Dec 7, 2021 6:54:05 PM | 4 Min Read

Case Study: Turning freight unpredictability into a 10% profit margin

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Liesel Borovsky
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Case Study: Turning freight unpredictability into a 10% profit margin

 

SUMMARY

When freight pricing uncertainty threatened a heavy equipment manufacturer’s profitability, they approached IL2000 for a solution. We built a pricing tool that allowed our client to accurately forecast freight costs. Today, the company is making a 10% profit on freight, and their total actualized savings have increased by over 5%.
COMPANY PROFILE

The client company was a B2B eCommerce heavy equipment manufacturer that specialized in making attachments for excavators, bulldozers, and other heavy vehicles in the construction industry. The company’s products equipped operators to handle heavy materials easily, safely, and with greater overall productivity.

PAIN POINTS

  1. Our client’s primary pain point was unpredictability. It was common practice for salespeople to have to quote on freight for a large shipment, weeks — even months — in advance.
  2. Freight costs on extremely heavy equipment were dynamic as a general rule, but market volatility spiked significantly in 2020, exacerbating potential losses.
  3. The company’s product line consisted almost exclusively of irregularly shaped equipment, which limited the business to using flatbeds — a comparatively uncommon method of transport. This meant premium rates and greater shipping uncertainty.


CHALLENGES

Our client needed a way to swiftly and accurately estimate freight costs. This was a critical profitability issue. But it had additional implications for sales and customer service because shipping rate unpredictability created a bottleneck when closing a sale. That same constraint on planning also served to undermine customer confidence which jeopardized repeat business. Another significant dimension of our client’s challenge was that the company had been locked into paying a premium on a relatively scarce mode of transport. They needed a way to distinguish between LTL, Partial TL, and full TL on rating.

SOLUTION

In a complex and multi-faceted situation like this, our first step is always to seek a complete, dynamic picture of our client’s supply chain. Their systems and resources form the foundation of our analysis, but we also look at their timeframes, risk tolerances and the unique constraints and opportunities their product brings to bear. No two logistics solutions are alike.

Accurate pricing tools developed

Our client’s biggest problem was that they needed to create something from nothing. Their salespeople needed to make important, accurate calculations on freight with almost no data. IL2000 built a tool that grabbed the small amount of shipment data the company’s salespeople could provide on a shipment, analyzing it against a vast body of industry-wide data. Almost instantly, the company observed a significant uptick in profits.

It’s worth noting that leveraging “big data” for predictive decision-making isn’t a new concept in logistics, but such solutions have historically been accessible only to companies operating at an enormous scale. IL2000 made similar functionality viable for a company with a comparatively smaller scale of operation.

Customer expectations exceeded

IL2000 developed the tool to work seamlessly within the company’s in-house ERP system, allowing salespeople to dynamically enter new data on dimensions and weight as it becomes available, fetching real-time market updates on truckload rates. The quote updates in real-time, giving the company instant access to accurate and reliable shipment estimates. The end result is a smoother, more satisfactory customer experience and improved sales.

More shipping options unlocked

Finally, IL2000 designed a system that would give our clients access to more shipping options, empowering them to choose from a wider range of carriers and more competitive rates.


RESULTS

  • Over 5% increase in actualized savings.
  • Transitioned from losing money on freight to turning a 10% profit on freight.
  • Achieved greater customer satisfaction by honoring rates given to clients and billing at a market accurate rate.

Download the One Page Case Study here

Case Study Manufacturing Image

 

Topics: Logistics Management, Case Studies, Pricing

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