What Is Yield Management and Why Is it So Important?

/in /by

StrategyDriven Tactical Execution Article |Yield Management|What Is Yield Management and Why Is it So Important?A service remains useful for as long as it is in use

In business, most pertinent is to sell off goods and effectively market services as quickly as they are available on the market.

Some services and businesses offer perishable goods that can expire on the shelves. However, it’s different for the hospitality industry. While it is almost as though the services that hospitality businesses offer can never expire, this simply isn’t true.

There are periods where the usefulness of a service runs out as long as it remains unused. In the hospitality industry, services and products are only useful when utilized and, of course, paid for. Plane tickets, train tickets, hotel rooms, etc., are only useful if people pay for and use them.
However, these services’ market demand is not fixed and can go for long periods with minimal requests. The fixed prices of these services do not allow the business to make up for the losses incurred on days where demand is deficient.

To remedy this situation in the hospitality industry, a new pricing strategy was developed; the Yield Management strategy.

StrategyDriven Tactical Execution Article |Yield Management|What Is Yield Management and Why Is it So Important?What is yield management?

What is yield management and how does it affect your business?

A simple answer will be that Yield Management is a pricing strategy developed for the hospitality, air travel, tourism, and related industries that helps to produce maximum returns from their services. However, that may be an answer that barely scratches the surface.

So, really, what is yield management?

Yield management runs mostly on the tilt of the supply and demand of the market. When the demand exceeds supply, the prices increase, and when the supply exceeds the demand, it drops. It first began from the air travel industry.

Have you ever tried to book a flight at the last minute and found that the price of the ticket is now jaw-droppingly higher than it was a few days ago when you procrastinated on concluding your booking? You most likely have been affected by yield management.

Many passengers aboard the same plane are most likely not paying the exact fare for the flight. Many took advantage of some unique early-bird discounts and other special pricing plans offered to passengers for booking early.

Unfortunately, a few people would still have to pay higher than those who booked early flights.
Yield management involves strategically editing prices of goods and services in the hospitality industry to match with the right customer in varying instances of demand and supply.

This works in such a way that businesses can balance their lost revenue by tweaking their prices when demand is less than supply and vice versa.

Factors that may help to influence yield management

Numerous factors are responsible for the change in demand and supply in business
Services in this industry that have benefitted from yield management include car rental services, railroad services, tourist services, cruise lines, hotels, and airlines. Many factors can influence the need to change prices in business.

One factor that influences yield management is the weather. For example, you would find that Uber prices get spiked when it’s raining because everybody is looking to be dry and safe in a vehicle and still get to their destinations.

Paying a little bit extra for this service that would ease their inconvenience at that moment would seem insignificant. The time of the year is also another critical decision-influencer when it comes to the prices of many services in the hospitality industry.

During Christmas, passengers are willing to pay exorbitant prices as long as it guarantees that they would get home to celebrate festivities with their families. Another one is the level of demand.
Tell people that only two available planes are willing to take them out of a virus-ridden town and watch flight tickets get sold out in minutes, no matter the price cap.

Competitors can also create a distortion in the level of demand for a product or service. Is there a new company on the block offering similar services like yours? Depending on the glitz and affordability attached to that new company, yours might suffer a drop.

With yield management, you can rectify the situation and show the new kid on the block who’s the boss. In a nutshell, yield management offers different clients different prices for the same product at different times based on varying factors to maximize business returns.

How do you implement yield management in hospitality businesses?

Find an equilibrium price zone where you can maximize your revenue
Yield Management has a very streamlined focus and approach to profit-making in business. It ensures that you get the best possible revenue or returns by critically analyzing your volume of sales and selling price.

In the hospitality industry, businesses use this demand-forecasting technique to determine how to offer prices to their customers and still make the highest profit possible. Many companies offer the highest prices to customers and examine how many clients are still able to book for their services despite that high price.

If they find that the demand for the service drops below the supply, they modify the price again to accommodate more customers who can afford the new, reduced price.
To be a great yield manager, finding an equilibrium price zone where you can maximize your revenue is key. Once you’re able to get this equilibrium price, your business is already working at its max capacity.

The best way to do demand-forecasting is not by guesstimating but doing thorough research from existing data and trends gathered from customer behavior and purchase patterns. Using historical data to calculate how much price should vary to accommodate fluctuating demand should be your go-to strategy.
It helps to effectively predict and make demand-forecasts so that you can strike a balance between the availability of your product/service and the price.

