Learning Launch Tools Find Effective Fuel Surcharge Methodology

By

Sachin Cordova

Challenge

I am a consultant for a Last Mile Delivery/Less-than-Truckload (LTL or small freight) logistics company in  Ohio. The challenge I have been tasked with is to find an appropriate fuel surcharge methodology that  will not alienate any existing customers, nor be an impediment to attracting new business. The project is  limited to internal resources, with the project team consisting of myself, and members of both the sales  and marketing departments. Other key stakeholders include company senior management and  members of the accounting department. We are focusing on trying to discover what customers will  accept best and respond to most positively. The fuel surcharge will be a new line item, going live as a  new company revenue stream and appearing on all customer invoices beginning January 2.

Selection

After detailed usage of other Design Process activities, including spending time with several Accounts  Payable personnel to understand how current invoices were received and processed, we have been  utilizing Learning Launch Tools. We have been placing “small bets” in hopes of discovering what  invoicing methodology will be most effective now and in the future with clients.

The IBM trade show booth section of the course materials was particularly helpful in this stage of our  process, as the stakes to my client are as high or higher than a trade show attendee not entering a booth  or leaving quickly. The wrong billing approach could lead to the ending of the business relationship. Just  as the course explained, gaining “Greater Comfort” is crucial to adoption.

Application

The Learning Launch has been two-fold: first, testing multiple billing formats, and gauging reaction from  a group of Client Contacts on the receipt of an invoice containing a new line item, breaking out Fuel  Surcharges for the previous month. Would they contact our company and question the need for it?  Would they not contact the company, but instead silently have a measure of resentment? Would it  affect their view of the company and impact future business opportunities?

Second, the multiple billing formats have been reviewed by a group of Accounts Payable personnel.  Would the new formats create questions? Would it cause their internal management to need to review  the new invoices? Would any of them create an impediment or any other kind of delay in getting the  invoice processed?

These were some of the questions we asked, in the hopes of finding out where there would be a “Big  Fail”, to use the Corning example from the course materials. Would, and if so under what conditions,  would customers reject this new billing methodology?

Insight

What we have found is generally good news … customers understand and accept the need for a  separate line team for a Fuel Surcharge in their monthly invoices. Many customers are familiar with the  methodology, having done extensive business with global logistics chains such as FEDEX and DHL.  Additionally, the Learning Launch Tools and process uncovered that customers understand that the Fuel  Surcharge is linked to national market rates for fuel and can increase as market conditions change.

One surprise we discovered, however, is that customers have little to no tolerance for any “Black Box”  formula on how the surcharge is calculated each month. A simple formula, easy to understand by all  client personnel, accounting and non-accounting alike, is expected as a baseline for instituting any new  methodology.

Approach

The Learning Launch Tool has been appropriate, and has given us the proper range of testable solutions  needed to uncover a commonality in client acceptance: Feel free to add the Fuel Surcharge line item  next year, but with complete transparency on its calculation. As such, I feel confident that my client will  go live on January 2 with a new Fuel Surcharge line item on its invoices. It will utilize a simple formula  with $2 per gallon as a reference point, that any Client Contact can calculate easily after passing by a gas  station and seeing the day’s prices.

While our process appears to have proven to be sound, and we gave a wide variance of billing formats  for clients to review, we came away with a usable takeaway for similar processes in the future. As an  alternative, it would have been better to limit the sample billing formats to a maximum of 5-6. We used  8-10 different concepts in this process, and the surplus of choices likely took away from the overall  curation to a small degree.


Learning Launch Tools Find Effective Fuel Surcharge Methodology By Sachin Cordova Challenge I am a consultant for a Last Mile Delivery / Less - than - Truckload ( LTL or small freight ) logistics company in Ohio . The challenge I have been tasked with is to find an appropriate fuel surcharge methodology that will not alienate any existing customers , nor be an impediment to attracting new business . The project is limited to internal resources , with the project team consisting of myself , and members of both the sales and marketing departments . Other key stakeholders include company senior management and members of the accounting department . We are focusing on trying to discover what customers will accept best and respond to most positively . The fuel surcharge will be a new line item , going live as a new company revenue stream and appearing on all customer invoices beginning January 2 . Selection After detailed usage of other Design Process activities , including spending time with several Accounts Payable personnel to understand how current invoices were received and processed , we have been utilizing Learning Launch Tools . We have been placing “ small bets ” in hopes of discovering what invoicing methodology will be most effective now and in the future with clients . The IBM trade show booth section of the course materials was particularly helpful in this stage of our process , as the stakes to my client are as high or higher than a trade show attendee not entering a booth or leaving quickly . The wrong billing approach could lead to the ending of the business relationship . Just as the course explained , gaining “ Greater Comfort ” is crucial to adoption . Application The Learning Launch has been two - fold : first , testing multiple billing formats , and gauging reaction from a group of Client Contacts on the receipt of an invoice containing a new line item , breaking out Fuel Surcharges for the previous month . Would they contact our company and question the need for it ? Would they not contact the company , but instead silently have a measure of resentment ? Would it affect their view of the company and impact future business opportunities ? Second , the multiple billing formats have been reviewed by a group of Accounts Payable personnel . Would the new formats create questions ? Would it cause their internal management to need to review the new invoices ? Would any of them create an impediment or any other kind of delay in getting the invoice processed ? These were some of the questions we asked , in the hopes of finding out where there would be a “ Big Fail ” , to use the Corning example from the course materials . Would , and if so under what conditions , would customers reject this new billing methodology ? Insight What we have found is generally good news … customers understand and accept the need for a separate line team for a Fuel Surcharge in their monthly invoices . Many customers are familiar with the methodology , having done extensive business with global logistics chains such as FEDEX and DHL . Additionally , the Learning Launch Tools and process uncovered that customers understand that the Fuel Surcharge is linked to national market rates for fuel and can increase as market conditions change . One surprise we discovered , however , is that customers have little to no tolerance for any “ Black Box ” formula on how the surcharge is calculated each month . A simple formula , easy to understand by all client personnel , accounting and non - accounting alike , is expected as a baseline for instituting any new methodology . Approach The Learning Launch Tool has been appropriate , and has given us the proper range of testable solutions needed to uncover a commonality in client acceptance : Feel free to add the Fuel Surcharge line item next year , but with complete transparency on its calculation . As such , I feel confident that my client will go live on January 2 with a new Fuel Surcharge line item on its invoices . It will utilize a simple formula with $ 2 per gallon as a reference point , that any Client Contact can calculate easily after passing by a gas station and seeing the day ’s prices . While our process appears to have proven to be sound , and we gave a wide variance of billing formats for clients to review , we came away with a usable takeaway for similar processes in the future . As an alternative , it would have been better to limit the sample billing formats to a maximum of 5 - 6 . We used 8 - 10 different concepts in this process , and the surplus of choices likely took away from the overall curation to a small degree .