Thanks to Chris / CopCarSS for my avatar.
QUOTE: Originally posted by smalling_60626 WIth all this talk about the pursuit of profit, I thought I would offer the following verbatim from the Illinois Tool Works' home site (itw dot com): About 80/20 The birth of ITW's 80/20 process dates back to the early 1980s when a handful of our businesses sought ways to improve manufacturing practices so they could stay competitive in a changing economy. Today, after more than 20 years of expansion and refinement, ITW has assembled a comprehensive 80/20 body of knowledge which touches all parts of our businesses. The concept underlying 80/20 is simple: 80 percent of a business' sales are derived from the 20 percent of its product offering being sold to key customers. Put simply, too often companies do not spend enough time on the critical 20 percent of their key customers and products and spend too much time on the less important 80 percent. This process is really about simplifying and focusing on the key parts of your business. Simplicity focuses action, while complexity often blurs what is important. In the process of simplification, we view all aspects of the business on an 80/20 basis. This includes finding ways to simplify our product lines, customer and supply base, and business processes and systems. In the end, 80/20 improves quality, productivity, delivery, innovation, market penetration, and ultimately, customer satisfaction.
QUOTE: Originally posted by CSSHEGEWISCH Another posting has implied that the appropriate rate is one cent over costs, without going into any specifics as to which costs are to be included. Not too much return on investment or incentive to go after that business at that rate.
QUOTE: Originally posted by CSSHEGEWISCH The markup provided above looks considerable but even a first-year accounting major would tell you that variable costs aren't the only costs. Any rate also has to cover a proportional share of fixed costs. It may be difficult to calculate the amount of that proportional share, but it does have to be included.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process. Well, it is important, but a little common sense might go a long ways. Other than the occasional inadvertent feeding of the bears at Glacier Park, grain is probably the simplest and most straightforward of all things railroads carry. Loading and unloading is simple and automated, the product doesn't dent or break, the product doesn't bang up the equipment like coal, gathering and distribution is simple and direct and takes place for the most part where vandalism and congestion are at a minimum, compared to any of the other profit center items. The equipment is rugged and reliable; there are no haz-mat expenses or concerns, and most of the actual handling labor is supplied by the shipper, in marked contrast, say, to intermodal. If you are making a serious suggestion that grain is more expensive to handle than industrial and consumer, in particular, I would be pleased to hear the reasoning why. Otherwise, the evidence I see, and have seen for 40 years, suggests that grain incurs probably among the lowest costs of carriage of any product group., while averaging the highest per carload revenue. Best regards, Michael Sol
QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process.
QUOTE: Originally posted by MichaelSol The average unit/carload of grain on the BNSF system brings $1969. This compares with Consumer Group at $874, with Industrial at $1568, and Coal at $1028. The 80% figure is from Senate testimony regarding the car shortage in the Fall of 2003. I would give you the cite, but that Binder is at home. Best regards, Michael Sol
QUOTE: Originally posted by MichaelSol However, in terms of facilities, the BNSF system has 148 shuttle elevators, out of 1525 total grain elevators. I doubt that even Kneiling would argue that serving 90% of the customers who provide over 80% of the company's most profitable traffic is quite the same thing as "going after every little bit of traffic." That's quite a lot of "little bit." Best regards, Michael Sol
QUOTE: Originally posted by CSSHEGEWISCH It would be interesting to see what Kneiling or a comparable out-of-the-box thinker would have to say about those who believe that a railroad is leaving money on the table by not going after every last bit of traffic, including that better served by truck.
QUOTE: Originally posted by jeaton I really find it difficult to accept your statement that single or small multiple car grain shipments can be handled for less than the cost of a grain unit train running directly from a fast loading facility to a single consignee. On the margin, perhaps?
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
QUOTE: Originally posted by bobwilcox QUOTE: Originally posted by futuremodal [ It is sufficiently profitable to those who deal with real competition each day. Before you continue with another rant about the evil BNSF how about letting us know exactly what real business competition you personally have ever dealt with. I think the answer is you never have but I look forward to knowing more about your business experience.
QUOTE: Originally posted by futuremodal [ It is sufficiently profitable to those who deal with real competition each day.
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