Why is yield management so important?

Yield management boosts revenue significantly

For hotel managers, cab hire services, tourist agencies, etc., being able to manage your yield effectively can not be overemphasized. It has so many benefits for your business that boosts revenue significantly.

Let’s examine a few of them below:

1. Flexibility of pricing

Yield management boasts of a flexible nature, and this affects both customers and the business positively. Suppose there’s a drop in demand for any product or service, with accurate yield management, the company can modify its rates to an equilibrium price to accommodate more bookings or orders.

This way, you can serve more clients and bring in revenue at the same time. Offering discounted rates or double-service in one package at a slightly reduced price can be an effective way to entice your customers back.

While you may not make as much as you would during a busy period, you’re able to make some revenue, unlike when there are no bookings at all. You also manage to satisfy your clients who may feel like they got a great package at lesser rates. It’s a win for both ends.

2. Improved seasonal pricing

This is also an offshoot of the flexibility of this concept.

Because customers are willing to do anything for some particular services in some peculiar seasons, a hike in price during these periods will not affect demand, such as high costs of flight tickets and hotel rates during the rush-hour Christmas season.

In this period, where the business is in high demand, you can make more revenue than when there was lesser demand for the service. Customers can also receive the services they need, howbeit that they have to pay slightly higher for it.

3. Enhanced forecasting skills

WIth accurate historical data analysis and customer purchasing patterns, your business is able to accurately demand-forecast. This way, you learn to know how to better prepare for times where business may not function at a high.

By using automatic forecasting strategies and techniques to keep track of the different parameters or factors that affect demand, you are able to make more accurate predictions. Tracking these parameters by hand may lead to errors or inaccurate data.

You would find useful cloud solution software like Bedvine.com to help you monitor a wide range of these factors simultaneously for the best results.

4. Enhanced coordination among sales channels and the customer relations team

With accurate yield management, there becomes uniformity across board, from the front desk to the prices on the different sales channels. There’s no case of one price from the customer relations team and a different one at the website or on the travel advisory.

You’re also able to make planned and coordinated responses about prices when guests or clients call to place reservations or inquire about bookings. It helps to plan ahead to determine when there will be discounted prices or not and how much discounts to take off the prices.

Conclusion

It’s easy to make losses in the hospitality industry, and it’s also easy to make gains. When you realize that it’s impossible to run at the same demand level throughout the year, the need for a middle ground becomes essential.

Yield management serves as an in-between for customers and businesses where you try to create a balance between demand and supply.

The goal is to make a maximum profit in business while also satisfying your customers by offering a reasonable price in exchange for your services as the market demands.

Five Advantages Of Cloud Computing For SMEs

/in /by

StrategyDriven Tactical Execution Article |Cloud Computing|Five Advantages Of Cloud Computing For SMEsThe importance of cloud computing is overlooked by many businesses, it is vital for small and medium businesses to function at their best.

Why is cloud computing so important for SMEs? The idea of the cloud is that it is a network of remote servers that will allow you to access shared applications, storage, and other computing resources via an internet-based facility. The cloud replaces the need to have to install additional hardware of your own. The cloud is all around you, operating in your day to day life.

Everything is moving into the cloud. This is because there are a lot of cloud computing use cases that will make life a lot easier for users and businesses alike. It can improve cash flow, increase efficiency, and offers a lot of other advantages.

Flexibility

When you own a business, have the needed flexibility is essential. This is where cloud computing for SMEs can come in to help you. When you’re on the go, you know that you can rely on the cloud to give you access to modify and save the files you need from any device wherever you happen to be.

If you want to access virtual resources like protected storage, web applications, or redundant firewalls for example, then you can do this by using any device that is connected to the cloud via the internet. Activity like this can give any small business the upper hand on the competition.

Portability – Remote IT Infrastructure

As part of the advantage of flexibility, the cloud offers near limitless computer resources to its users regardless of their location.

The ability to allocate an entire server farm’s equivalent of computer power for your project or the task you need to do with just a few clicks is very appealing. Every major player in business uses a platform like this to give its users and internal employees access to secured data.

Data Security

Storing files and your important data via the cloud is often safer than more traditional storage on a phone or a computer. There are often many laters that are put into cloud computing security so the best cloud service providers can offer infrastructure will protect all your data.

