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My six sigma project on air travel cost

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  • #50311

    Shivkumar Swamy
    Member

    I am a Black Belt in SKF India doing a transactional project on cost.
    The domestic air travel cost for my staff is X Rs. I have to reduce it by a Y %.
    My project definition is in Rs. However I dont want to use this as the metric because the cost (absolute Rs) may increase with the air fuel rate so even if I take many improvement actions, the same may not be trackable. What will be a correct metric to be used ?
    I thought of  4 possibilities but decide against them (am I right)
    1. Rs / trip – The problem with this is the same as with Rs
    2. Rs linked to financial figure like company profitability – The problem with this is that we may need to travel more in times of uncertainty OR even if we travel a lot and gather new businesses, profitability may be low because of other reasons (acquisitions)
    3. Rs linked to sales – We are planning to move more persons to locations close to the customer. This will wrongly reflect as a relationship
    4. Rs linked to employee nos – same as 3 above
    I request some guidance on this before 25 June, so I can get started with my baseline.
    Thanks in anticipation, Shivkumar Swamy, Black Belt.

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    #172888

    Pramod
    Participant

    Hi Shivakumar,
    I was wondering if you could consider average cost/trip. Maybe you could look at historical data (for the past 6 months) find out the total cost incurred on travel divide that by the number of trips and arrive at cost/trip.
    You could reduce costs by anticipating the number of tickets you need to purchase over the next month and then approaching a particular airline and ask them for a bulk discount. This will not only reduce travel per trip but might also give you extra miles on a particular trip.
    I feel cost/trip is the right way to go.

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    #172889

    DD
    Participant

    Check, if cost of air travel is linked with lead time of booking the tickets. If “yes”, then frame your problem statement around it.

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    #172890

    Dharm
    Participant

    Check, if ticket cost has relationship with lead time of booking tickets. If “yes” frame your problem statement around it.

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    #172892

    Szentannai
    Member

    Hi Swamy,
    I think that every ratio you gave has the same dependence on fuel cost as the simple cost of travel. If this is a genuine concern I would just pick a measure that is independent of the fuel price – like total number of miles travelled by plane.
    I would also consider wat the my customersactually wants – maybe they are really interested in the amount of money spent for travel? In this case I would just stick with that measure.
     
    Regards
    SAndor

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    #172894

    Clive
    Participant

    I’m guessing that your customer has asked for a reduction in Costs from air flight. In which case you can’t change really change it. If you want to make sure that your project is seen as a success even if the costs go up I would get the standard cost for a number of different flights and then continue to gather this on a monthly basis through your project. Having this information will give you an inflation indicator so even if the costs goes up as long as it doesn’t go up by more than your inflation percentage you can claim a win.
    You could also take another indicator outside of cost e.g. miles travelled by air. This would then backup the work you’ve done if costs don’t go down.

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    #172895

    Michael Mead
    Participant

    It seems these other guys are not addressing your problem. My guess is that a statistic exists, something like “airfare cost index” or something. Even a number from the popular press could help in this regard.
    In a class I took many years ago, one group had a project like this and they saved a  lot by using some linear programming tools.  Good luck.
     

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    #172898

    GPaisley
    Participant

    I think these two represent the best options.  If domestic air fares in India are anything like they are in the US, they are very much subject to a number of things outside your control.  You definitely want to have a metric that you can affect rather than cost.  Cost brings into play all these things which you can’t control.  You can control things like number of trips, miles traveled by air.  As fares continue to rise because of fuel, you want to be sure your metric shows improvement, which a cost metric will probably not do. 
    I think the cost index idea suggested by a couple people would not really help because airfares can be very dependent on a lot of micro factors and can’t all be adjusted by a single factor.  Again, you want to make sure that what you are measuring is something you can directly affect. 
    Best,
    GP
     
     

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    #172900

    Clive
    Participant

    I agree that you want to measure something that you can change but if your customer doesn’t care about what your measuring why bother doing the project.
    Remember that project are to make changes the customer wants not to look good on your CV.

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    #172902

    Tex
    Member

    You may look at number of trips year over year (increasing in proportion to the business, unecessary trips ect.) 
    Lead time for booking trips is a good one (compare quantity of lead time vrs no lead time) 
    Cancelled trips, what happens to these tickets, are there fees etc.
     
     

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