Quality assurance carried out by ILOS identifies potential increase in net margin of new business
A logistics operator was in advanced negotiations in a BID process for transportation and storage conducted by a food company. The logistics operator needed technical support to validate the viability of the business for signing a contract of up to 10 years. Since the pricing had already been agreed with the client, the logistics service provider urgently sought ILOS to help with the assessment of risks associated with the project that it was about to sign with its new client.
Based on benchmarks and its extensive market expertise, ILOS identified that the planned capacity for the operation was oversized, with room for cost reduction. In addition, it suggested reviewing productivity and cost parameters, as well as new contractual clauses that would ensure the good health of the business in the long term.
Sensitivity scenarios were created and, therefore, it was estimated that the implementation of the ILOS recommendations had the potential to increase the expected net margin of the business by up to 2 pp.
Even with this increase, profitability was identified below that expected by the logistics operator, indicating the need for new negotiations or the non-continuation of the business.
If your company also needs assistance in evaluating the pricing of logistics contracts, contact ILOS!
project type
- Quality assurance
Segment
- logistic services
Potential increase of 2 pp in the business's net margin
Challenge
A logistics operator was in the final stages of negotiating a contract with a food company and needed validation of the business's viability calculations to avoid future losses.
ILOS solution
- Review of costing, productivity and capacity parameters
- Recommendation of new contractual clauses
Results
- Potential increase of up to 2 pp in the projected net margin of the business
- Identification of the need for new negotiations or contract termination