Software Updates

Automatic software updates are another bonus that you can get from moving across to a cloud computing system. A key thing that can damage the productivity of a business is running out of data software. A lot of owners neglect this step, so it’s a common issue. With the cloud, it’s the job of the cloud service provider to manage any needed maintenance and software updates without you having to worry about it.

Environmentally Friendly

Cloud computing can easily be scaled to match your business needs. Before the cloud, you had to buy physical machines yourself, pay to power the whole server room, and pay employees to handle maintenance. Now, you only need to pay for the resources that you actually need. This helps the environment by reducing your carbon footprint.

3 Tools for Streamlining Processes in Manufacturing

/in /by

StrategyDriven Tactical Execution Article |Manufacturing Processes|3 Tools for Streamlining Processes in ManufacturingManufacturing processes are complex and they often consist of multiple steps. So, in order to maximize profits, businesses have to find innovative ways to streamline these processes and reduce the time they take to complete.

If your manufacturing processes are inefficient, then there are a few things you can do to improve them, including getting rid of obsolete steps and improving the communication between your employees. There are also some amazing tools available that will help you to streamline these processes. Some of these tools include:

1.Salesforce

In order for manufacturing companies to be successful, they need to take good care of their customers. This is where the Salesforce tool comes in. Salesforce is a customer relationship management solution that brings customers and companies together. It makes sure that all departments including sales, marketing, commerce and service have a shared view of every customer. Salesforce for different industries is available, meaning that no matter what industry you work in, this is a tool you should consider. Salesforce solutions by Alt-Solut are a brilliant option for businesses wanting to streamline their manufacturing processes.

Here are some of the products they use to help you achieve this:

  • The service cloud – this allows your customers to connect with a specialist or find answers to any questions they may have in a fast and traceable way. Keeping track of your customers’ needs and concerns allows you to support them and run your business more effectively and efficiently.
  • The sales cloud – this helps companies to increase their customer base. It gives them the ability to notice potential deals as well as the ability to close more deals, all while increasing overall productivity.
  • The sales force CPQ – this allows you to provide accurate pricing and it can increase your ability to send quotes more quickly
  • Manufacturing cloud – this can help you to create transparency through each process.

2. Kanban

Kanban is another great tool that manufacturing companies can use to streamline their business processes. It is a Japanese scheduling system for lean manufacturing. This tool allows you to highlight problem areas by measuring the cycle time and lead time of each step. One of the main benefits of this tool is that it can help you to avoid overcapacity.

Unlike many other continuous improvement tools, Kanban is less about revolutionizing and more about evolving. This method looks at each part of the process as a fluid and changeable piece.

3. PDCA Cycle

The Plan-Do-Check-Act Cycle allows you to test out hypotheses and ideas. The four stages of this cycle include:

  • Plan – set out your goals and work out how you will achieve them
  • Do – try out the first few steps of your plan to see how well they work
  • Check – keep an eye out for areas that can be improved. You can do this by evaluating each step you’ve implemented as you go along. This allows you to spot problems at each stage of the process.
  • Act/adjust – depending on what you find in your evaluation, make any necessary changes in order to meet your goals.

Most manufacturing businesses are eager to streamline the complex processes within their business. Streamlining these processes can not only increase overall productivity, but it can also increase profitability. However, streamlining these processes can often be time-consuming and daunting. This is where streamlining tools come in handy. Why not try using some of the above tools in your business to see what a difference they can make?

The Importance of Cleanliness in Your Manufacturing Facility

/in /by

StrategyDriven Tactical Execution Article |Manufacturing Facility|The Importance of Cleanliness in Your Manufacturing FacilityManufacturing facilities, regardless of what product you’re making, can get extremely dirty. With a variety of nooks and crannies for the dust and dirt to settle in, hard-to-clean equipment and machinery, and chemicals and particles in the air, a broom and dustpan just will not cut it. A clean facility is essential for the health and well-being of employees and the quality of your product. While cleanliness in any business is necessary, it’s even more vital to the manufacturing business, and here are some of the reasons why.

Makes a good impression

Clients often visit your manufacturing facility either for meetings, tours, or just to check on the progress of the production process. Sometimes, they can show up unannounced to do an audit and make sure that everything is up to their standard. A clean facility shows that you are professional and that your products are high-quality. If you have a potential buyer visiting for the first time, you must make a good impression if you want to close a sale. You will need industrial cleaning services that offer specialized cleaning for manufacturing. The cleaners should understand the manufacturing business, and the safety protocols to follow within different types of facility.

