Challenge

PCG’s road freight client, with over $1billion in parcels revenue, was unable to determine if specific customers were profitable. Management was concerned that this was leading to uninformed decision making.

The client was looking for a systemised solution to continuously calculate customer profitability and integrate with native yield tools to enable rapid decision making and customer insights.

Our Solution

• PCG implemented its Dimensional Profitability Model (DPM) , facilitating the application of in-depth cost allocation methodologies across the entire cost base
• Event data was used to identify the nature of each consignment as it passed through the value chain
• Scan data was used to determine in which depots consignments were handled and how much time was used by the Pickup and Delivery (PUD) fleet to deliver each consignment
• The linehaul delivery data was used to allocate the cost of long-distance consignment carriage
• Where customers had dedicated customer service staff or customer implants, such costs were allocated to those customers only

Benefits

• Deep understanding of every customer’s profitability by multiple dimensions
• Automated customer-specific scorecards to drive contract and pricing negotiations
• Reduced administrative burden associated with the annual pricing review process
• Enhanced ability to develop customer-segment specific marketing strategies