Operating cost reduction: delivering more for less

The UK is a market leader in maximising the intensity with which our transport assets are utilised. Over recent decades we have worked to squeeze ever more capacity out of our transport infrastructure – whether it be London's Underground system, our major roads, our key rail corridors or our runways.

And yet we don't always take the same approach to the operational processes within the very same organisations that are delivering these efficiencies. In particular, in respect of one key asset – people.

Too often cost reduction and efficiency programmes in transport are seen as a negative. As a sign of failure. Of contraction. Of worsening service.

Reducing the amount of time we spend doing our weekly grocery shop online hasn't stopped us eating. We've just found a more efficient and cost effective way of getting our groceries home, which has freed up our time to do more things that we want to do.

Right now, many transport organisations have goals in one form or another to improve customer service, provide more journeys and reduce their operating costs. Typically at the same time.

KPMG takes a simple but effective view of improving operations - by reimagining and redesigning the processes used to deliver services. Doing this frees up time, capacity, and human capital to re-invest in improving the customer experience more broadly.

Only do an activity that you need to - or that adds customer value 

You only really have to do something if you are required to for legal and regulatory requirements. Everything else is fundamentally optional.

We look at those optional activities from a customer's point of view, and only retain them if they genuinely add value to the customer. Looking at end-to-end processes that cross historic functional siloes so that every process becomes focused around the customer.

When asked by President John F. Kennedy what he was doing, a janitor carrying a broom at a NASA space centre replied "I'm putting a man on the moon".

So everyone in a transport organisation, whether in the front, middle or back office should see their mission as helping a customer make a journey. Transport organisations should redefine processes to enable them to realise that.

This allows organisations to free-up spare capacity (typically in middle office activities) that can be re-invested in improving customer service by converting people to be client facing.

Do less of it if you can without impacting the outcome

Many organisations use a variant of Cost-Quality-Time to measure outcomes. Too often though a rigid set of standards (designed for the worst case) mean that processes and activities can be over-engineered.

If a vehicle is being used less than planned, does it need to be cleaned as often to keep it operating safely?

Adopting risk or activity based approaches, enabled through the latest data and analytics capability, means more flexible standards and processes can be adopted. Achieving the same outcome for less input. Allowing capacity to be re-invested in other projects that can help improve service.

Make or Buy?

For those processes that have made it this far, and therefore need doing, efficiencies can be achieved by looking at whether or not they should be delivered by the organisations itself, or if someone else could do it better.

The debate around insource vs. outsource, public vs. private is perhaps too binary. Rather than perpetuating a negative view of outsourcing, let's look at what it enables us to do well. Get someone else to deliver an activity that they are great at doing it, freeing up internal capacity to focus on the activity that we are great at, and should be doing in-house.

Make it as efficient as possible

And for those processes being retained in house, organisations should work to make them the best and most efficient they can be. Because too often organisations have people working hard, but inefficiently, wasting that human capacity that can be used elsewhere.

Continuous improvement is one tried and tested tool to do this. Whilst automation and new technologies increasingly mean processes can be automated, freeing up time and capacity for activities that require that human touch, such as more interactions with customers.

Of course freeing up capacity immediately gets people worried about job losses. If the previous steps have been done right though, organisations should be focusing on their core, value adding activities. So that extra capacity means the service can be grown or improved, often increasing revenue, at no extra cost.

Invest in remaining human processes to develop skills and capability

So left with a bunch of essential processes, as efficient as possible, strategic workforce planning ensures the right number of people are in place and are properly trained to deliver it well.

Skills development and talent management can help ensure organisations make best use of their people. By doing this they can free up human capital and focus it where it can deliver more customer value, creating more enriching jobs in the process.

Operational improvement and efficiency shouldn't be a dirty subject. It's about being able to deliver more for the same resource. Deploying these approaches in isolation can deliver quick results, but these rarely last.

Combining all five has the ability to enable transport organisations to meet that perfect storm of challenges: Delivering better customer service, more journeys and more revenue without increasing the cost base.