Natfreight Business Report 2019
Name:
Student ID:
Course Name: Business Information Systems (ISYS2059)
Workshop Time: 830 to 1130
Tutor’s Name: Sahaya Francis Jeganatham Mahendran
Table of Contents
1.0 Introduction 3
2.0 Analysis and Discussion 3-8
2.1 Analysis of Natfreight & Sunnydels 3-4
2.2 Comparative analysis of Natfreight and SunnyDels 4-5
2.3 Analysis of Quality Initiative for NSW and WA based on total cost savings 5-6
2.4 Trendline analysis of Quality Initiative 7-8
2.5 Analysis based on Number of Pallet Baskets 8
3.0 Conclusion 8
4.0 Recommendation 8-9
5.0 Appendix 9-10
1.0 Introduction
Natfreight is a company that has been providing freight shipping services with Interiors for about a year now. The freight rates have been broken down into country and metro.
Country rates per pallet basket reduce as the quantity in the shipment increases.
Metro (city) rates are a flat rate. However, there will be additional surcharge for each state destination.
Interiors have also classified their stores to small, medium and large. Small stores on average receive 1 to 3 pallet baskets, medium stores 3 – 5 pallet baskets and large stores 4 – 8 pallet baskets.
Sunnydels – another transport company is perceived as one of Natfreight’s biggest rivals. This report is to analyze the profitability of the business between Natfreight and Sunnydels by considering descriptive and predictive analytics as well as further analysis and recommendation on how to improve the business.
2.0 Analysis and Discussion
2.1 Analysis of Natfreight & Sunnydels
Figure 1: Sum of total freight cost for the first 6 months
Figure 1 shows the sum of total freight cost for the six months in the first half of 2019. Looking at the chart above, Sunnydels total freight cost is higher than Natfreight. Although Sunnydels has a higher profitability, I concluded that there is a relationship between the cost of paying for the freight charges and profits generated by the transport companies. Therefore, I believe Natfreight would generate a higher profit compared to Sunnydels as the cost of paying for the freight cost is lower which would generally result in more profits earned in the long run, considering that Natfreight still charges a metro surcharge but its overall freight cost is still cheaper than Sunnydels.
2.2 Comparative analysis of Natfreight and SunnyDels
Figure 2.1: Sum of total freight cost for Natfreight
Table 1.1: Natfreight Data
Figure 2.2: Sum of total freight cost for Sunnydels
Table 1.2: Sunnydels Data
Looking at both Figure 2.1 and Figure 2.2, it clearly shows that Sunnydels did not charge an additional surcharge in the freight cost. However, Sunnydels is still making a higher profit than Natfreight. Although Sunnydels has a higher profitability, I believe there is no need for Natfreight to change freight companies, considering Natfreight charges a surcharge and its overall freight cost is still lower than Sunnydels. In the long run, consumers will rather opt for reduced rate shipping as no consumers would want to significantly increase the final cost.
2.3 Analysis of Quality Initiative for NSW and WA based on total cost savings
Figure 3: Sum of cost per Kg for NSW and WA
Figure 3 is a column chart that shows the initial and reduced sum of cost per kg after the loads for large and medium country stores have been reduced. As shown in Figure 3, NSW initial cost was $1484.39 and it is now reduced to $1423.96. On the other hand, WA initial cost and reduced cost are $850.13 and $822.08 respectively. There is a higher cost reduction seen in WA of $60.43 as compared to NSW of $28.05. With this, I have achieved the conclusion that WA have significantly reduced the freight costs as compared to NSW. Therefore, I believe the team working on WA should be offered with a one-off $1000 bonus.
2.4 Trendline analysis of Quality Initiative
Figure 4: Trendline analysis for NSW & WA
Table 3
From Figure 4, the overall profitability for NSW in Natfreight has been increasing from Jan to May but started declining around June. The profitability peaked during May at $102145 and declined to $88325 during June period. As for WA, there is an increase in profit from Jan to Apr and started declining from May to June. The profitability peaked during Apr which is at $49495 and declined to $42035 in June.
However, looking at both trendlines in Figure 4, the overall profitability for both states (NSW, WA) in Natfreight has been increasing. From the trend, we can do a predictive analysis for the next 3 months. The predicted analysis is NSW would generate a higher profit than WA for the upcoming months.
2.5 Analysis based on Number of Pallet Baskets
Figure 5: Total cost per Pallet Basket
Figure 5 shows the total cost per pallet baskets. It is shown that large stores (6-8 pallet baskets) have the lowest cost and medium stores (3-5 pallet baskets) have the highest.
3.0 Conclusion
In conclusion, Natfreight have a higher profitability in the long run. This can be seen with the supported information shown above where Natfreight charges a lower freight cost to their consumers. Offering the right shipping rates is crucial as consumers are high likely to opt for lower shipping fees over an expensive freight cost. Natfreight uses a better marketing strategy in increasing the profit and growth for the company as compared to Sunnydels.
4.0 Recommendation
The cost of NSW is the highest amongst all the other states. Australia should import more goods to NSW as more purchases are made in NSW. This could be due to customer loyalty and it should be capable in generating profit for the business.
Natfreight can consider reducing or removing their surcharge in attracting more consumers.
Natfreight can consider advertising to consumers to buy in bulk (large stores) as it is more cost savings. This is statistically proven in Figure 5. Lower cost typically results in higher profits.
Continue working with Natfreight for another year, this would lead to a more consistent and reliable data in order to come to a better conclusion and recommendation for the company.
5.0 Appendix
Vlookup functions used to calculate $ per Pallet Basket for Natfreight
Vlookup functions used to calculate $ per Pallet Basket for Sunnydels
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