Archive for Intermodal Industry

Reduce costs by eliminating the need for manual procedures and checking.

In a previous article on the intermodal blog, RAM discussed how automatic billing can save days of manual procedures and checking.  Rental4000 for intermodal leasing uses stored contract terms to bill customers accurately and calculates every charge applicable such as early return options, damage protection, post build down rates, time and volume stepped charges, handling fees and penalties.  Built in warnings also operate within the system when minimum contract terms are not met. 

This accuracy in the billing process not only has a huge impact on the profitability of each unit but it cuts administration costs.  The reduction of manual procedures can help companies to reduce their costs.  For example, an estimate to manually monitor and enforce just two types of contract restriction would be 30 minutes for every unit returned.  If 100 units are returned in a month, there would be 50 hours of cost savings totalling an average of $6,000 per year.

Another example of cost reduction is found within the task of processing purchase invoices.  Without an automated system, the verification of such invoices can take around 5 days each month.  This could not only cause a delay in collecting revenue but could cost companies an average of $5,000 per year.  With Rental4000 able to offer further cost reductions in many other areas, companies can concentrate on raising profits rather than wading through administration.

Top Leasing companies can save around $2.1 million over five years

Most companies are looking to reduce costs in the current economic climate and RAM’s Return On Investment white paper may be a valuable tool to help companies reduce unnecessary staff and recruitment costs. The paper lists savings that can be made by implementing a specialist intermodal management system as opposed to maintaining an expensive in house development team.

RAM’s white paper was researched using information from customers and explains how a top intermodal organisation could save as much as $2.1 million over a five year period. The main way to achieve these savings is to remove the need for expensive IT development staff (example above is based on a team of six) and to either reduce the number of administrators working with inhouse software or to reallocate their time towards more productive activities and new business generation (example above re-allocates four administrators). Specialist software can help companies to achieve such savings even taking into account the initial purchase cost. Payback can be as little as five months with a Return on Investment of 51%.

The paper also contains scenarios for start-up, small and medium sized intermodal companies.

To receive your free copy of the white paper, please email your details to solution@realassetmgt.co.uk or call +44(0)1689 892111

How accurate are your customer re-bills?

Substantial cost savings can be made from effective Maintenance & Repair software

Real Asset Management’s (”RAM”) Repair4000 module is helping its customers to make substantial cost savings when re-billing customers for maintenance and repairs to equipment. 

Many companies are still using spreadsheet based systems to store M&R costs.  This method has significant drawbacks.  It is very difficult to extract customer re-billing data accurately and if revisions from depots occur regularly, the data cannot be easily updated and invoices to customers may not reflect all the relevant costs.  The administration time needed to improve this manual process is not always available and often invoices are estimated or left to the discretion of the depot.

The following calculations are based on an analysis of RAM’s customer data where the average re-bill invoice was found to be $150.  By identifying and then blocking the potential negative 5.2% variance,  customers that averaged 150 re-bills per year were saving $14,040 in that time.  Larger customers that handled 750 re-bills per year were achieving a staggering $70,200.

RAM’s Repair4000 system, which fully integrates with the Rental4000 lease management package enables the automatic generation of customer re-bill invoices and allows centralised billing for control over both costs and invoicing.  A dedicated M&R system will also reduce costs by cutting administration time and enabling managers to drill down amongst the cost data for detailed analysis, allowing them to monitor variances and make crucial adjustments.

The margin improvement that can be made by more accurate re-billing is just one element of the M&R process where intermodal customers are increasing unit profits.  By implementing a dedicated solution, organisations are also saving money by reducing turnaround time, cutting administration and using EDI transactions.  Look out for future articles on these topics for valuable cost savings.

For more information on Real Asset Management’s Repair4000 and Rental4000 modules, please contact solution@realassetmgt.co.uk

Lack of system functionality can slow down marketing efforts

Start up container leasing companies sometimes delay the implementation of an IT system.  This is usually because they either overestimate its cost or because managers hold back funds until the time when their in-house or spreadsheet systems can no longer cope.  It may be the case that these companies can currently operate with a spreadsheet based solution to manage their long term leasing contracts. Going forward, however, it becomes increasingly difficult to take on Master Lease Agreements (MLAs) without the support of a specialist container lease management solution.

It is crucial to plan ahead and have a system in place ready for growth and new business developments.  The sales and marketing of MLAs and other more complicated business transactions will inevitably be inhibited by delays within the IT process.  Project timescales must be incorporated into the business plan so that marketers know when they have the green light to start new campaigns that may result in more complex lease contracts.  In addition, the acquisition of a new IT system is much easier without complex data to convert and best practice can be adopted from day one, working in harmony with the IT programme.

The Billing process can be a drain on resources

Companies that use multiple systems to gather billing information could be missing out on vital cost savings according to many of RAM’s customers. In-house systems often contain several elements that are not centralised causing the billing process to be heavy on administration and requiring manual input. The following comments were put forward by RAM’s customers when asked to comment on their experience with previous in-house systems:

• Operational, contractual and billing elements are not always in one central system, adding uncessary cost.
• No electronic billing options and the entire billing process is slow and reliant on data from multiple systems.
• Billing can only be produced in one format.
• Data entry is slow and subject to user error.
• Reports are limited and there is no report-writer option or query tool.
• No net book values are available to instantly monitor the true cost of equipment and its replacement.
• Posting transactions to the accounts system is manual, duplicating data entry.
• Key Performance Indicators, such as with unit profitability, are difficult to measure.

Calculating the Return On Investment on a Specialist Intermodal IT System

To maximise profits and compete in a demanding market, forward thinking intermodal companies must take full advantage of the latest technology, continually review their business processes and upgrade or replace front-office systems.  Decision makers should compile detailed information in order to assess the benefits of implementing a specialist software package such as:

• Reasons for change
• Current system issues
• Strategic benefits of both types of system
• Predicted costs over next five years for both systems

When calculating the Return On Investment of a prospective new IT system, it is just as important to calculate the cost of not implementing a system, i.e will current systems incur more costs over time than new software.

Real Asset Management has recently released a white paper to provide a template for comparison, including sample calculations and suggested areas of consideration.  The paper focuses on companies of all sizes within the intermodal leasing or tank/container operator markets.  To receive a free copy, please contact Nicola Byers on +44 (0)1689 892153 or at solution@realassetmgt.co.uk