Do you rely on any single customer for more than half of your annual sales revenue?
Addressing what could be the single most challenging issue facing Fleet Owners right now.
Do you rely on any single customer for more than half of your annual sales revenue? Given the current economic climate and political uncertainty prevailing at present, this might be your single most important focus in determining the future of your company bearing in mind that road transport is a derived-demand service industry. So what contingency plans have you in place for say even a 20% drop in your budgeted revenue this year?
Begin by asking: How much attention is being given to the critical issue of formally managing your financial operating risk? For instance, how much do you really know about the future of your major clients businesses and how SA’s ambiguous Macro-economic developments are likely to impact on your Shippers and their clients’ future?
Furthermore apart from the possibility of losing business due to any fall in demand from a slowing economy, there are price wars to contend with in the road transport equation. For instance: How competitive is your service, and how far can you discount tariffs and sustain these if necessary?
These are only some of the chilling challenges facing fleet operators, so it’s essential to formally research the many probabilities likely to affect investment performance.
Map showing how the company strategy plan integrates the strategic relationships with risk probability
The following are only a few suggestions on setting up sustainable and successful supply-chain risk management decisions:
Start with assessing your existing commitment to supply-chain risk management.
Have you factored in some of the most probable issues that are likely to affect your transportation budgets and what contingency plans are in place to implement a rapid response?
Next, move on to identify the Macro-economic events that are geared to your primary business interests. Obviously these are numerous and therefore select no more than five carefully considered uncertainties, then formerly research how these are most likely to influence your transaction projections, remember these should be specific to your particular business.
Obviously these uncertainties are in continuous flux, so set the monitoring periods accordingly and scan for changes in any one or more risks which are singularly or conjointly most likely to affect your short and long term decisions. It mostly pivots around industries you serve and the extent of services you offer.
The purpose of electing this Topic for discussion is that given the current political climate, a formal risk management policy should be a priority, especially in our demand-driven industry and continually monitored for short and long term market movements likely to affect profitability projections.
We look forward to your participation in discussing this crucial Topic.