Supply Chain Success Stories

Fast-growing 3PD got its start—and its money—in Atlanta

While working for Home Depot in the 1990s, one of Karl Meyer’s jobs was to improve the quality and efficiency of the professional customer delivery program. That meant figuring out how to make the average delivery less expensive for Home Depot.

Everything was being delivered on third-party flatbed trucks. It would be less expensive, Meyer knew, to deliver certain products, such as appliances, on box trucks. The problem is Meyer couldn’t find a national, professional box truck service with consistent customer service.

He got the idea to start his own, and in 2001, 3PD was formed. The new company specialized in dedicated fleets, with trucks bearing the name of its customers. At first, customers were local, including Dekor (started by another Home Depot alum Jim Inglis). Trained driver teams wore uniforms and installed and assembled products. The company handled only last-mile deliveries, allowing it to become the leader in this niche.

By the end of the first year, 3pd was big enough to bid (successfully) on Home Depot business. This paved the way for operations in Denver, Jacksonville, Portland, Phoenix, Salt Lake City, New York and other markets.

In 2002, more big-time clients signed on, including GE and Lowe’s. Growth continued, and by 2004, revenue was $100 million. The next year, it was $135 million. In 2008, revenue was close to $300 million. Along the way, 3pd raised money, first from a local angel investor and later from Arcapita, which has an Atlanta office. 3PD bought two companies and expanded its offerings. Nowadays, in addition to its core dedicated fleet business, 3PD offers so-called transactional business (when a retailer that doesn’t regularly do deliveries hires 3pd to deliver a large product such as a pool table).

3pd has 1,700 driver delivery teams, 600 support employees and 500 locations throughout the U.S.

Meyer, a native of metro Atlanta, said his hometown has been the right place to grow 3pd. There’s a good pool of logistics professionals for recruiting, thanks to Georgia Tech’s top-ranked industrial engineering program and other large companies with logistics focuses, such as Home Depot, UPS, Georgia-Pacific and Manhattan Associates. The quality of life in Atlanta makes it easy to woo employees from other places. He also said that when it comes time to raise money, Atlanta is as good a place as any outside of New York.

"Atlanta provides a large pool of potential talent, a reasonable cost of living, a great airport and near perfect weather, and I’m finally used to our engineering department turning from LXE silver and blue to Georgia Tech blue & gold during football season."

Jim Childress
President and General Manager,
LXE Inc.

Enabling companies to efficiently track inventory with RFID has become a reality for companies such as LXE Inc. A subsidiary of wireless systems maker EMS Technologies, metro Atlanta-based LXE is a leading manufacturer of industrial wireless data collection and transaction processing solutions for supply chain execution applications.

Founded in 1970, LXE began as the Digital Products Group of EMS Technologies. EMS was quick to see the potential for the wider business community of the ultra-rugged and reliable technology it had developed, so LXE was born as the first company to offer wireless data products for use in supporting logistics and material handling applications.

The company’s products include rugged handheld and vehicle mounted computers, advanced auto-ID technologies, and wireless networking products. LXE also offers a full range of turnkey services, including radio integration, project and installation management, network design, technical support, and repair services.

Currently LXE has over 400 employees.
 

Delta Air Lines has the largest cargo business among passenger airlines and recently broadened its reach further through a merger with Northwest Airlines. As it grows, Delta Cargo is also overhauling its service. The upside for Atlanta: Local companies can ship cargo anywhere in the world with relative ease.

Delta Cargo was already growing organically (faster than any other carrier) when Delta merged with Northwest in the fall of 2008. Through the merger, Delta gained new routes to Asia as well as about 14 dedicated freighters that carry cargo primarily to Asia. (Most cargo is carried in the belly of passenger flights.)

Delta generates more revenue through cargo than any other passenger airline. Delta Cargo, which employees 1,500 people, posted roughly $1.45 billion in revenue in 2008.

Delta Cargo is a member of SkyTeam Cargo, the world’s largest global airline cargo alliance. Other members include Aeromexico Cargo, Air France Cargo, Alitalia Cargo, CSA Czech Airlines Cargo, KLM Cargo, and Korean Air Cargo. SkyTeam Cargo offers a global network with over 16,000 daily flights spanning 6 continents. The alliance employs more than 10,000 people.

“This is compelling because we truly have the only global network,” said Neel Shah, vice president, Delta Cargo. “What that means is that we are connecting Atlanta with the world.”

As it grows, Delta Cargo is also rethinking how it provides its services “from acceptance to delivery,” said Shah, who joined Delta Cargo in early 2008 and heads a new management team for the division.

