National Logistics Management NLM

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National Logistics Management (NLM)
TEAM 1
Ernesto Roedenbeck Keith Salach Lynn
Schuvie Stacie Rupiper Smita Srivastava
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3 PL Industry Segmentation

• 3PL (Third Party Logistics)
• Asset-Based 3PLs FedEx and Ryder own their own
  shipping fleets and typically provide a wider
  range of services.
• Non Asset-Based 3PLs Leading Air and
  Multi-Modal do not own their own shipping
  assets.
• Internet-Based 3PLs Asset or non-asset based.
  Some of these companies include NLM,
  Logistics.com, and Celarix.com

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National Logistics Management
NLM Non-Asset Based Internet Based

• Founded in 1991 by CEO, Scott Taylor.
• The multi-million dollar firm is Detroit based,
  and performs the vast majority of its services
  for the automobile industry

Asset Based
Non Asset Based
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Industry Environment

• The current 3PL business environment is ramping
  up quickly
• Even those who successfully implement IT will not
  be free from competition if they are unable to
  keep it functioning at peak levels with highly
  trained personnel.
• The 3PL environment has entered the limitless
  world of communication and computation. Todays
  IT is not likely to remain dominant in two years
  time.

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NLM Timeline
1988 Taylor founded Artisan, a 3PL to handle
specialty product shipments and logistics for
the big 3.
1991 NLM founded
1995 During mid to late 1990s the internet
became the common platform for sharing
information between multiple parties
1993 1996
1996 1999
1991 1993
OEM PlantsSuppliersShipments
430012,000
483000373,000
71,000122,000
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EMS
Carrier Bidding Window Opened for 30 Minutes
by NLM Specialist
Supplier Enters Shipping Request for Premium
Freight
NLM Specialist Reviews Customer Information
Transportation Type Requirements
EMS Ranks Bids by Customer Parameters (Cost,
Quality Rating, Availability, etc.)
Carrier Enters and Supplier Confirms Freight
Delivery on EMS
NLM Coordinator Awards Bid to Carrier
EMS Tracks Shipment Status Using Carrier
Receiver Entered Information
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Creation, Growth, and Future of NLM

• How was NLM Created? By Whom?

How did NLM Grow?
How will the next steps for NLM be determined?
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Creation

• How was NLM Created? By Whom?

Scott Taylors Background

• Auto industry knowledge via work with Artisan

Identified Opportunity

• Automakers/suppliers made hundreds of premium
  shipments a day that were LTL (less than
  truckload)
• In current process, manufacturer would call
  preferred carrier
• To streamline efficiencies in premium freight
  transactions

The NLM Process Advantages

• Bids for premium freight were opened to many
  carriers to increase competitive environment and
  thereby decreasing prices
• Bids granted to high quality carriers with proven
  track records for on time delivery

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Growth
How did NLM Grow?
EMS Fostered Growth

• EMS technology allowed carriers to view all
  premium shipments looking for bids
• EMS technology allowed manufacturers to view
  information pertaining to premium shipments in
  route such as part s and status

Positive Performance Pays Off

• Availability of data has allowed the manufacturer
  to make a more educated, cost-effective decision
  for shipping premium freight and has fostered a
  more competitive environment among the carriers
• NLMs interaction in the process resulted in
  savings to the manufacturers of 25 - 35
• The success of NLM paved the way for the
  manufacturer to add more plants and for more
  carriers to then be included in the process

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Future
How will the next steps for NLM be determined?
Scott Taylor

• All considerations and decisions facing the
  future of NLM will be determined by Scott Taylor

Competitive and Capital Considerations

• NLMs success will provoke interest amongst the
  larger 3PLs. Their entrance into this niche
  market may be inevitable
• Staying optimally competitive means continuous
  improvement to technology such as EMS or other
  systems needed in the future
• Advancement in technology and personnel resources
  requires capital

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SWOT Analysis
Strength
Opportunity
Weakness
Threat
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SWOT Analysis
Strength

• First Mover Advantage
• Proven Track Record of Success (25 - 35 cost
  savings)
• Relationship Building/Maintenance
• EMS
• NLMs Management Staff Commitment Level
• NLMs culture and business process are quick to
  adapt

Opportunity
Weakness
Threat
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SWOT Analysis
Strength
Opportunity
Weakness
Threat

• Lack of Substantial Capital Pool
• Customers are very specialized (one major
  customer)
• HR, high turn over rates, low pay
• Customers performing over 70 of transactions via
  phone rather than internet
• Too many personnel allocated to logistics

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SWOT Analysis
Opportunity

• 3rd Party premium freight intervention is an
  untapped niche market in other areas of the
  automotive field as well as other industries
• Leverage existing relationship with carriers to
  access other potential manufacturer customers
• Identify small niche business as an advantage
  non-biased, performance based, bid awarding
  process has been key to success
• Longevity of shipping industry is ensured
• Future technological advances have potential to
  increase efficiencies

