The firm provided a countrywide service to several manufacturers on a contracted cost basis with an agreement term usually of 3 years so getting it wrong at the negotiation stage would affect them for a long time to come – the problem was that they didn’t know how much it cost to run their fleet!
We were asked to go in and do a full analysis of the cost of delivery per unit and the running cost of their vehicles. Added to this they asked for our support to provide analysis of their bid positions so that their executives knew how low they could safely go without putting the company in jeopardy.
We started by getting an accurate cost for each vehicle, its running and maintenance costs and analysing out the average unexpected costs such as accidents and unforeseen wear and tear. Then we worked out the differing costs for delivering from each of the firm’s depots and the likely spread of deliveries based on the client company’s forecasts giving the client a clear idea of the likely cost of each delivery at various activity levels.
We sat down with the distribution manager, the sales executives and the MD and worked out a strategic pricing plan to allow them a fair margin on their work and provided insight into differing strategies to cope with rising fuel costs. Finally we helped produce a template proposal document that could be adapted for each client easily giving their sales force a professional presentation.
The icing on the cake was that the company won a prestigious contract for a manufacturer’s entire delivery network paying back the cost of the exercise many times over and giving the MD the confidence that they had priced their service at a sustainable level for years to come.
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