Leveraging the Concept of Service Aggregation in Transportation Industry

In a dynamic world, cross functional industrial influence is the order of the day. Industries are on the lookout for best practices in other industries for improving performance in critical areas. Innovations and process improvements are gathering pace, and as a matter of fact, are at the epicenter of corporate focus. However, the focus is shifting from in-house invention to exploring inventions made in other industries. Organizations prefer their employees to focus on, ‘not reinventing the wheel, instead find the best rim that fits their existing wheels.

The concept of Group-On is one of the most popular and recent revolutions in the world of organized retail and social media marketing. A junction between these two industries, Group-On aims to drive home the benefits of providing a common platform in a restricted geographical region to potential consumers and retail service providers.

Picking cues from this concept of service aggregation, transportation service providers can organize spend along the spend categories. The customer can tie up with the solution provider against assurance of bulk purchase of commodity or service within specified period. In reciprocity, the solution provider offers ‘certain’ percentage of discount on the commodity or service to the customer against a ‘preset’ target purchase. The customer then, based on his savings calculation, can debit the transportation service provider.

The customers in such a case can drive home the following advantages:

• Standardization of service providers being used for transport of customers’ commodities
• Vital information on cost centers that can be used for establishing patterns and arrive at logical conclusions about resource optimization
• Provision for additionally monitoring the progress of vehicle during transit

The process for implementing the concept of service aggregation has the following high level steps:

–  Establishing the primary objective of implementing the scheme
–  Arriving at timelines for each phase of implementation
–  Being a volume driven scheme, the success of the scheme will depend upon capturing reliable data regarding the following aspects:

1. Identifying ideal geographic region
2. Identifying cost centers along the defined geographic regions
3. No. of vehicles available for scheme in a particular geographic region
4. Consumption of fuel or lubricating oil consumption in specified time interval
5. Criticality of route and complexity of the consignment under consideration

–  Contacting service provider with preset target consumption levels
–  Enabling the transportation service providers and informing them about the implementation of the scheme

The challenges in implementing such a futuristic scheme is understandable. The unorganized nature of Indian transportation industry itself prevents the enactment of such techniques. Also, being a volume driven scheme, the demand aggregation forms a key element of the process. Furthermore, educating the service providers about the benefits of this scheme plays a pivotal role in its successful implementation.

Though the challenges are considerable, it is just about time that the transportation service providers adapt themselves to this new way of operation. With a constant quest for innovation, the supply chain industry will definitely witness similar dynamic changes in times to come.

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