In a tough economy, are you being paid for everything that you do?
As we hear in the news of more EU countries seeking a financial bail-out, banter down the pub on the state of the economy moved on to people moaning about not getting paid for all the work they perform... Everyone seemed to be doing a little extra here and there without question or in some cases, without recognition for it. That principle seems to apply in the logistics industry too. So my question is ‘are you being paid for everything you do?'
Too big to handle
As a result of today’s all channel commerce environments, many organisations have multiple business units – for example warehouse, retail, distribution, e-commerce and transport divisions. And with each carrying out their own activities to get the job done, how can you be certain that each division is charging for the correct activities and at the right rate? With movements from pick in warehouse and store collect, pick in store and ship to consumer and all the extra labour involved in packaging, labelling and transporting goods - activities might not be reflected in the charges you pass on to your customers, even if they are only internal departments.
For third party logistics providers, efficient revenue recovery can involve a whole host of activities that may not have been part of the original contract or are value added services that have become increasingly more labour intensive and time consuming. The use of shared user or multi-client facilities spread the cost but do you cover the actual cost of whatever work is conducted for each different client? Is it based on historical information? And is it accurate? Or is it guesswork – a stab in the dark?
And what about the ‘cost-to-serve’? The wider the range of products the more challenging it is to identify the cost to manage and distribute them. Analysis of the profitability will ensure action can be taken to address underperforming areas rather than rely on more successful lines supporting loss-making lines.
Time equals money
So how can activities and time spent be accurately recorded? Manually on spreadsheets and averaging costs for storage across a week or month? This perhaps is not the most accurate method because of the possibility of human error, with some of us guilty of “fat finger” typing days or “off” days when entries might be doubled or completely forgotten. It is important to know what your ‘cost to serve’ is - how else can you streamline and optimise the services you provide if you don’t know what it costs to do so?
A simple answer is to implement a third party billing software solution. Fire this up and the solution will accurately and consistently track and maintain data, eliminating entry errors ensuring accurate invoicing (and cross-charging) equalling quicker payments and improved cash flow. The most effective billing solutions are easy to configure and update, so adding new clients and/or divisions is hassle free.
Hooking up a billing solution to your warehouse management system (WMS) and transportation management system (TMS) will provide a seamless flow of information, processes, transactions and conversion factors and a client-billing module can manage the financial aspects by generating invoices for individual suppliers, internal business units, third party logistics providers and customers.
In simple terms, a third party billing solution reduces the common pain points and eliminates the need to make estimates for quotations. But perhaps most importantly, it can help spot trends and provide data that can support contract negotiations.
In the current economic climate, the case for knowing your costs and making sure you are paid for everything you do is more important than ever before. Automated billing through a billing solution is an area where the initial investment can pay immediate dividends. Someone once said ‘time is money’ and he was sure right....
I’d be really interested to hear from you if you any thoughts or experiences of billing solutions or have other, perhaps different, method of billing. Get in touch with me on Twitter, LinkedIn or via email: Michelle.Campbell@RedPrairie.com or leave a comment below.
Michelle is RedPrairie's EMEA Supply Chain Industry Director with over 16 years experience with many leading organisations.
Email me at: Michelle.Campbell@RedPrairie.com
Posted by RedPrairie EMEABlogs on 7/27/2011 12:09:23 PM