NLM Analysis Essay

This essay has a total of 2815 words and 19 pages.

NLM Analysis

Part I
Logistic Business
Transportation, Process to manufactures & 3 keys
Shipper needs to ship product or goods by using Carrier to Receiver

3rd Party Logistics Provider / Service

Shipper Receiver

Type of 3PLs

Asset-Based Non-Asset-Based

Revenue 100% 100%
COGS 80 - 85% 70 - 74%
Gross Profit Margin 15 - 20% 26 - 30%

Asset-Based: Owned its own fleet of transportation vehicles i.e. truck, airplanes, railroads and ocean freighters

Non-Asset-Based: without any of their own physical assets.

Freight Transportation
Multiple shipments: air, water, truck, and rail
· Truck segment: Ryder, Penske, and Emery Freight to small owner-operated trucking firm
· In competition: smaller firms developed specialty service or served niche markets
· Large firms expanded into multiple modes of transport and provide service across a wide range
· All shipper demanded Goals be transported safety& timely fashion
· Price importance all companies (especially large, automakers) want to reduce cost of delivery to customer
· Big 3 automaker (Ford, GM, Daimler Chrysler) looking to better management of supply
chain (the series of transaction & interaction between suppliers, buyers, and
intermediaries) to minimize costs while improving quality

· All parties - manufacturers, 3PLs, suppliers - could participate in EDI (electronic data interchange)

NLM Overview
National Logistics Management is the only North American Third Party Logistics provider to
specialize solely in premium freight for manufacturing industries, including automotive
manufacturers. It is non-asset based and has a unique business model that employs its
proprietary software to utilize the Internet to determine optimal shipping modes; export
shipments to its vast carrier base including ground, air freight, and air charter; receive
bids back form its carrier network; evaluate the lowest bids and carrier quality ratings;
and coordinate shipments based on best price and carrier quality ratings all within a
30-minute window.

Company profile
Founded in 1991
Over 1.3 Million shipments successfully managed.
Network in North America:
200 Assembly and Manufacturing Plants
6,800 Suppliers and 300 Ground, Air Freight, and Air Charter Carriers
Financial Information
• 1999 Revenues: $ 7.3million No debt
• Total share: $ 825 million (10% MKT Share)
• Employee: 111
- 65 in Detroit, Michigan Office
- 36 Logistic coordinators & Supervisors
- 7 Audit Team
- 1 Marketing & Business Development
- 2 IT Team

Business Model
Business to Business
NLM to Big 3 automaker (Ford, GM, Daimler Chrysler)
NLM manages the return of containers to over 130 suppliers throughout North America.
The returnable container program is part of an industry-wide greening strategy to reduce
landfill use and decrease production-source pollution.

Suppliers ship their products to the plant in returnable, reusable plastic containers.
Most containers are returned to the suppliers within a 12-24 hour period. NLM determines
release quantities and ship frequencies for containers and monitors supplier inventories.
One measure of this program's success is evident in the excellent air quality at the plant
and the overall quality of the transmissions.

Core Competencies
1. IT Infrastructure
a. Internet Based
b. Unique EMS program
c. Carriers' location tracking with Global Positioning System (GPS)
2. Knowledge Worker
a. Strong Team
b. Entrepreneurial Spirit
3. Reputation
a. Based on Best Price & Carrier Quality
b. 90% On-Time Delivery
c. Complete Client Satisfaction
d. Deadline-Driven Industry
4. Alliance
a. Strong connection with carriers
b. Artisan & TopFlite Alliance

Part II
The Analysis

5 Forces Analysis
1st Force: Supplier Power is ‘LOW'
· Several carrier company
· e-Auction system
2nd Force: Buyer Power is ‘MODERATE'
· Switching cost is high
· Big in value and volume customer
3rd Force: Barrier to Entry is ‘HIGH'
· Niche Market
· Strong relationship with customer
4th Force: Threat of Substituted is ‘LOW'
· Low direct competitor
· Need expert to deal with a job
· Switch cost is high
5th Force: Industry Rivalry is ‘HIGH'
· PL market is growing significantly
· Many players in market
· Switch cost is high

SWOT Analysis
‘S' Strength Factors
· Internet based
· Good reputation
· Unique EMS program
· Monthly management report provided to customers
· Timely tracking in every tasks
· Qualified carriers selection
· Fast speed processing
· Carriers' location tracking with Global Positioning System
· Focus on a special shipment with specialists
· Strong connection with carriers
· Deep understanding premium freight activities
· Supplemental services providing
· Strong customer service team
· No transportation asset

‘W' Weakness Factors
· No effective supplier compliance system
· In sufficient IT team
· High staff turnover
· No transportation asset

‘O' Opportunities Factors
· 3PLs boom
· No direct competitor
· Expand service to other automakers
· Expand service to other market
· Expand service to other area
· Growth Economic in North America

‘T' Threat Factors
· Rely on 3 big automakers
· Other internet based 3PL invasion
· Increasing fuel price

Part III
Focus on Technology

Will Internet Exchanges Replace Logistics Providers?
Absolutely NOT, because
· 3PLs will continue to benefit from shipper outsourcing, which is driving 30% annual growth
· Technology solves just one element of the SCM (Supply Chain Management) problem
· Mixed impact on logistics providers
· Some will be replaced by the Internet
· Smart companies will incorporate Internet technology instead of being eliminated by IT

e-Auction Overview
Electronic reverse auctions (e-Auctions) are an innovative procurement technique that use
secured Internet-based technology. The sense of competition is heightened as suppliers
compete in real time by bidding lower as the auction unfolds.

e-Auctions offer efficient, open and transparent negotiations as part of a full
procurement process. This means that the time needed to carry out competitive negotiations
are reduced as it starts at or near the market price. e-Auctions may either be structured
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