Pavan Bagai, Chief Operating Officer

Abstract

In the current economic environment, revenue leakage from the Order-to-Cash cycle represents an opportunity for freight carriers. Identifying and preventing such leakage can realize missed revenue opportunities that exist at different stages of the order-to-cash cycle – billing, audit, rating, pricing, invoicing and collections. Analytics can assist freight carriers in identifying and plugging revenue leakage, resulting in additional revenue – also termed as positive revenue.

A top US freight carrier added millions of dollars to its revenue by implementing a solution that combines BPO and analytics to identify positive revenue opportunities and improve process efficiencies. The solution has three integrated components – revenue augmentation, process reengineering & automation, and continuous monitoring & reporting. With the help of this solution, the carrier was able to equip its order-to-cash cycle with better controls and transform it into a more effective and efficient process.


Positive Revenue Analytics in Order-to-Cash Cycle

Background

On the face of it, the US freight transportation industry is facing such challenges as volatile fuel cost, overcapacity and driver retention. However beneath the surface, the industry is known to be saddled with inefficiencies, particularly in the order-to-cash cycle. The prolonged recessionary environment has further magnified the process inefficiencies and brought it under the glare of the Board and the management. This has brought the focus of transportation carriers on preventing revenue leakage as well as maximizing return from each shipment. There could be several points of revenue leakage in order-to-cash cycle. If carriers are able to identify and plug such vulnerable points, it could result in realizing positive revenue opportunities.

Overview of order-to-cash Cycle

A typical order-to-cash cycle for a freight transportation company involves multiple steps, as shown in the diagram below, from the point of receiving order, to delivery, to revenue collection. Positive revenue opportunities can exist at any point in this cycle.



Positive revenue opportunities

The order-to-cash cycle diagram clearly indicates that different handshakes are involved at different stages in the cycle. Missing even one step during any of the stages could lead to incorrect revenue calculation.

Missing critical information during data entry Incorrect field entry Insufficient / inefficient bill entry audit Inaccurate base rating Missing an accessorial or other charge Process inefficiencies Missing critical information or a valid correction Process inefficiencies Inaccurate invoice creation Insufficient / inefficient invoice audit Process inefficiencies

Incorrect invoicing of higher-than-actual values does not pose a major threat because such errors typically get reported by the customers. In contrast, a lower value invoice could result in revenue losses and therefore it becomes critical to track and rectify such errors. Such process inefficiencies could also result in delayed payments, rework costs and high overall service delivery time; eventually leading to order rejections and customer dissatisfaction.









The EXL approach

EXL uses its proprietary patent pending methodology, MicroAnalytixTM for data analytics and modeling. The methodology includes use of different analytics tools like MATLAB, CART & MARS and SPSS along with an EXL proprietary tool kit. The analysis process is driven by Lean and Six Sigma (DMAIC) approaches. The use of structured methodologies like these facilitates development of accurate, stable and effective solutions.