The “Penalty for non-delivery” parameter literally says how much it will cost you not to service / not implement a specific order.
Possibilities of use – to deliver or not to deliver?
The parameter “Price for non-service” can be used for solving tasks, where you solve the question of whether it pays to divorce a specific order by your own transport, delivery service or not to commit at all. The principle is simple, in the field “Price for non-service” we set a real value, which can take several forms depending on the problem I am solving, eg.:
- how much do I earn by introducing the order – margins,
- how much would it cost to introduce a delivery service – price per package / pallet,
- total contract price – sales price.
After starting the solution, the program will immediately evaluate the situation and design a solution so that it is as effective as possible. There are 3 levels of use:
- to introduce or not to introduce,
- introduce by its own transport or by an external carrier.
Priority – excess demand over capacity
The value of “Non-service prices” for individual orders is high for the system to try to service all orders, but the price level varies depending on the priority you place in order (often regular customers or customers with a larger order). A typical example is that there are two customers with the same delivery time requirement (both want the goods at seven in the morning). If they have a different price set for non-service, the program will give priority to the calculation of the customer with a higher price and will either come to the second one at a different time or not at all.
If there are no collision situations, as shown in the example, the system tries to load all orders at all costs.
A typical user of this setting is the company JASO-Distributor spol. s r.o., which deals with the distribution of beverages.
To introduce or not to introduce – evaluation of profitability
The “Non-service price” setting is usually the actual value of the profit (margin), where the calculation evaluates the customer service cost related to the potential earnings. Settings can reveal places that cost more than you earn. Such an output can serve as a basis for the sales team to focus on an unprofitable area, or move the order to another day.
The difference compared to the previous example is that there may be a targeted exclusion of the order from the plan due to the prevailing transport costs compared to profit, even if the customer is “serviceable” (does not violate capacity, time or work rules).
A typical user of this setting is Avista Oil, which collects used oils.
Introduce by your own transport or external carrier
The “price for non-service” is set according to the actual price list, how much it would cost if the order was delivered by a specific courier service. At this moment, you have a unique tool at your disposal, which will evaluate the situation exactly for you, whether to charge with your transport or courier service. However, it is necessary to have the best possible set price model for own transport (exact price per km, or per hour of work, etc.).