Case 3 · logistics operator

From heavy losses to stable: a delivery rate that hadn't changed in almost 10 years

Real story
A real company, real people, real numbers. Only the company's name is hidden.
The question

One huge client, heavy losses, and one idea: more volume

I was advising one of the co-owners of a logistics operator. The business was built around one job: delivering private-label products to a huge supermarket chain. About 60 vans a day for intracity delivery and 20 trucks for intercity delivery.

The co-owners had very few ideas about what to do. The managing co-owner insisted it was only a matter of getting more volume from the same client.

I was given all the company's reports, and the question was: is it possible to get the company out of losses quickly?

~60 vans a day · intracity 20 trucks · intercity Supermarketchain private label The whole business built around one client
What was really going on

Costs were fine. The price was the problem.

I made cost attribution to the contracts and checked the potential to decrease prices for transport and warehousing.

What I found:

  • The expense side was OK. It could hardly be optimized enough to stabilize the situation.
  • The problem had grown from something else: under pressure from the chain, the company hadn't changed its delivery rate for almost 10 years.
  • The strong side: they were the only ones delivering this private label to the chain.

Looking at the loss the biggest contract was generating for the company, I ran different simulations with the scenarios I believed were realistic.

With those scenarios and that logic, I came to the owners and explained that I saw only one option: increase the price, or file for bankruptcy as soon as possible.

DELIVERY RATE year 1year 10 unchanged for almost 10 years held down under pressure from the chain
What we did

Raise prices by 20% in one step, and use the time it buys

We agreed on a plan. I led the whole negotiation process myself.

Why the chain couldn't refuse: They couldn't risk their private-label deliveries, and replacing us would take time. Even if they had someone to replace us, their contracting procedures took up to 3–4 months. Including a tender, it was definitely over 6 months.

THE PLAN 8–12 months of time and money the chain may start replacing us +20% 03691215 months
  1. +20%Raise prices by 20% in one step.
  2. Hard talksAccept that negotiations would be VERY hard, but we had to do it.
  3. The windowIf we succeeded, we would have 8 to 12 months before the chain started replacing us, because a 20% increase would hurt them hard.
  4. PrepareUse that time to prepare the business for losing its biggest client.
The result

The price increase was done in 3 months, and the company avoided bankruptcy

+20%
on a delivery rate frozen for almost 10 years
3 months
to complete the price increase
6 months
of my involvement

That gave the company the time and money to partially restructure the business and avoid bankruptcy.

Case 3 · logistics operator

From heavy losses to stable: a delivery rate that hadn't changed in almost 10 years

Real story
A real company, real people, real numbers. Only the company's name is hidden.
The question

One huge client, heavy losses, and one idea: more volume

I was advising one of the co-owners of a logistics operator. The business was built around one job: delivering private-label products to a huge supermarket chain. About 60 vans a day for intracity delivery and 20 trucks for intercity delivery.

~60 vans a day · intracity 20 trucks · intercity Supermarketchain private label The whole business built around one client

The co-owners had very few ideas about what to do. The managing co-owner insisted it was only a matter of getting more volume from the same client.

I was given all the company's reports, and the question was: is it possible to get the company out of losses quickly?

What was really going on

Costs were fine. The price was the problem.

I made cost attribution to the contracts and checked the potential to decrease prices for transport and warehousing.

What I found:

  • The expense side was OK. It could hardly be optimized enough to stabilize the situation.
  • The problem had grown from something else: under pressure from the chain, the company hadn't changed its delivery rate for almost 10 years.
  • The strong side: they were the only ones delivering this private label to the chain.

Looking at the loss the biggest contract was generating for the company, I ran different simulations with the scenarios I believed were realistic.

With those scenarios and that logic, I came to the owners and explained that I saw only one option: increase the price, or file for bankruptcy as soon as possible.

DELIVERY RATE year 1year 10 unchanged for almost 10 years held down under pressure from the chain
What we did

Raise prices by 20% in one step, and use the time it buys

We agreed on a plan. I led the whole negotiation process myself.

Why the chain couldn't refuse: They couldn't risk their private-label deliveries, and replacing us would take time. Even if they had someone to replace us, their contracting procedures took up to 3–4 months. Including a tender, it was definitely over 6 months.

THE PLAN 03691215 months +20% 8–12 monthsof timeand money the chain maystart replacing us
  1. +20%Raise prices by 20% in one step.
  2. Hard talksAccept that negotiations would be VERY hard, but we had to do it.
  3. The windowIf we succeeded, we would have 8 to 12 months before the chain started replacing us, because a 20% increase would hurt them hard.
  4. PrepareUse that time to prepare the business for losing its biggest client.
The result

The price increase was done in 3 months, and the company avoided bankruptcy

+20%
on a rate frozen for ~10 years
3 mo.
to complete the increase
6 mo.
of my involvement

That gave the company the time and money to partially restructure the business and avoid bankruptcy.