Creating Competitive Advantage in Transportation, BCG Perspectives

July 18, 2012

In many companies of the transportation industry—an increasingly complex and challenging business that requires high levels of capital expenditure—the approach to maintenance is inadequate. More demanding customers, excess capacity in the market, new regulations, and climbing fuel costs will continue to pose challenges for transportation companies.

Maintenance—often viewed as a cost center, a “necessary evil”—is frequently executed in silos, relegated to the engineering department, and underrepresented as a discussion topic in the C-suite. Yet superior performance in maintenance can have a significant impact on the four key success factors in transportation: safety and reliability, on-time performance, fleet availability, and cost efficiency. Furthermore, a superior capability in maintenance can improve returns by 50 to 100 basis points.

Viewed strategically, maintenance can be a source of competitive advantage for transportation companies. To ensure the most effective orchestration of maintenance, operations, sales, and procurement and generate the highest return on gross investment (ROGI), maintenance should be a primary focus of senior management.