The company implemented a bar code scanning system to better track freight coming in and out. It also built a perishable center, which keeps fruits, vegetables, pharmaceuticals and other items in a temperature-controlled holding center. The sales force is now global and the company has realigned its product portfolio.

“We are focused on operations because the service you provide is your calling card in the industry,” Shah said

Delta cargo offers a variety of products to accommodate shippers’ needs. One product, called DASH, is an expedited delivery service for products that weigh less than 100 pounds. It is much faster than FedEx. An example of a customer is Quest Diagnostics, which uses DASH to ship blood for testing.

Delta Cargo also transports human remains, live animals and many other products.

Delta Cargo benefits from being in Atlanta because of the city’s business-friendly environment and its location, Shah said. Companies from Florida to Tennessee to as far away as Texas forward their freight to Atlanta.

The benefit for Atlanta is that Delta Cargo’s growth and improved service is prompting customers, such as DHL, to shift operations here.

“Many of our customers are moving more of their business to Atlanta,” Shah said.
 

For Alpharetta-based Coyote Logistics, the name of the game is growth. The third-party logistics provider has been able to grow quickly, at least in part because of its exceptional technology.

“Most companies in this industry are technology challenged,” said president Mitch Bernet. “We have technology that is fully integrated across all modes of logistics.”

He added that the firm has nine programmers on staff and that Coyote’s technology can easily be customized for each customer.

“All this makes us incredibly easy to do business with,” he said.

Here’s how the Coyote story goes. Bernet moved from San Francisco to Alpharetta to start Integra Logistics in January 2003. He and his business partner aimed to sell their technology to logistics providers. However, their business model quickly changed and they decided to use their technology instead to become a logistics provider.

The company grew to $65 million in revenue by 2007, attracting the attention of Inc. magazine, which named Integra the fastest-growing logistics company in the country and the 30th fastest growing company overall.

The growth also got noticed by private equity firms, and many came courting. In February 2008, Warburg Pincus (which owns big players such as Bausch & Lomb) bought Integra, along with two other firms, Chicago-based Coyote Logistics and Caen, France-based eGlobe. Warburg merged the three firms, and growth continued.

In 2007, the three firms posted combined revenue of $100 million. In 2008, that number doubled. The new company, called Coyote Logistics, bought another Atlanta firm, General Freight Services, bringing annual revenue to $280 million.

Clients include Coca-Cola, International Paper and Staples. Coyote employees 350 people. The non-asset-based company contracts with trucking companies and railroads to get goods delivered.

Bernet has never questioned his decision to move to Atlanta, which offers a relatively low cost of living compared to other technology centers such as his former home San Francisco. It has also been a good place to grow his company, which hires a lot of college graduates and puts them through a year-long training process. Three full-time recruiters visit large SEC and ACC schools. Atlanta is an easy place to recruit young people, most of whom live in Midtown and make the easy commute to Alpharetta. “This is a big city where they want to live,” Bernet said.

The story of Chainalytics is “really about filling a void in the market,” said founder Mike Kilgore.

Kilgore, always captivated by transportation and logistics, got an undergraduate degree in transportation/physical distribution from Auburn University and a master’s of science in business logistics from Penn State. He went to work at Ernst & Young to specialize in supply chain management, specifically focusing on designing networks of manufacturing and distribution facilities for companies. While Kilgore had great success applying supply chain software for his clients, the large consultancy took too much of a generalist approach – exposing him to a wide variety of services and industries, but limiting his specialization in supply chain analysis.

To further advance the way supply chain decisions were made, he left to work in the supply chain software industry in the late 1990s. After becoming frustrated with software’s pressure to “put a square peg in a round hole”, he decided to return to his roots of consulting. He knew that working at a big firm would offer the same impediments the second time around, so he decided to start his own firm specializing in supply chain analytics. He realized a need for a service that provided optimal, but practical analysis – one that would assist companies with their most important decisions like to move production overseas, switch suppliers, or relocate inventory.

“I knew we needed a highly experienced and skilled team to help executives make better decisions,” he said. “And this idea became our business. We help companies make better decisions through analytics. We thrive on complexity. The human brain cannot handle that much complexity, so we use tools and techniques that allow us to sift through the complexity and make the right decisions obvious.” Working with CEOs of Global 3,500 companies, Mike’s company has gone on to profitably deliver more than a billion in savings to its clients.