Improves efficiency

A dirty manufacturing facility operates less efficiently. When there is stuff lying all over the place, including scrap materials, empty boxes, and unused parts, it can become extremely disorganized. In manufacturing, it’s imperative that staff can find everything they need exactly when they need it. On top of that, throwing unused materials around and not having them in their right place can lead to wastage and losses. On top of that, cleaning dirty equipment takes time and time is money in manufacturing. If you have to stop the production line to clean up, you’re cutting down on production.
Boosts quality control

Regardless of what product your facility is making, if it gets loose particles or dirt in it, you may have to scrap it and waste materials, resources, and time. Orders almost always have deadlines, and you’ll have committed to producing a certain amount by a specific time. If you have multiple products contaminated with debris or dirt, your risk not completing the order in time. A clean facility means the products will always be good quality and ready at the required time.

Reduces workplace injuries

A messy and dirty facility is a recipe for disaster when it comes to employee safety. Suppose empty boxes are laying around, or even slippery floors due to a spillage, then an employee could slip and fall. Slips and falls are more dangerous in manufacturing facilities since employees could be carrying heavy or sharp items. The equipment and chemicals that employees work with also present hazards of their own, but when the facility isn’t clean, these hazards become more prevalent. Sharp materials, such as cut pieces of metal or glass left around as scrap could cause serious injury if not cleaned up.

For all these reasons, hiring an industrial cleaning service will help ensure that your manufacturing facility operates efficiently and safely.

3 Common Shipping Mistakes and How to Avoid Them

/in /by

StrategyDriven Tactical Execution Article |common shipping mistakes |3 Common Shipping Mistakes and How to Avoid ThemDid you know that UPS and FedEx each ship around 34 million packages each day?

If you’re looking to ship a package, you need to focus on how you can avoid certain kinds of shipping mistakes. If you don’t do this, your package might experience some kind of damage while it’s in transit.

Below you’ll discover three common shipping mistakes that people tend to make. If you avoid these shipping mistakes, your packages should arrive safely at your chosen destination.

Let’s begin!

1. Not Paying for the Right Kind of Shipping

One of the biggest mistakes people make is not paying for the right kind of shipping.

Most of the time, this happens because people are trying to save money. However, in some cases, trying to lower the cost of shipping can often lead to an increase in overall costs.

That’s because the item you’re shipping might ‘break’ due to the fact that you didn’t select the correct form of shipping.

In some cases, you might select the wrong kind of shipping, simply because you don’t know much about shipping. For instance, if you’re looking to ship a painting, you might use a ‘standard’ form of shipping.

Yet, in situations like this, couriers actually offer a dedicated form of shipping for those that want to ship paintings. If you use such shipping, your painting will receive special treatment, and this will lower the odds of it being damaged during transit.

Following this, always make sure you speak to your chosen courier company before you ship a given item. They’ll be able to tell you what kind of shipping is right for your chosen item, and this will then help you minimize any issues.

2. Not Packaging Your Items Properly

A lot of people don’t know how to pack items properly, and so their packages often experience an excessive amount of damage during transit.

If you want to package your items properly, you should use some bubble wrap, or even ‘packing peanuts.’ You might also want to invest in a high-quality box that will be able to withstand lots of bumps and scrapes.

3. Not Focusing on Presentation

Another thing that people forget about when it comes to shipping is presentation.

This is especially important if you’re shipping out items as a business, as your packaging can have a big impact on how people perceive you.

If you want your packages to look good, you might want to hire someone to help you with the package design. You should also think about coating your packages so the design doesn’t fade while the item is in transit.

If you’re going to coat your packages, you can generally choose from aqueous coating or UV coating. If you’d like to learn more about each option, this post takes a closer look at UV coating vs aqueous coating.

Will You Avoid These Common Shipping Mistakes?

If you avoid these common shipping mistakes, your package should arrive safely at your chosen destination.

In some cases, you might still experience shipping problems, even though you’re doing everything right. This can happen if you’re working with a lackluster courier, and so if you’re in this position, you might want to work with someone else.

Did you like reading this blog post? Go to our blog to see some of the other content we have to offer!