Transport & Logistics
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All these companies operate in markets with increasing competition and pressure on prices. They face critical pricing and revenue management challenges.
The following table presents top challenges and key benefits delivered by OP for Business Contract (OP)
Top challenges |
Benefits delivered by OP |
|---|---|
| Complexity managed by “rule of thumb”
- Multiple factors influence cost of service: shipment type, weight, origin, destination, period and operational conditions (operator, vehicle type, pickup/delivery density, capacity utilization)… - Rate plans with price differentiation by origin and destination, weight band, period… - Discounting based on revenue, volume, - Bundle pricing… |
Precision quotes
For each deal (new business, business extension, re-negotiation): - Simulates the expected margin taking into account the intended rate plan, the cost model and the shipment profile (i.e. the expected distribution of shipments by origin, destination, period, type, weight band…) - Compares simulated price with competition - Recommends optimal price after review of different scenarios |
| Uncontrolled discounting in the field
- Due to pressure on prices, discounting is a key lever used by account managers to close deals - Price inconsistency and disparities between customers cannot always be explained by tangible factors |
Score and workflow to drive sales behavior - The score reflects the quality of each deal according to the applicable pricing policy - Pricing workflow permits to get the different validations and approval for price exceptions. They may involve different stakeholders: sales, pricing, operations, credit control, billing… - Result is eradication of unjustified discounts |
| Contract compliance risk
- Price is fixed whereas shipment profile is uncertain - Many contracts have actual volume lower than expected or changes in shipment profile (such as destination mix, weight…) with negative impact on profitability - Adjusting price of contracts showing deviance with initial assumptions has a significant impact on margin |
Systematic contract monitoring
- Enables to seize all re-rating opportunities - Compares on an on-going basis actual shipment profile with committed profile. Any deviance is reported through a system of alerts - Recommends the rate plan that corresponds to customer’s actual shipment profile |