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GPS in taxis and supply chain gizmos! September 29, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Supply Chain.
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untitled.JPG Supply Chain gizmos!

I recently read an article in a business newspaper about GPS being fitted to taxis in India. It waxed eloquently about the advantages and benefits of having taxis fitted with GPS. That article made me think about how we get carried away by ‘high tech’ and think of it as a panacea for our problems.

In our rush to implement barcodes, RFID, ERP softwares we forget to use our commonsense. We try to solve a behavioural problem with a structural solution.

Let me take the “GPS in taxis” example and elucidate.

Define the problem or issue
Before we use any of the gizmos or fads to solve a problem, we must define the problem in measurable terms. A genuine business problem should be defined in 20 words [ my sales is decreasing, I do not have time to complete this order on time, my inventory is higher than my competitors].What problem will the “GPS in taxis” solve? GPS in taxis will enable the company to know where each of their taxis is at any point of time. It can help the controller direct the closest taxi to the customer. It can help a taxi driver, in case he is lost.

What is the problem the taxi company is facing?
Is its customer satisfaction low because customers have to wait long for a taxi? Is it not making sufficient profit and margins because utilization of taxis is low? Are taxi drivers getting lost leading to delays and low utilization?

Will fitting GPS in taxis lead to taxis reaching a customer within 15 minutes [ I have assumed that customer expectation is that he/she should get a taxi within 15 minutes of calling for one] of his calling for a taxi? Will it lead to better utilization of taxis, thereby leading to increased business and income? Will it lead to taxi drivers not getting lost?

Is the issue a business driver?
Will solving the problem increase sales? Will it lead to increased customer satisfaction? Will it be noticeable by the customer? If you had to take the approval of your customer to spend on the gizmo, would the customer have approved the spending?

Is taxi reaching within 15 minutes among the top tertile [ top 3 or top 5] of customer needs? When a customer is in the taxi and the driver gets lost, is it a big dissatisfier for the customer? Is utilization of taxis a big driver of costs?

Are you solving a behavioural problem with a structural solution?
A why-why analysis on the issue would have to be done, before the root cause is established. Ensure that all the behavioural issues are sorted out before implementing a structural/ technical solution.Why is the taxi not reaching within 15 minutes? Is the driver not aware that the company’s goal is to reach all customers within 15 minutes of calling? That is a management issue which cannot be addressed by fitting a GPS. Is there a performance measure for drivers which includes reaching a customer within 15 minutes? Are the taxi not geographically distributed across the city, to enable a taxi to reach any part of the city within 15 minutes? Why are the not geographically distributed? Because data is unavailable on demand for taxis by geographical areas? Would GPS help in getting the data?

Are the controllers not directing the taxi closest to the customer? Is this because controllers do know which is the taxi closest to the customer? Or are they directing the business to a few favourite taxi drivers?

If it indeed does require a structural solution, does the team have the skills, training and time to use the gizmo and solve the issue/ problem?
Does the organization have the skills to use and analyze the data thrown up the GPS? Can the team determine the number of taxis to be deployed in a geographical area? Can the organization use the data to increase the utilization of taxis? Can the drivers and controllers use the GPS to reach the customer in 15 minutes? Will the GPS in taxis point out the taxis which can reach within 15 minutes?

Cost benefit analysis

And finally, will the increased business pay-off the cost of the gizmo? There may not be a clear-cut and objective answer to this question. Then one has to go by gut-feel and top management direction.

It would be difficult to attribute the increase in business, because of better customer service, to taxis reaching in 15 minutes.

I have just used the “gps in taxis” example to illustrate the process and thinking that should happen before taking a decision on a gizmo.

This can be applied to other similar situations- when you are planning to install an ERP for the organization, implement barcodes for the warehouse, implement RFID and many more

To make it clear, I am not against gizmos like barcodes, RFIDs etc. I think of them as solutions that can solve certain problems. Applying these gizmos does not excuse us from resolving the tough issues of process, training, rewards/ recognitions, roles/responsibility, communication, scorecard/ measures/KPIs, compensations/incentives/demerits.

For the full story click on the link GPS in taxis and other supply chain gizmos

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Comments»

1. Apurva Mankad - October 3, 2007

I agree with you for a need to have a thorough analysis befor applying a technology solution. One of the taxi companies we are working with has a simple reason for GPS: They can assure guests that compnay knows where they are !! For foreign tourists this is an important factor and this company intends to market their services with “security” as a feature.

2. streamlinesupplychain - October 19, 2007

Hello Apurva!

Good point! Taxi services can use GPS to provide a feeling of security to their customers.

GPS is used in trucks for exactly this reason- security.

In Malaysia, GPS were used on container trucks by Dell [ which assembled laptops in Penang] and trucks carrying computer chips. The reason for installing the GPS was to prevent hijacking of the trucks which carried a millions of dollars worth of laptops and computer chips.

The containers also had their numbers painted on the roof so that helicopters could trace it from the air.

It would be great to get in touch with you and work together.


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