Wednesday, March 18, 2009

The Logistics and Freight Industry

Given the popularity of the case studies we shared on our corporate web site a couple months ago, we've been working on a new section where we describe use cases for about a dozen different industry segments where we've seen "low hanging fruit" for the use of prediction markets. One write-up we finished recently was for the logistics and freight industry. We've done some work with a couple of these types of companies and while it may not sound like the most glamorous industry in the world, what they do is actually damn interesting. Here are some of the things companies have been doing and some ideas we thought up as well:

Supply Chain Management

  • Understand risk probabilities of supply chain interruptions and inefficiencies (e.g. network congestion, equipment failure) and unexpected costs
  • Forecast equipment supplier performance on service level agreements and quality control

New Product/Service Development & Business Process Change

  • Forecast changes in performance metrics because of changes in business processes or new technologies
  • Improve product/service development lifecycle: better forecast timelines, human resource and capital requirements, and budget requirements

Competitive and Regulatory Environment

  • Understand impacts of changes in public policy in countries where business is being conducted related to operational costs, safety measures, and security protocols
  • Leverage employees, supply chain partners, customers, and subject matter experts to gain comprehensive view of sector trends
  • Compare idle time, distribution volume, and other available metrics with primary competitors

Customer Relationship Management

  • Forecast demand of individual customers and other business performance metrics
  • Contribute to profit margin and operating margin forecasts
  • Predict customer satisfaction levels (ahead of time)

What's notable about these use cases is they all tie back to operational risk factors freight and logistics companies regularly experience, so figuring out something like the Annual Loss Expectancy (ALE) which can ultimately lead to the calculation of a Return on Investment (ROI) is pretty straightforward - a topic coming soon in another blog post. :)

1 comment:

Shirley said...
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