That was in 2001, and today Chainalytics employs almost 50 people around the globe with roughly one-half of the team in Atlanta. While its clients are national and even global in scope, Chainalytics has picked cities like Atlanta, Denver, and Chicago to lay its roots because of their ability to attract talent. Atlanta is an easy place to recruit people because of the good quality of life. That’s important, Kilgore said, because his company is so specialized that “when we find someone with the experience, knowledge, and skills we want, there are few substitutes.”

Atlanta has also been a good home for Chainalytics because of the large logistics community – Kilgore jokingly refers to it as the “Atlanta Logistics Mafia” – that has been instrumental in Chainalytics’ ability to network and recruit the right candidates. This base of supply chain professionals is enhanced by the strength and focus of Georgia Tech’s industrial engineering program, which has a strong presence in supply chain.

Chainalytics, named a finalist for Logistics Company of the Year in 2008 by the Metro Atlanta Chamber of Commerce, has enjoyed roughly 40 percent compounded annual growth since its founding. Kilgore hopes to eke out a few more points of growth this year, despite the recession and a decline in the total market. These days, Chainalytics regularly competes against big consulting firms for business—and wins.  “In 2009, if we just hold the line on revenue, we will gain market share from our competitors.”

“Our differentiation is our expertise. There is no burn and churn in our business. We partner with our clients for the long haul and work diligently to help them uncover not only the optimal decisions, but also the ones with the lowest risk and highest return,” said Kilgore.

Chainalytics still does plenty of network design, its flagship service in the early days. The firm also helps clients solve business problems related to other facets of supply chain, such as transportation management, transportation procurement, inventory management and portfolio management. Its Model-Based Benchmarking Consortium – that now contains over 70 companies representing over $15 billion in freight spend -- holds its annual summit in Atlanta each year.

"When we relocated here back in 1995 Atlanta was already on its way to becoming the technology epicenter of the southeast. We saw this city as a place of tremendous opportunity both in terms of the recruitment pool with Georgia Tech right in our backyard and the centralized location for travel."

Pete Sinisgalli
President and CEO,
Manhattan Associates

Manhattan Associates: A High-Tech Growth Story in Atlanta

Manhattan Associates was founded in—and took its name from—Manhattan Beach, Calif. Executives, however, soon realized the location wasn’t ideal for a supply chain technology company. They canvassed the country looking for a place with good technology talent, as well as proximity and convenience to customers and potential customers. They chose Atlanta, which had the added bonus of being a logistics hub.

After five years in California, Manhattan Associates moved to Atlanta in 1995 and has become one of its adopted hometown’s success stories. Manhattan, named Logistics Company of the Year in 2008 by the Metro Atlanta Chamber of Commerce, provides supply chain software solutions to about 1,200 customers across the globe. The company employees a total of 2,100 people, half of whom are based at headquarters. Jobs, for the most part, are high-tech and high-paying. In 2008, Manhattan was the largest employer of Georgia Tech graduates.

Despite the current economic slowdown, CEO Pete Sinisgalli said he expects Manhattan Associates to continue growing, both by deepening existing customer relationships and acquiring new customers.

Manhattan’s Offerings
Manhattan got its start with solutions for warehouse management, and this specialty still accounts for about half of its revenue growth. However, the company has expanded its offerings and now offers solutions for every phase of supply chain management—planning and forecasting, lifecycle management, inventory optimization, transportation lifecycle management, and of course, distribution management (including warehouse management). There are a total of 28 products across these five categories.

The goal is to get more customers using multiple solutions, which soon will all be on the same technology platform. As companies become more focused on saving money during the economic slowdown, Manhattan is well-positioned to help them do that, said Sinisgalli. “This is a good opportunity for us to deepen our relationships with our existing customers,” he said.

Customers report that Manhattan has saved them 10 to 20 percent on labor costs, 10 to 20 percent on distribution costs and 5 to 15 percent on transportation costs. Customers are able to reduce inventory by up to 50 percent, Sinisgalli said.

Commitment to Research
Manhattan spends big bucks on research—about $200 million during the past five years. The company plans to spend an additional $50 million in 2009. Research is focused on creating new technologies for customers. One piece of the research program is the Science Advisory Board, made up of professors from schools like Columbia, MIT, Princeton and Georgia Tech.

Here’s an example of a problem these high-powered thinkers might work on. When oil was cheap, it was generally considered smart to keep inventories low. A company could justify a lot of trips back and forth in order to keep inventory costs at a minimum. With oil prices now more volatile, figuring out where inventory levels should be becomes much trickier. The professors have worked on algorithms that allow customers to make adjustments. “This is very complex math,” Sinisgalli said.

