Brambles, parent company of pallet-pool operator CHEP, has agreed to acquire LeanLogistics, a provider of transportation management software, for $45m cash. LeanLogistics will operate as a division of CHEP.
While this may seem like an odd pairing, research firm Aberdeen Group suggests that CHEP will be able to use its huge data base to help optimize transportation. The U.S. division of CHEP has a network of 4,000 customers and tracks data on more than 40,000 pallet movements daily. While CHEP doesn't know which carriers are used to move goods or what freight rates a company pays, the data does reveal overall shipment patters--who is shipping goods in what volumes and to what locations. UP to this point, CHEP has lacked the key to unlock the logistics value in that data. Through the merger, however, CHEP could use LeanLogistics' software platform to mine this data and identify companies that would be good candidates for logistics collaboration. CHEP could then sell Lean Logistics' On-Demand TMS to interested parties to serve as the planning and execution tool to allow each firm to capitalize on the opportunities that were initially flagged by the CHEP data.
While potential is there, Aberdeen says that CHEP and LeanLogistics will be challenged to make intelligent use of the data and connect the dots to facilitate the type of multi-enterprise collaboration that could change the landscape of transportation management.
Adrian Gonzalez, leading logistics and supply chain analyst for ARC Advisory Group, takes a similar position on his blog. He writes:" You can make a strong argument that CHEP's most valuable asset isn't its 285 million pallets and containers. It's the vast amount of data the company collects across the 300,000 customers it serves. For example, CHEP has visibility to 2.5 million equipment moves each day, including the origin, destination, and departure/arrival times of thousands of transportation moves. What can you do with this information? Can you leverage it, for example, to enable continuous moves across shippers where enough density exists? Can you provide benchmark information to clients regarding lead times and lead time variability? These and other opportunities exist, but you need the right technology infrastructure and the right people to provide these services, and that's where LeanLogistics comes in." Over the past couple of years, Gonzalez says, LeanLogistics has introduced a set of managed services (part of its "Path to Value" program) that uses network-level information to benchmark its clients' performance, identify best practices, and execute continuous improvement initiatives.
"Simply stated, this deal is not about a pallet company buying a software company. It's about the coming together of two rich information networks and the services they can power to bring value to shippers, consignees, and carriers by enabling more efficient, cross-company business processes."
Gonzalez also warns that realizing this potential will not be easy. "But if Lean and CHEP execute their vision successfully, the way shippers, consignees, and carriers will manage certain transportation and logistics processes tomorrow will be much different than how they do it today."
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