Transportation National Group – Revenue Management

Implementing Revenue Management

Implementing a revenue management strategy for the optimization of this operation is a must. TNG has the potential of having a better utility of its inventory and filtering everything through the assessment of ROI. They are losing the opportunity to generate more revenue. We have demonstrated that there is more revenue to be generated without a doubt. TNG has to move away from the ROI mentality. Meeting demand at 100% without compromising inventory is feasible, at least in the Yakima branch as we were able to conclude. 

We can surely conclude that re-allocating that inventory can generate more revenue for the operation because we found Yakima to have excess inventory at various points in the year. Through revenue management strategy, they would get the ability to distribute their inventory more effectively among the branches. With the added value that forecasting brings to revenue management, we can determine within a confidence interval how much is the expected demand of any branch at any point in time. Revenue management as a strategy will bring science to the relocation of the equipment process, which was perceived within the branch operations as โ€œmore of an art than a science,โ€ as Reisman (COO) referred to it. 

A final crucial recommendation is to create an infrastructure of data collection. TNG used to purge their historical information every six months. Once moving into active data collection across the 120 branches would be crucial to optimize the revenue management strategy. Part of the reason why we could not develop a different model that could show the benefits of a revenue management strategy was because of the lack of historical data available from TNG. 

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