A story of growth
Since its move to Atlanta, Manhattan has enjoyed consistent growth, adding customers, increasing revenue and growing its workforce. In 1997, the company had revenue of $32.5 million. A decade later, in 2007, revenue was $337.4 million. Part of this growth has come from acquisitions, including Evant, ReturnCentral, Streamsoft and Logistics.com.

Manhattan Associates went public in 1998 and is traded on the Nasdaq undert the ticker symbol MANH.

Today, Manhattan Associates has several U.S. offices, including in California and Indiana, as well as international offices in Australia, China, France, India, Japan, Singapore, the Netherlands, and the U.K.

Manhattan claimed 14 straight quarters of double-digit revenue growth, a streak that ended in mid-2008. Sinisgalli expects the company to return to that growth rate in the future, as the overall economy improves. He hopes that much of the growth will come internationally. Currently, about 25 percent of revenue is generated overseas.

“We continue to make investments around the globe,” Sinisgalli said, “even as we benefit greatly by being located in Georgia.” www.manh.com
 

"UPS has a 97-year heritage of being a logistics and transportation leader. Atlanta has the heritage of being the center of commerce for the South and is continuing to grow as a center of commerce for the world. We are proud to make our home here."

Bob Stoffel
Senior Vice President,
UPS Supply Chain Group

Created in 2002 by combining 19 companies that provide global supply chain management services, Atlanta-based UPS Supply Chain Solutions has become a global leader in supply chain management,international trade and transportation services. UPS Supply Chain Solutions, a unit of package giant UPS, offers more than 750 facilities ranging from regional logistics and technology centers to small strategic stocking locations and critical parts depots. The company has refrigerated and bonded distribution centers and is located in 120 countries. UPS Supply Chain Solutions offers transportation and freight services (ground, ocean, air and rail), freight forwarding, international trade management and customs brokerage.

About 120,000 shipments a day for 100 corporate customers leave the Supply Chain Solutions warehouses. And while employees there don’t wear the brown outfits of UPS truck drivers or help sort 900,000 air shipments a day like the package handlers at Worldport [in Louisville], the logistics workers represent a growing and increasingly important part of the UPS network.

"Supply Chain Solutions generates $2 billion a year in revenue — about 8 percent of UPS’ $33.5 billion take. It allows UPS to be a ‘single-source provider’ for a variety of business services,” said Solutions Senior Vice President Bob Stoffel. “We do much more than small package. We want the general public to think of us as a leader in global commerce,” according to The Courier Journal Louisville, Kentucky,“Logistics Unit Makes UPS More than a Shipper.” (2-29-2004)

UPS relocated its world headquarters to Atlanta in 1991 with 1,000 employees. It now boasts more than 355,000 employees worldwide.
 

"Atlanta is an ideal home for TLI. The region’s infrastructure, companies and expertise provide a vibrant real-world lab for Georgia Tech faculty and students. Through our programs, graduates and faculty we strive to continually develop and nurture logistics innovation and Atlanta’s global logistics environment."

Harvey M. Donaldson
Managing Director,
Georgia Tech Supply Chain & Logistics Institute

The Georgia Tech Supply Chain & Logistics Institute (SCL) is the world’s largest research and education center focused on global logistics and supply chains. SCL is headquartered in Atlanta and is a unit of Georgia Tech’s School of Industrial and Systems Engineering – a world-renowned engineering program that has been ranked number one by U.S. News and World Report for 13 of the past 14 years. Georgia Tech is a natural home for an institute like SCL, which is devoted to advancing the design and application of new logistics technology and solutions. At the heart of the center is groundbreaking research that translates into educational and industry outreach programs.

Professional development and executive education courses on logistics-related topics are offered throughout the year at Georgia Tech’s new Global Learning and Conference Center. Since 1992, more than 6,000 logistics professionals, inclusive of 600 international attendees, have participated in SCL conferences, seminars and short courses. Georgia Tech’s School of Industrial and Systems Engineering also offers the Executive Masters in International Logistics (EMIL), a fully accredited masters degree program offered in a unique part-time format for high potential logistics executives.

Overall Georgia Tech offers the most comprehensive curriculum of logistics-oriented engineering degree and certificate programs in the world. These Georgia Tech graduates provide technical and executive leadership to the world’s logistics companies, consulting firms and government agencies. SCL also places significant emphasis on industry outreach and economic development activities. With programs like Leaders in Logistics and Supply Chain Executive Forum, SCL is partnered with more than 25 corporations and government agencies. Through these sustaining relationships, SCL sponsors a wide range of field-based research projects and industry conferences. Since 1999, SCL has also partnered with the Government of Singapore and the National University of Singapore to operate The Logistics Institute Asia Pacific in Singapore. They recently established the Sino-U.S. Global Logistics Institute in Shanghai, China in partnership with Shanghai Jiao Tong.
 

