Collaborative Transportation Management

7. Translating Benefits into Financial Return

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No one can deny that improved on-time performance, reduced lead times, inventory reductions, sales improvements, and cost reductions are desirable outcomes. These benefits in and of themselves, however, typically will not justify the investment of time and effort required of collaboration. The business case for CTM must be stated in financial terms that spell out the real costs and benefits. Figure 7.1 represents the business case for CTM, showing how some of the benefits reported in CTM pilots have translated into improved profitability and balance sheet performance. The increased sales potential and reduced costs result in improved profitability. Better utilization of transportation assets, inventory reductions, and the potential for reduced days' sales outstanding (DSO) yield improved balance sheet performance. The improvements are found among all parties -- shippers, receivers and carriers involved in collaborative effort.

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