An illustrative diagnostic of margin leakage in a multi-site logistics group. When definitions differ and allocations vary, reported profitability becomes a negotiated outcome rather than a governed one.
This is an illustrative example scenario, based on common challenges we see in multi-site logistics environments. It is not a case study from a specific client, but reflects the types of findings a diagnostic typically produces.
The logistics group operated across three regional sites, each with its own fleet mix, client base, and operational leadership. At consolidated level, group financials showed acceptable margins. Performance was stable. There were no obvious warning signs.
Yet internally, friction was growing.
Site managers challenged head office profitability reports. Certain routes were described locally as “solid earners,” while group-level analysis showed them as marginal. Pricing decisions were increasingly debated rather than accepted. Finance spent more time reconciling numbers than analysing them.
The issue was not declining performance. It was declining confidence.
An independent diagnostic was initiated to determine whether margin leakage existed — and whether reported figures could support route-level pricing and capital allocation decisions.
Initial interviews revealed consistent themes:
None of these issues appeared individually material. Collectively, they suggested structural inconsistency.
The core question became:
Is margin genuinely under pressure, or is the definition of margin unstable?
The review focused on three areas:
No systems were changed. The objective was clarity, not redesign.
Each site used the term “shipment cost,” but the underlying composition differed materially.
Driver time was similarly inconsistent:
Depreciation and maintenance were treated differently across sites:
Toll costs were included in shipment-level reporting at one site and absorbed into general expenses at the others.
Subcontractor rates were coded inconsistently:
There was no group-approved definition of what constituted shipment-level cost.
The consequence was predictable:
Routes were not being compared on a like-for-like basis.
Revenue was recorded in the Transport Management System (TMS).
Costs were recorded in the ERP.
There was no shared shipment identifier.
Reconciliation occurred monthly in a spreadsheet maintained by a single individual. The file performed several critical functions:
This spreadsheet was not formally governed:
Margin figures were therefore:
This created key person risk and audit exposure.
Route-level pricing reviews relied on these margin reports.
Management believed they were making evidence-based decisions:
In reality:
The diagnostic did not identify dramatic hidden losses.
Instead, it found something more subtle and more serious:
The organisation could not say with confidence which routes genuinely created economic value.
The instinctive reaction was to question system capability.
However, the root causes were governance and definition failures:
Systems reflected these ambiguities. They did not create them.
Until leadership agreed on:
No technology change would stabilise reporting.
Before considering any structural or tooling changes, the group:
The objective was not to achieve perfect precision.
It was to achieve defensible consistency.
Only once this was in place could route-level profitability become a reliable input into pricing and capital decisions.
In multi-site logistics groups, margin leakage often hides behind inconsistency rather than error.
When:
Reported profitability becomes a negotiated outcome rather than a governed one.
In this case, the group was not materially loss-making.
But it was operating without a stable margin foundation.
Correcting that restored confidence in pricing, reduced internal friction, and allowed leadership to evaluate performance without debating the numbers themselves.
The difference was not technological.
It was definitional.