Improving Transportation Efficiency at the Nanzan Educational Complexeral Motors

The Problem

The Nanzan Educational Complex is a cluster of universities and secondary schools in and around Nagoya, Japan (population: seven million), operating under a unified administrative structure. The schools, particularly Nanzan University, have been challenged by a decline in admissions applications and the academic achievement levels of students applying for admission. The problem reflects broad demographic trends in Japan. One response to the application drop has been improving the educational quality of its offerings, thus making the university more appealing to a broader applicant pool. Doing so, however, involves a financial investment that could not be achieved without reducing expenses in other operational areas. In addition, decision-making authority for important decisions at the university resides with change-resistant professional educators, not bottom-line-oriented business managers.

The Analytics Solution

Three opportunities for operational efficiency improvements were identified that could cut costs and redeploy funds to upgrade academic quality. The utilization of an analytics-based approach, with its objective, mathematical foundation, was deemed ideal to help overcome traditional resistance to change at the university. One such efficiency-improvement opportunity involved the bus system serving university and other students of the Nanzan complex. Nanzan used a combination of its own buses and those supplied by an independent service provider. Two issues required analytics-based techniques: The efficiency of the existing route system, and the best strategy for replacing older, polluting university-owned buses to comply with stringent exhaust emissions regulations.

Using traditional analytics techniques, Nanzan’s efficiency experts gathered basic data on bus routes, schedules, numbers of students transported and details of the future exhaust standards. Optimization scenarios determined, among other things, that schedule and route changes, coupled with consolidation of separate systems operated for different schools within the Nanzan complex, could significantly reduce the number of buses and drivers required to deliver students efficiently to and from school. Although recommended bus system changes had to accommodate political considerations, the objective strength of the analysis ultimately enabled efficiency-based changes to be made.

The Value

Overall combined savings for the Nanzan complex totaled $800,000 in annual operating expenses and $1 million in one-time capital costs. Bus system operating costs were reduced by 26% the first year the recommended operational changes were put in place. In addition, the new operational efficiencies meant the Nanzan complex needed six fewer buses in its own fleet than before – and thus six fewer that would need to be replaced to satisfy the new emissions standards. And an analytics-based linear programming model helped officials determine the best way to finance the acquisition of the new buses — specifically to purchase rather than lease them.