also lead to better customer service, for instance by making the service more attractive to drivers.
In recent years there has been fierce price competition, especially over the rights to operate public services. At worst, public services – such as SOTE and Kela transport – compete against each other on price. A buyer who seemingly drew the longer straw in price competition can find itself in the middle of a capacity problem, as the higher-priced service is more attractive to transport entrepreneurs.
With underdeveloped operating models, it is easy to end up in a situation where, in quiet periods, too little is shared among too many, nobody is satisfied, and nobody can make a living from the service. Transport companies then lose interest in the service. At peak times, on the other hand, financial potential is wasted and passengers suffer when not all trips can be handled on time.
It's essential to recognise your own need and room for optimisation. For some it means running the exhaust pipe or battery cells red-hot when there's plenty of driving, and fairness during quiet moments. For others the goal is to grow, or simply to stay consistently bigger than their size. Defining your own goal and finding the range of tools needed to reach it is easiest with an expert partner.
A modern optimisation system solves many different problems and adapts to the demands of its operating environment. A skilled system supplier understands the needs of all four stakeholder groups and, together with the service provider, aims for the local optimum – which, in the end, is also a moving target.