Solve problems

What 56ACC for fast growing freight forwarders

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Solve problems

Postby 56admin » Fri Nov 21, 2014 7:02 am

Over commitment or excess tonnage
A fast growing company has committed higher and higher chartered space or tonnage to ensure reliable supply of space and volume discount. Given the volatile and uncertain future the freight forwarder industry face higher and higher risk
56ACC recommendation
The only solution is accurate tonnage budget, updated idle space information, fast sales channel, fast pricing and fast review on idle space management

Cost Pressure
End customers continue to expect low costs. Cost pressure seems to remain the ultimate criterion. The trend towards increased customer expectations has made it ever more difficult to reduce costs further. Logistics costs play an important role in reducing overall costs; their share of overall revenue is as low as 4 percent and 6 percent in the electronics and automotive industries, respectively. However, the survey shows that costs are on the rise, many freight forwarders cannot estimate their freight cost and profit due to seasonal prices and the volatile and uncertain future market.

56ACC Recommendation
 Cost reduction program
 Cost Alert system

Cashflow problem
The company always lacks of cash as the company has to pay on time to ensure reliable supply of transportation space, investment in office and equipment but customers demand longer and longer payment term or actually pay over payment term allowed. Also the thin margin cannot generate much cash flow

56ACC Recommendation
Finance training for non-finance manager including cashflow

Lack of key CRM
The key CRM objective of our company is to achieve maximum profit by lifting up the efficiency of sales performance. In order to achieve maximum profit, we must first identify the key parameters. Total profit is derived from total revenue minus total necessary cost.

56ACC Recommendation
The company must go into the details of each of these elements, with an attempt to identify where we need to improve to maximize our profits. The company also must perform regular measurements to ensure we are working in the right direction. It is just not information available under one system. Data need to be captured by different people during different times.

Overtime and exhausted human resources
In this people industry, it's imperative to tightly control labour costs, optimize the use of labour and constantly strive for higher productivity if you want to stay in business. However, for a fast growing logistics company, staff always work overtime due to too many unexpected complain, claim, urgent instruction and inquiry. There seems no internal control and risk management or they are not effective. An analysis of overtime and the underlying reason is recommended for a fast growing company.

56ACC Recommendation
 The first step to set up the best practice standard operating procedure based on the analysis of problem encountered, including internal control and risk management
 Gradually move more and more unexpected events to best standard operating procedure
 Automate your best practice within the company and up to the subcontractors.
 Resources can then focus on the true unexpected events which is time consuming and tip up resources tied up.

Talent shortage
In China, talent shortages in logistics are considered one of the most important challenges in the coming years. Shortages are seen at both the operational level as well as the planning and controlling function. In Shanghai, Shenzhen strong competition from other fields like finance, strategy and IT contributes to the talent shortage in logistics. For a fast growing company, the staff turnover rate is high due to overtime and exhausted human resources and this created further difficulty.

56ACC Recommendation
The most important strategies to cope with this talent shortage are talent development training, training to talent and automation of best practice

Moving company strategies
A great deal of uncertainty remains in the deployment of business strategies which is important for setting up KPI measurement systems and reward system for projects and departments

56ACC Recommendation
Consolidated information for business decisions

Departmental objectives conflicts with company goal
Departments sometimes do in different directions and complain each other.
Ensuring every departments objectives are consistent with that of company goal can save the processing and achieve the company goal.

56ACC Recommendation
Set up KPI by department for each company main objectives like customer service improvement, cost reduction and revenue management
Set up reward system for each department KPI

Expansion in office/operating units in other cities in China or/and other countries
As a fast growing company expands, operation performance as measured by delivery reliability has deteriorated, due to increasing customer requirements, greater volatility, and problems with infrastructure, lack of capable staff and poor partners in less developing cities or countries. All SOP cannot function there.

Lack of consolidated information for business decision
Lack of visibility on performance such as cargo consolidation and procurement from consolidator.
There are no on time, accurate and complete information for customer relationship management, partnership management, pricing and credit limit control.

56ACC Recommendation
The majority of companies are recognizing the growing need for investments in new technology and big data analysis tools. However, many solutions existing in the market is just not affordable and do not fit all the purposes.
However, you may make changes around the existing system to explore the opportunity of volume discount, share of overhead and idle space sales
You may change to a new system which is costly and risky but can generate high efficiency and quality of service to cover the costs
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