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Group - 5 - Section - B: Evaluation of A Third-Party Logistics Service Provider

The document evaluates two alternatives for the Wheels Group to achieve its goal of doubling sales in five years: 1) expanding its non-asset based Wheels International supply chain management business or 2) growing its asset-based Wheels Dedicated business. Both alternatives are estimated to provide reasonable 20% annual revenue growth. While Wheels Dedicated allows more control, Wheels International provides greater financial flexibility and margins. Given its expertise in 3PL, the recommendation is for Wheels Group to focus on expanding its non-asset Wheels International business.

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Rajat Ranjan
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79 views

Group - 5 - Section - B: Evaluation of A Third-Party Logistics Service Provider

The document evaluates two alternatives for the Wheels Group to achieve its goal of doubling sales in five years: 1) expanding its non-asset based Wheels International supply chain management business or 2) growing its asset-based Wheels Dedicated business. Both alternatives are estimated to provide reasonable 20% annual revenue growth. While Wheels Dedicated allows more control, Wheels International provides greater financial flexibility and margins. Given its expertise in 3PL, the recommendation is for Wheels Group to focus on expanding its non-asset Wheels International business.

Uploaded by

Rajat Ranjan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 15

The Wheels Group

EVALUATION OF A THIRD-PARTY
LOGISTICS SERVICE PROVIDER

Group - 5 || Section - B
Ayushi Jaiswal M082-20

Kartik Kapri M091-20

Mridul Agarwal D M098-20

Nethala Greeshma M101-20

Pritish Mehndiratta M106-20

Rajat Ranjan M111-20

Ramkumar R M112-20

Reddy Sanjana M113-20

Sonar Shruti Jagdish M123-20

Tanmay Sadana M128-20


Presentation Flow
1. Wheel group’s core
01 competencies

2. Wheels group add the value


02
for his customers

3. Revenue growth estimates


03
reasonable for the alternatives

4. Advantages and
04 Disadvantages with alternatives 05 5. Road Ahead
Introduction
 Wheels Group President, Peter Jamieson and the company's founders are exploring alternatives
to achieve the goal of doubling the company's sales in the next five years.

 The Wheels Group was founded by Doug Tozer in 1988 and started operations in 1988 as a non-
asset road and intermodal railway service provider.

 By 2002, Wheels Group had five subsidiaries: Wheels International, Wheels Dedicated, AIM
Integrated, Wheels Pacific and Wheels Logistics.
1. Wheel group’s core competencies
CORE COMPETENCIES

Deployment A Non Continued Leveraging its Combining Value


and usage of (international) focus and extensive technology & addition
leading Web- and light asset enhancemen supply chain operational based
based supply (dedicated) t of a people expertise, services to customer
chain strategy. centered technology provide focus
information culture capabilities logistics
system and logistics management
resources from purchase
order to final
delivery

01 02 03 04 05 06
2. Wheels group add the value for his
customers
VALUE ADDED FOR
CUSTOMERS
Route and load WDC,WFAT &
optimization for WADP,CAST-
customers dpm:Developed 3
proprietary
software tools

Tools used for cost Multi-mode


benchmarking, logistics
performance services:
measurement, core Delivery
root analysis, irrespective of
accessorial
load sizes
charges, carrier
evaluation
3. Revenue growth estimates reasonable for
the alternatives
ALTERNATIVES
REASONABILITY
Wheels International’s Wheels Dedicated
SCM Option DCCW Option
Wheels International’s revenues in the USA could grow Anticipated that the dedicated contract transportation
at annual rate of 20% sector could grow by 20% per annum
Non-asset-based domestic transportation management Warehousing / value-added sector would grow by 11%
sector for 3PLs could grow by 21% annually over next per annum
5 years
Non-asset-based international transportation Estimated that Wheels Dedicated could generate
management sector for 3PLs could grow by 10% sustainable growth at a rate of 18% to 20% annually
annually

Yes, the revenue growth


estimates are reasonable for Reasoning for Reasonability of Options
either of the two alternatives i.e
Wheels International’s, SCM  The company has achieved revenues of $100 million in the initial 15 years.
opportunity and Wheels
Dedicated DCCW opportunity so  A decision can be assumed by Wheels International, that is, to generate 20% of the overall revenue of
the final decision of alternative
the company in order to achieve 200 million in the next five years, to achieve 100% growth in the
depends upon other external
factors.
upcoming 5 years which requires the company to achieve 15% growth rate for the company which
doesnt
4. Advantages and Disadvantages associated
with each of the alternatives
Alternative 1: Wheels International
(Non-Asset based Model)

ADVANTAGES DISADVANTAGES

Financial Flexibility Unfavorable customer perception


Since it is a non-asset model, positive cash Customers may perceive the firm as a
flows can be generated in a shorter span “broker”, less capable of providing logistics

Potentially lower
Reduced Complexity
Includes reduced cost of managing assets
valuation
Due to negative customer perception
and managing 3 PLs

Higher Margins High investment in intangible assets


With additional services consolidated with To build customer loyalty and relationships
logistics, the firm enjoys lesser competition
Alternative 2: Wheels Dedicated
(Asset based Model)

ADVANTAGES DISADVANTAGES

Any changes such as new technologies, etc. Risks and information system costs to be borne by
in the supply chain can be easily implemented Wheels Dedicated

Generation of higher revenue in proportion High Competition from competitors to find good
for the group logisticians

Shortage of trucking capacity by diverting its High Capex Cost due to technical system to monitor
route to less trucked model can be asset utilization which might hinder their low cost
optimized as a market opportunity solution providing ability
Lack of expertise with skilled manpower and
More control resources in the asset model might affect their
operations and quality of solutions provided
5. What should Jamieson and Tozer do
The Decision

Managerial Observation
❏ Slightly higher expected growth in Wheels International
❏ Expertise in 3PL
❏ A more favourable operating and financial leverage exists in 3PL business

Recommendation

Wheels Group should focus on 3PL business


THANKS!

CREDITS: This presentation template was created by Slidesgo, including

Group 5 || Section - B
icons by Flaticon, and infographics & images by Freepik

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