“In an economic downturn, it’s critically important that transportation companies focus on stopping the revenue leaks. Pricing and customer value are very difficult areas to manage and are therefore the two primary areas from where profit escapes, often undetected,” said Shaun Connolly, global program director for the transportation industry, Teradata Corporation.
Profit escapes when companies fail for instance, to bill for upgraded or ancillary services such as special product handling or delivery requirements. Customers can appear to be very valuable based on the rates they pay, but further analysis and proper allocation of all the costs can show a far different story. This requires detailed data and a powerful analytic engine.
“For instance, a high volume customer may have negotiated a lower price. But if that customer does a significant portion of its shipping in the last three days of the month, the transportation company may have additional costs for overtime, even additional trucks. Unless those actual costs, based on the detailed data, are properly allocated, the customer’s true profitability is disguised,” Connolly said.
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