CEO Sinking Transport Company-2

Syphilius gets a briefing on the need to salvage the fleet from the trough of losses. After detailed analysis he discovers that the revenue is less than the expenditure. He decides to cut down expenditure. He outlines his plans and addresses his officers.

‘Our objective is to reduce expenditure by 50%. Hereafter fuel supply will be for covering only 100 miles for each bus per day. The bus staff ratio is 15 now. I reduce this to 1:10. All suppliers of spares tire and batteries will supply items at 70% of the price. I know they make huge profits. The balance sheets of such companies reveal this. Hereafter our bus will ply only on alternate days. On days of rest they will not require any driver or conductor. These measures will ensure reduction of costs by 50%. “

One official questions the logic of his proposal. CEO silences him by giving him option to take over the company and run it. The official is not prepared to take the risk and the proposal is dropped.

He realizes materials management is a gold mine to cut costs. He appoints a Materials Manager (MM) whose only qualification being he is materialistic in his dealings. The MM suggests that considerable savings will arise in coach building by having ” mini skirt” buses. He explains this concept by saying that buses will have more exposure of the frame and undercarriage, and thus will consume less material and labour. Of course fuel savings also will arise. However, he stealthily demands cuts for all transactions in his department. He develops an inspection team, which rejects quality items unaccompanied by cuts in advance.
He goes ahead with his plan and explains.

” Next I announce measures for increasing revenue. We give each driver a bus and a conductor with fuel for covering 100 miles. He should run and make the best use of it and make profits. The only condition is he has to give the company 50 dollars per bus per day for 150 days a year. This will yield 100000 dollars a year. The driver and the conductor will take all surpluses after paying the company, as their profit. The will meet all expenditure other than what I have allowed.”
The workers hailed the scheme and were quick to implement.

The proposal seemed attractive. They fulfilled their commitments to the company but after six months started dismantling the bus selling part by part to realize their share of profit. The fleet strength fell flat in two years. Syphilius announces that the workers have become the real owners of he company and could run it themselves. He claims he has arrested the annual loss. However, the workers who opted for voluntary retirement wanted settlement according to which an average amount of 5000 dollars was payable to each employee. For 400 employees this comes to 2 million dollars. The finance department points out the magnitude of the problem and funds requirement.

Syphilius said,” We shall approach the World Bank.”
He also announced pension benefits to remaining workers and included their requirements in the proposal. (To be continued)