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National Logistics Management

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Post information and wait for responses. Ease of sharing information between ... Cost savings of one shipper can be wiped out when a late shipment occurs ... – PowerPoint PPT presentation

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Title: National Logistics Management


1
National Logistics Management
Turn of Events? Turn to NLM.
  • Cindy Westcott
  • Gerri McCann
  • John True

2
3PL Opportunities Provided by the Internet
  • Real-time information
  • Track loads
  • No need for traditional phone line link
  • Common platform for sharing
  • Opportunity to reach larger audience
  • Post information and wait for responses
  • Ease of sharing information between supplier
    ? 3PL ? customer
  • No EDI required

3
3PL Opportunities with Internet
  • More value brought to industry
  • Traditionally 6-10 capacity not utilized
  • Internet allows for more options to optimize
    underutilized capacity
  • Quicker turnaround
  • More accurate orders

4
3PL Opportunities with Internet
  • Non-asset based 3PLs
  • Do not own any transportation methods
  • Rely solely on transportation firms to deliver
    scheduled loads
  • Standard processes can be automated
  • Tech savvy customers can complete their own forms
  • No large staff required to answer phones

5
Does this industry have good structure?
6
3PL Industry
Competitive Advantage
Low Cost
Differentiation
Logistics.com Celarix.com Transplace.com
Some offer value adding services - Size
- Modes of Transp. -
Location - Storage
Broad
Competitive Scope
National Transportation Exchange
(unused space)
National Logistics Management (premium
freight)
Narrow
7
NLM Target Niche Market
  • Premium Freight
  • Items that are high priority
  • Delays cost 20-50k per MINUTE
  • Not subject to standard contract rates
  • Potential for high profit margins due to high
    risks taken to deliver loads
  • Automaker does not care about being charged high
    rates
  • Reputation of shipper more important than cost
  • Cost savings of one shipper can be wiped out when
    a late shipment occurs

8
Industry Structure Porter Model
Source Applegate. Lynda M. Robert D. Austin, and
F. Warren McFarlan, Corporate Information
Strategy and Management. Burr Ridge, IL
McGraw-Hill, 2002.
9
3PL Industry Pre-Internet
  • Suppliers
  • Manufacturers for big three automakers
  • Very strong power
  • Need cargo picked up at right time
  • Customers
  • Big three automakers
  • Very strong power
  • Need cargo received at right time at right
    location

10
3PL Industry Pre-Internet
  • Barriers to Entry
  • Must be on plant manger contact list
  • Expensive to have fleet available
  • Must have reasonable size fleet always ready
  • Staff on hand to take phone calls
  • Traditionally 6.3 9.6 of costs spent on
    processing transactions
  • Substitutes
  • In house logistics management
  • Company owned transportation
  • Sign contracts to single or few companies

11
3PL Industry Post-Internet
  • Suppliers and Customers
  • More power
  • More 3PL companies to chose from
  • More cost conscious to decrease costs in value
    chain
  • High value is expected
  • Commoditized industry

12
3PL Industry Post-Internet
  • Barriers to Entry
  • Less expensive due to website interfaces
  • Not as many calls have to be answered
  • More steps in process automated
  • Still requires capital investment to start
  • Data management allows for outsourcing of
    trucking
  • Strong reputation required
  • Substitutes
  • In house logistics management
  • Company owned transportation
  • Sign contracts to single or few companies

13
Why would a customer use a 3PL service, such a
NLM?
  • Lack of knowledge of shipping industry
  • Lack of labor force to manage logistics
  • Need for low cost transportation of goods
  • Time sensitive deliveries

14
Advantages and Disadvantages to using 3PLs
15
Advantages for Customer with 3PLs
  • Single point of contact to reach multiple
    potential shippers
  • Potential cost savings due to competition
  • Reduction of company overhead
  • Provides labor and management of labor
  • 3PL maintains their own facilities to manage
    their business
  • Specialization in field
  • Experience More efficient Lower costs

16
Disadvantages for Customer with 3PLs
  • Having to pay extra company profit margin in
    supply chain
  • 3PL may not select most cost effective supplier
    of transportation
  • May be biased to some suppliers
  • Limited access to suppliers of transportation
  • Another potential for human error that could
    result in increased costs

17
Winners and Losers of a 3PL Dominated Industry
18
Winners in a 3PL Dominated Industry
  • 3PLs
  • Best prices
  • Transportation is a commodity
  • Will continue to grow if have low prices
  • Add Value
  • Industry differentiation is as good as the value
    it adds
  • IT employees at 3PLs
  • Web based applications require constant
    modifications
  • Customers
  • Costs continue to lower as more 3PLs enter the
    industry
  • Cost savings can be passed to stockholders

19
Losers in a 3PL Dominated Industry
  • 3PLs
  • Low prices
  • Only one low cost provider
  • Not enough room to support many 3PLs
  • Add Value
  • If customer can not quantify value, it is not
    value
  • Employees in 3PL industry
  • Web based software will continue to replace need
    for humans
  • More technical savvy employees will be required
    as industry advances

20
NLMs Expedited Management System
  • Web based format
  • Many steps automated by using EMS software
  • Load optimization
  • Sharing of information
  • Customer and NLM staff monitors shipments using
    real-time data
  • Only trusted transportation providers used

21
NLMs Expedited Management System
22
NLM Role in the Shipping Process
  • Receive orders
  • Optimize
  • Post orders
  • Determine best carrier
  • Dispatch carrier
  • Monitor delivery
  • Real-time information from shipper
  • Apply corrective action when needed
  • Follow Up
  • Ensure customer satisfaction

23
Potential growth strategies for NLM
24
Possible Growth Strategies
  • Organic
  • Grow naturally as it has in the past
  • Slow, but business plan has worked
  • Proactive Partnerships
  • Explore partnerships with other companies in
    industry
  • Cover more than existing niche market

25
Possible Growth Strategies
  • New Playing Fields
  • Reach out to smaller shippers
  • Be a dedicated 3PL for companies with multiple
    shipping contracts
  • Profits may be lower
  • Could create diverse customer base
  • Branch out to other industries
  • Existing system easily modified for other
    industries
  • Possible modify EMS to automatically award jobs

26
Recommendations for NLM Growth
27
Recommendations for What Not to Focus on for
Growth
  • Organic Growth
  • No need to pursue as long as strong player in
    industry
  • Will come with time
  • Proactive Partnerships
  • Other large 3PLs always under pressure to be low
    cost provider
  • Highly competitive industry with decrease in
    profit margins as more 3PLs join industry

28
Recommendations for Growth
  • New Playing Fields
  • EMS software
  • Easily be adapted for other industries
  • Scalable to fit customer or industry needs
  • Minimal expense to expand
  • Automation of shipment awarding
  • Scoring of received bids can be automated along
    with awarding of shipment to carrier
  • Have customer set most important criteria for
    scoring of bids
  • Force shipper to be responsible for shipment
    tracking
  • Notify customer if shipment will not make
    deadline
  • No need to track specifically if non-critical
    load

29
Questions ??
  • Comments??
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