Third generation rating is a must says Trevor Ammundsen

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Third Generation Rating

It has taken some time for the IT Industry to understand the real requirement for rating engines but finally the team at TLP Software have got it right, and now we have the first Third Generation Rating system for Transport Companies.

So before we can understand what this means, first we must understand history. So what were the first two generations of rating systems? We will not bother with describing manual rating off the back of a cigarette packet, more of a generation zero really, but will give a rundown of the computerised functionality that has evolved and been used over the past 30 years or so.

The first generation of rating was really based around inventory/distribution systems, because that is what most people bought and possibly what accounts people understood. The concept of the pricing function in such systems is that you had a price for a thing. For example stock code 1234 was priced at $50.00. Worked quite well if you were selling stock items. For Transport Companies this became a bit of a dogs breakfast as they had to invent a whole lot of stock codes for work such as “Bulk Coal from Huntly to Auckland, Bulk Coal from Huntly to Whangarei” etc.  Basically all you had was a messy price list which was hard to administer and demanded that your admin staff manually selected a code in order to apply a price. Prone to error as many people found out.

Surprisingly many Transport Companies are still using such systems and some IT Companies still feel this is a valid solution to the auto rating challenge. We beg to differ

So what is second generation rating? This is an advance on first generation in that the code entered would now point to a rate card not a stock record. The rate card functionality could be quite strong and flexible in some systems so major steps were taken forward with this generation. Other additions were the use of other transport job fields such as zone codes to be used as part of the search for the correct rate card.

The second generation saw some major steps forward taken however it was still based around a code, let us call it a rate code now. Better systems would give some partial form of automation by linking the rate code to the customer so that the need for staff to select rate codes was greatly reduced.

Unfortunately anything that is code based means that you must end up duplicating rate cards to be sure that each rate card will find something to charge. Failure to do so could mean that no charge would be calculated. Duplication is especially needed when charges are of differing types; for example if Customer Fred was to receive special rates from Hawkes Bay to Auckland but standard rates less 5% elsewhere in the North Island and standard rates to anywhere in the South Island then you would generally need to be creating a new rate card for Fred, copying some existing ones, changing them and so on. Leads to a cumbersome electronic rate book.

Another issue with these historical methodologies is that both generations really only provided some benefit if you rated your work after the freight operation was completed as it was too cumbersome to do it any other way. This resulted in bottlenecks and administrative pressures.

The clever chaps at TLP have overcome most of these historical problems by thinking outside the square and not being tied to the old and tired methodologies. So what makes TLP a Third Generation rating engine?

Firstly the necessity to use a code to point at a pricing calculation, be it manually entered or linked to a Customer, is gone. TLP looks at all valid rate cards for a job and applies the most appropriate rate card for that job. Definition of what is appropriate is up to you and is managed by the way in which you set up the rate card.

As a job can change as it moves through your system TLP rates the job every time it touches it. So for example you may enter the job as going from Auckland to Wanganui and it will be priced accordingly. But when the legs are changed to divert the job through New Plymouth the job will be re-rated to reflect the additional work, if it is appropriate to do this.

Another area where codes are no longer used is to represent geographical points. Zone codes including the myriad of dummy zone codes are no longer used. TLP provides you with the ability to use full address matching when rating. For example you can have a rate from Hawkes Bay to Auckland which is quite general. But you could also have a rate from Hawkes Bay to Logistics Consultants, 19 Tarndale Grove, Albany, Auckland. The system will select the more defined rate card as this is more appropriate. This is made available by the feature of full address matching that we provide which promotes flexibility and accuracy.

TLP have coded their system to ensure jobs are rated every time they are touched (saved) until they have been invoiced. Every time a job is rated the most appropriate rate card is used, which may be different to that which was most appropriate last time. This means jobs are always charged so we can use this information, for checking manifest profitability for example, while the job is still in progress.

The third generation is a step forward and offers the Transport Industry more efficiency, accuracy and the potential to lower staff numbers, in certain situations. Why would you not have a look at what it offers.

Regards,

Trevor.

www.logicons.co.nz

 

 

 

 

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