Moving freight can be a complicated business. Between the demands of customers, the day-to-day minutia of operations, and the challenges of transporting each load, it can be easy to lose track of a crucial question: are we making a profit? Tracking the profitability of your business in general and specific shipments and dispatches can be the key to identifying opportunities – moving freight more effectively, seeking out more of the best and most efficient routes, and avoiding those that aren’t worth your trouble.
To help you identify these opportunities, Tailwind provides a number of different reports, which can help you get a better sense of where you’re making the most money. But reports are only as good as the data behind them, and driving all those reports are Tailwind’s Revenue and Cost allocation tools.
Is Profit That Complicated?
If your company mostly runs simple one-pick one-drop routes, determining the profitability of your Orders is pretty straightforward, and Tailwind’s default configuration should have you covered.
The tools described in this article are for the more complicated cases. You are fulfilling Orders with multiple Shipments, putting Shipments from different Orders on a single Dispatch, or moving single Shipments over multiple Dispatches. In situations like these, you want to make sure that Tailwind is distributing your revenue and costs to match up with the operation of your business.
Configuring Your Default Allocation
Whenever you have an Order with multiple Shipments or a Shipment that is moved across multiple Dispatches, Tailwind has to decide how to allocate the Costs and Revenues associated with those records. Several settings are accessible; control these decisions through the Configuration menu. To access the settings, click
at the top right and select ‘Configuration.’ The settings appear under ‘Operations,’ in either Orders or Dispatches.
Order Settings – Shipment Share of Order Revenue
The Shipment Share of Order Formula setting determines how much revenue is allocated to each Shipment in an Order. You can have the revenue split evenly between all Shipments or split it based on the weight of the Shipments or the mileage on their respective Dispatches.
Order Settings – Order Share of Dispatch Costs
The Allocate Dispatch Costs setting controls how Expenses flow back from Dispatches to the Order. This is relevant if you have a single Dispatch that is moving Shipments from more than one Order: by default, Tailwind will allocate the Costs using a percentage based on your configuration setting. This percentage will either be based on miles travelled per Shipment, the weight of the Shipments, or the revenue allocated to each Shipment.
Dispatch Settings – Dispatch Share of Shipment Revenue
The last default is the Allocate Revenue setting under the Dispatch settings. This default controls how Revenue is assigned to Dispatches in cases where a single Shipment is being moved over multiple Dispatches. For example, you can split the Revenue based on relative mileage only, by mileage plus weight/length, or assign all the Revenue to the Dispatch that makes the final delivery.
Which Defaults To Choose?
How you decide to configure your defaults depends on your business process and workflow. Consider which revenue and cost-splitting situations are every day in your business and which are less likely to come up – and for those that are common, think about which default will distribute the revenue or cost accurately in most cases. Defaults can always be over-ridden in unusual circumstances, but hopefully, the available options will have you covered most of the time.
Consider also that some defaults require you to track certain information more closely than others. For example, if you decide to allocate your Revenue by Shipment weight, you should also make sure you are recording the weight of individual Shipments as accurately as possible!
Viewing Revenue Allocation
Of course, every load is different, and sometimes you will want to check to make sure that Tailwind is allocating your Expenses and Revenue correctly. To view how revenue is allocated within a specific load, start by opening the Order in question. Then click the ‘More’ button at the top right, and select ‘Revenue Allocation.’ This will open a consolidated view of how revenue is allocated between the Shipments on this Order.
Editing Revenue Allocation
If you would like to override the default allocated percentage, you can click the edit button found at the top of the window. This will allow you to adjust the amount or percentage to the desired value. Note that you will not be permitted to save if the total amount is greater than 100%.
If you’ve dispatched this shipment to more than one truck or carrier, you can also adjust the amount associated with each trip by clicking on the arrow to the left of each shipment. This will expand the section under the shipment with another edit button, allowing you to adjust the allocation directly.
(The above example shows a shipment moved on two trips, each getting 50% of the allocated revenue.)
Viewing Cost Allocation
A similar view is available if you want to see how expenses are allocated to Shipments on a Dispatch record. Open the Dispatch record in question, click the ‘More’ button, and select ‘Cost Allocation.’ This will display a view detailing the profitability of the trip.
(In the example above, the cost allocation shows that we’re moving two orders with total revenue of $52.50 and total costs of $100.)
Editing Cost Allocation
If you’re moving more than one shipment on this trip and would like to adjust how the cost is being allocated, you’ll need to click the arrow to the left of the payee. This will expand the section under the expense, displaying an edit button that will allow you to adjust the amounts currently allocated.
Reporting On Profit
Ensuring that your Revenue and Expenses are being accurately assigned across your Orders and Dispatches will allow you to take advantage of a number of Tailwind’s reports. Reports are available under the Tools section of the left navigation and are an invaluable resource for any business. Reports like Profit by Customer and Profit by Tractor will more accurately reflect the reality of your day-to-day operations — and that will make it easier for you to ensure that you are getting the most out of your available resources.