Operation:
Qualitative Analysis:
One crucial prospective of launching Express Pool is to improve seat utilization. However,
reducing the operational expense itself is not “the goal” for this service. Referring to “The
Goal”, the plant was nearly bankruptcy when managers try to keep every machine at their
highest capacity and to reduce accounting measurements such as cost per working hours.
Uber is facing a very similar problem with increasing wait time. Although increasing wait
time could improve “efficiency” and reduce cost per ride, it does not increase the demand
nor the throughput of the whole service since demand and revenue did not increase as
wait time increases. Waiting longer time will only reduce operating expenses attributes to
a single rider and thus could not reach the goal, which is to simultaneously increase
throughput while lowering inventory and operational expense.
In addition, waiting longer time will erode riders’ patience, lowering the overall rider
experience. This leads to higher cancellation rate and thus less throughputs. More
importantly, the market competition in the rider sharing industry is fierce. Longer wait time
and negative rider experience could easily direct Uber’s customers to other competitors,
trimming market share and curtailing demand. Less demand means less throughput for
Express Pool. Moreover, negative experience could also affect customers’ perception of
Uber as a brand and hence hamper sales for other service in Uber’s product mix.