Simon Clark - VP of Business Development, Europe, Middle East & Africa for WiseTech Global - discusses the constant challenge of Revenue Management and finding profitable growth especially when you're operating in an environment characterized by suspicion of unreliability.
Who Can I Trust?
Whether you're a regional company or a global entity, at some point everyone needs agents or takes on an agent role to complete a customer supply chain, but this can often leave you feeling vulnerable. Agents serve multiple clients in the supply chain. Because there's very little exclusivity in partnership arrangements, sharing for competitive advantage is loaded with risks. If the revenue flows only one way, the power imbalance leads to the threat of being taken advantage of. Typically, a logistics provider secures a customer and allocates, say, $100 of the total job to an agent. Because the agent has no visibility into the sale, he's never quite convinced that he's getting a good deal.
The solution? Transparency.
Visibility can be built into your own business by implementing a single, fully integrated platform. With the latest on-demand, software-as-a-service offerings, you can affordably open an EDI extension to all your agents, whether they use the same software or require a 3rd party link. Having committed to this ecosystem - with access to accurate and timely communications - you can develop lasting, open relationships. With open access, the suspicion levels drop. When the agent can see into the full costs and profit statement for the sale, they can see the $100 task offer (in this example) is reasonable. The money is the same but the perception of its transaction is vastly different.
Cut short conversations about lack of trust, and create profitability by saving on labor costs. Now that you're not quibbling with agents over what's been paid, who's been paid, and for what reasons, you can use your time constructively.
If you and your agents have linked your systems, you are improving the likelihood of repeat business and mutual gains. By building reliability, the temptation to do anything dishonest falls away so both parties focus on building a relationship of maximum benefit.
Stopping the Leakage
Many logistics providers still struggle with a large gap between anticipated revenue and actual profits. Even worse, some are not even aware how much they made on a given transaction.
Stopping the leakage is critical to your survival. Your systems should be fully aligned with your business activities. 'Cradle to grave' visibility throughout your sales cycle is key, from shipment to invoicing and back again: real time profit & loss, job statements, on orders, and consolidations. It doesn't necessarily mean that the predicted percentage gain at the point of sale will always be achieved, but it's vital that you give yourself an opportunity to reverse some of the loss. Is the revenue leakage from an unforeseen expense, or did you deliberately create a loss leader? Plan your way around it rather than working through hindsight and disappointment. If you determine you should always make 3.5% on every job, your system should automatically flag an alert if it drops to 2% (for example) and prompt someone to approve the change. In this instance, when you're prepared, it's not leakage. It's a planned, acceptable decision.
Did your hauler charge more than their quote? If you can catch this oversight as it happens, you can be proactive. Are you able to pass it on to the customer? When the customer can be consulted in advance, you have a chance to increase the final invoice and retain your profit margin.
Your business will grow stronger once you have the ability to check and report every job, to learn from the before and after comparison.
The more efficiently your business produces, the more ready you become for sustainable growth. (You may even choose not to expand, opting instead to simply stay lean and profitable.) Standard operating procedures - with staff working within the same technology platform - will create the fastest ROI you'll ever experience. You won't waste time and resources reinventing the wheel in each subsidiary or with the addition of each new agent. Your people work the same way, regardless of region or time zone, and you present the same consistently high quality service to customers.
Anyone can grow by accident or luck and then possibly fail without knowing why. With management control and rapid response capabilities, you can be more confident along your own path to expansion.
Turning Sales Talk into Measured Profit
Sales teams are often viewed as the bane of the enterprise. They talk fast and cause nightmares for operations staff who have to deliver on promised timelines, services, and prices (all of which management must report). Sales people can continue to make ridiculous offers if they're working separately from the rest of the organization.
With integration between operations and CRM, you'll achieve much needed responsibility and accountability from your sales teams. If they use the CRM properly (and that's a big 'if,' unless strict management is also put in place), it stops them crossing boundaries into fantasy. Because everything is automatically visible, it creates accurate reality in communications between sales, operations, and customers.
Prior to the availability of the latest logistics software, there was little to stop reps from floating deals with customers without putting anything on paper. Now, tariff proposals can feed directly to operations and finance. There are control points for the approval of activities that fall outside set tolerances. It's all checked before it's sent to the customer. The sales process is now highly efficient. All the rep has to do is use the CRM capability to segment the market and help identify opportunities. The system generates contact reports and reduces tedious paperwork. Having visibility eliminates problems created by different reps chasing the same customers, makes it impossible for them to get kickbacks, and archives every record, making them accessible at any time. A client can't get away with falsely claiming they've spent $1.5 million with you last month to receive a reduced rate for new business. It can be verified with the click of a button.
Utilizing available technology in the right ways can put to rest the suspicions and fears of unreliability. With the right technology solution, you stop the leakage, measure your profits, and grow sustainably.
Simon Clark is VP of Business Development, Europe, Middle East & Africa for WiseTech Global
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