"In the current economic environment, with business models and technologies changing rapidly, it is more critical than ever that companies carefully target and plan their sales, demand and supply efforts to reflect their long-term success and profitability strategies," says Borczon. "It is crucial to business success that logistics companies' sales and marketing efforts are strategically focused, carefully planned to achieve objectives, and the results accurately measured in order to meet management's strategic goals."
Borczon says that while the majority of companies utilize traditional S&OP strategies to align potential revenue, supply, demand, profit margins and opportunities, successful freight forwarders and LSPs are increasingly focusing on two key areas:
- New Product Planning - Targeting Niche Markets: As the forwarding industry changes, companies are carefully evaluating what market niches they plan to target. Management is appraising specific lane segments or customer types they have been successful with in the past, or identifying new market segments they can successfully target with new services or segment offerings. Business intelligence and data-mining tools help verify targets. If targeting a specific lane segment, for example, companies are making certain it's a profitable segment. If focusing on a particular market, it is imperative to fully understand the makeup of companies in that marketplace.
- Sales Opportunity Planning - Customized Campaigns: Successful LSPs are creating targeted sales and marketing campaigns by using integrated customer relationship management (CRM) applications as a tool for communicating service offerings and promotions that are customized to specific markets. Clear, quick and concise messages explain LSP services offered, and they provide potential customers with a reason to call the service provider. The success (or failure) of marketing efforts is then measured by tracking and analyzing how many leads a specific campaign produces, how many shipments were obtained, and how much revenue was generated. If a campaign's success can't be accurately measured, one is left with no idea whether or not to repeat it, Borczon notes.
The Importance of Accurate Reporting
Demand planning for operational requirements is not an exact science, especially with fluctuating business conditions and dynamic business models, Borczon adds. Rarely do economic conditions or shipment volumes remain constant from month to month or year to year. While past performance can be a good guide, it is no guarantee of future business achievements.
Therefore, the ability to report accurately and in a detailed manner is critical in planning for future operational needs. Companies must constantly analyze how the markets and their business are trending. If business typically spikes during a given month or at a particular time of the month, this can provide important data that can be critical to future operational planning and should be accounted for in strategic planning to manage risk.
Once an accurate forecast for the weeks and months ahead is generated, the question then becomes what to do with the data accumulated. If a rise in business is projected, companies must then assess how to handle the increased workload, and with what resources and cost factors involved.
More and more forwarders and LSPs today are relying on technology instead of manpower to handle increasing workloads with existing resources instead of adding personnel. Many LSPs are requesting that customers deliver their bookings electronically as one way of reducing the workload on staff.
Whether it be an EDI transaction where the customer sends the file containing their shipment information, or the customer keys in the booking details on a Web site, the use of today's technology provides a faster, more seamless and error-free process. Either scenario reduces time-consuming work for operational staff and shifts the responsibility to the customer. Statistics from forwarders suggest that more than 50 percent of today's logistical data is now arriving via electronic means, greatly expediting the logistics process, according to Borczon.
Delivery of sales and operations information to customers is another area where automation has replaced many of the manual methods of the past. Providing shipment status and proofs of deliver (PODs) to customers is relatively easy to automate, and it saves an enormous amount of manpower as forwarding staff is not spending time on the phone dictating information that can be delivered electronically.
Overall, automation can greatly decrease the time a company's staff spends on routine transactions and thus increase resources available for personal interaction with the customer on more critical issues and exception transactions.
Focus on Business Development
If a company's S&OP projections indicate that business will be slowing, of course an entirely different set of issues arise. No one likes to cut staff; but reallocation of resources is frequently necessary when going through tough times. This begs the question: how can a company use its extra manpower to generate new business? Does existing staff have sufficient skills to help sell new products and services?
Borczon advises companies to consider allocating their best customer-facing employees into more of a business development role. The key for companies is to always be alert to changing market trends so they can target their sales efforts to meet clearly focused business objectives that are the most likely to obtain maximum ROI in a high-tech world through greater S&OP efficiencies with existing resources.