"The addition of the fifth runway and our Air Cargo Master Plan will ensure Atlanta’s continued success as world leaders in both passenger and cargo movements."

Ben DeCosta
Aviation General Manager,
Hartsfield-Jackson Atlanta International Airport
A Gateway to World Commerce

What began as a dirt racetrack less than a century ago is now the busiest airport in the world. Hartsfield-Jackson Atlanta International Airport is consistently cited as a key attractor for corporate relocations and expansions into metro Atlanta. In 2004, Hartsfield-Jackson ranked first in the world for passengers operations. Also during the last couple of years Hartsfield-Jackson has expanded and improved its cargo operations as demonstrated by an impressive nine percent increase in cargo the last year alone. It is now moving goods as rapidly and efficiently as it does passengers.

40 Airlines offer Passenger & Cargo Service Directly from Hartsfield-Jackson

Metro Atlanta’s largest employer, Delta Air Lines, is headquartered in Atlanta, which is its largest hub city. More than 40 additional domestic and global airlines ship passengers, cargo, or both to and from Atlanta via Hartsfield-Jackson. More than 80 percent of the United States population market is within a two-hour flight of Atlanta; nearly 100 percent within four hours. Nearly 200 domestic and international cities are served by a total of more than 2,400 flights from Hartsfield-Jackson on an average day – a large majority of these flights being direct non-stop service to more than 180 destinations. More than 9,000 flights leave Atlanta weekly for 184 destinations in 29 countries.

Atlanta is a major air cargo gateway

With more than 30 cargo carriers serving the airport, Atlanta’s Hartsfield-Jackson is increasingly becoming a major world port for air cargo. Already ranked tenth-busiest airport in the United States for total air freight tonnage, Hartsfield-Jackson has seen a 31.3% increase in cargo handled in the last decade and a nine percent increase in the last year alone. Atlanta is the home to the U.S. Cargo Sales Joint Venture, a sales consortium of five major cargo carriers, as well as a major cargo hub for the 7-cargo carrier world alliance-Skyteam Cargo. With more than 25 additional independent cargo carriers serving the airport and a new expansion at the airport slated for completion in 2006, the airport is positioned to increasingly grow its cargo business.

Most efficient airport in the world

Already ranked the most efficient among the world’s 50 leading airports based on productivity measures, according to the June 2003 issue of Airline Business magazine, the new expansion plans calls for even greater effectiveness. Airlines serving Atlanta are expecting to benefit from the master plan improvements with reduced operating costs that will further enhance Hartsfield- Jackson’s position among the world’s most elite airports. More information on the improvements in the airport’s Master Plan is available at www.atlmasterplan.com. For more information on Hartsfield-Jackson Atlanta International Airport visit www.atlanta-airport.com.

Georgia Department of Economic Development

Atlanta’s ambitious $5.4 billion expansion of Hartsfield-Jackson Atlanta International Airport will increase capacity by a third, adding a new runway and a new international terminal. It is the largest public works project in the history of the state of Georgia. Economic impact studies suggest the financial effect of the airport’s business revenue — already $17 billion a year will reach $32 billion annually by 2015.

When the airport’s expansion program is complete, Hartsfield-Jackson Atlanta International Airport will be one of the few airports in the world designed to accommodate more than 100 million passengers annually.
 

"Schneider National is excited to expand its business in Atlanta and Georgia. As a Georgia Tech alumni, I am also particularly pleased to continue Schneider’s relationship with Georgia Tech, The Logistics Institute and Atlanta’s logistics community – one of the world’s best cities for logistics talent and innovation."

Christopher B. Lofgren, Ph.D.
President and CEO,
Schneider National Inc.

Schneider National, North America’s largest truckload carrier based in Green Bay, Wisconsin, chose metro Atlanta as its Southeast Operations Center in February 2004 creating 640 jobs on 25 acres. Schneider is known as a pioneer in adopting transportation technology and was one of the first to link trucks via satellite. Schneider does more than trucking, however.

Schneider Logistics handles supply-chain management services, arranging domestic and international freight transportation through a network of more than 8,000 providers, including truckload and less-than-truckload carriers, as well as air, rail, and ocean freight transporters. The company’s Schneider Finance unit sells trucks. The company is also establishing partnerships with railroads to offer more rail and truck offerings through a single point.