Strength
Weakness
Threat
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SWOT Analysis
Strength
Opportunity
Threat
Weakness

• Growing niche market will be enticing to larger
  3PLs
• Larger 3PLs may have advantage in leveraging
  existing relationships within the industry
• Current trend towards consolidation and
  partnering of logistics companies

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SWOT Diagnosis
Strength
Opportunity

• First Mover Advantage
• Proven Track Record of Success (25 - 35 cost
  savings)
• Relationship Building/Maintenance
• EMS

• Tap other customers and other markets
• Identify small niche business as an advantage
• Longevity of shipping industry is ensured

STRENGTH
MAXIMIZE
Weakness
Threat

• Lack of Substantial Capital Pool
• Customers are very specialized (one major
  customer)
• Customers performing over 70 of transactions via
  phone rather than internet

• Growing niche market will be enticing to larger
  3PLs
• Larger 3PLs may have advantage in leveraging
  existing relationships within the industry

MINIMIZE
OPTIMIZE
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Future Decisions

• Scott Taylor is faced with the following dilemma
  in 1999
• Find a venture capitalist (VC) and leverage NLMs
  existing infrastructure to grow the firm quickly
• Pros
• Large resources would attract new customers
  partners
• Rapid Growth
• Aggressive approach to Internet B2B marketplace
• Cons
• Scott Taylor is historically against rapid growth
• Continue to have slow, steady growth by
  reinvesting profits
• Pros
• Taylor would retain sole shareholder status
• Maintain company culture
• Reinvest profits based on needs ambitions
• Cons
• Market players rapidly changing, threat to NLMs
  market niche
• Slow growth

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Future Decisions

• Scott Taylor is faced with the following dilemma
  (contd.)
• Partner with a larger logistics company
• Pros
• Expand into multiple modes of transportation
• Tap other customers within the automotive network
• Service across a wider range of geographies
• Cons
• Availability and interest of a merger with a
  large logistics provider may not exist
• Trust and personal relationship aspects of
  business lost
• Convincing companies that NLM is complementary to
  their business, rather than competitive
• Sell his company

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Recommendation

• Options/Strategies for Growth

• Find a venture capitalist (VC) and leverage NLMs
  existing infrastructure to grow the firm quickly
• Continue to have slow, steady growth by
  reinvesting profits
• Partner with a larger logistics company
• Sell his company

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Our Recommendation

• Option/Strategy for Growth

Find a venture capitalist (VC) to leverage NLMs
existing infrastructure to grow the firm quickly
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Explanation

• Why venture capitalist (VC)?
• Year Avg. VC Funds
  Avg. Amount of Funding
• 1998 165
  million 5.15 million
• 1999 220
  million 9.63 million
• Huge potential for VC funding.
• Other Internet-based 3PLs like Logistics (1987),
  Celarix, Inc. (1998), Transplace (2000) and
  National Transportation Exchange (1994) had
  strong venture capitalist backing.

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Business Model Evolution
Impact of VC Funds Infrastructure Leveraging
Extend Enter new line of business and / or add
new business models.

• New customers
• Expand EMS by incorporating new services and
  capabilities, which
• Less time lost in developing new system

Enhance Add functionality or features to current
product / service offerings or improve
performance of existing business.
Expand Add new product / service offerings or
enter new geographic markets.

• Hire logistics coordinators exclusive for new
  contracts

Exit Exit a business or market or drop a
product/ service offering.
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Business Model Evolution
Impact of VC Funds Infrastructure Leveraging

• New business opportunity New customers
• Has expertise, capabilities, and relationships
  for tendering new business

Extend Enter new line of business and / or add
new business models.

• Needs funds to develop

Enhance Add functionality or features to current
product / service offerings or improve
performance of existing business.
Expand Add new product / service offerings or
enter new geographic markets.
Exit Exit a business or market or drop a
product/ service offering.
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Business Model Evolution
Impact of VC Funds Infrastructure Leveraging

• Make necessary changes to gain private equity
  backing
• Become full featured internet B2B player
• Diversify customer base to lessen the impact of
  any one companys defection
• Service both carriers and shippers

Extend Enter new line of business and / or add
new business models.
Enhance Add functionality or features to current
product / service offerings or improve
performance of existing business.
Expand Add new product / service offerings or
enter new geographic markets.

• Need to enter the internet marketplace more
  aggressively
• Need more marketing for a competitive presence

Exit Exit a business or market or drop a
product/ service offering.
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Outcome
Facts

• Scott Taylor has already proven his ability to
  reach customers on a personal level.
• He is able to gain their trust.
• He is motivated to provide a service has
  succeeded in the past.

If He

• Remains a private entity
• Finds a Venture Capitalist
• Develops EMS into the IT program he needs and
  envisions

He Will

• Enhance the customers experience with NLM
• Extend his product/service base, and
• Expand the customer base

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• Questions