Aligning Competing Interests While Optimizing The Service Chain In The Transportation Sector

By definition, the service chain is heavily dependent on labor for effective execution. Regardless of industry sector – retail, legal, healthcare, etc. – people form the backbone of every service-based business. In the transportation industry, compensation and benefits account for a substantial part of operating expenses – on average between twenty and thirty percent in North America.

Transportation companies are in constant pursuit of an optimal balance between labor costs and service delivery. The challenge is there are many competing and often divergent interests at work: Employees seek to maximize their earnings, managers must ensure that all the right skills are available at the right times, and executives monitor the overall costs with a keen eye toward minimizing them while maintaining compliance with regulatory and/or union requirements. More progressive organizations also realize that it is equally important to sustain a healthy level of employee satisfaction as a critical contributor to a positive passenger experience and overall company performance.

This paper explores convergence in detail, starting with a breakdown of the service chain into its key components. We then discuss the obstacles and inherent consequences of inadequate efforts in each of these areas before presenting a model that helps set transportation companies up for success in service chain optimization.