Business Case Analysis

A business case is typically created for the following reasons:

  1. Provides justification for some level of investment in Transportation such as new technology, process improvement, or organizational changes
  2. Analyzes insourcing vs. outsourcing the Transportation function

A Transportation Business Case starts with defining the overall objectives of the Transportation function. There are a few key questions to ask:

How does Transportation/Logistics support the overall business?

  1. Is Transportation a cost center, profit center?
  2. What are the service level objectives?
  3. What unique requirements of products and services affect Transportation?

The methodology behind creating a business case:

  1. Understand the current state of the business – from order creation to freight payment
  2. Identify improvements in systems, process or organizational structure
  3. Determine the level of benefit
  4. Determine level of investment – time, resources, technology
  5. Determine the ROI

A Transportation business case focuses on the following process areas:

  1. Procurement
  2. Planning
  3. Execution
  4. Settlement
  5. Visibility and Exception Management
  6. Business Intelligence/Reporting

Typical areas of improvement focus on:

  1. How often are bid events conducted? What strategy is utilized?
  2. How are orders consolidated?
  3. How is mode/service level determined?
  4. How are routing guides and capacity commitments determined?
  5. How are exceptions handled in real-time fashion?
  6. How are rate discrepancies processed through the payment process?
  7. What metrics are tracked and measured – operational, financial, performance?

Practices