George Brody, Co-founder and CEO of GlobeRanger, exchanged glances with his management team:  Roy Varghese, Co-founder and VP of Strategic Alliances; John Sweitzer, VP of Corporate Strategy; and Ken Floyd, Executive VP of Sales and Marketing.  They had just finished a brief conference call with some of their Venture Capitalists, a pre-cursor to next Monday’s meeting.  There was nothing unusual about next week’s meeting. They met fairly regularly to update the VC’s on their current standing as well as communicate what they felt GlobeRanger’s next steps were. 

    While the management team had an idea of where they were headed, they needed to firm up their plan if they were to get approval for the next round of funding.  In today’s tight market, everything had to be perfect.  GlobeRanger’s premise was smart, innovative, and just what the supply chain manager needed.   George was confident that with the correct next steps they were sitting on a successful business model.

   GlobeRanger is the brainchild of George Brody, Roy Varghese and Dr. Shrikant Parikh.  The beginning of GlobeRanger was the chance meeting of three people with great ideas and impressive track records coming together at the right time.  The business world was just waiting for an idea like this.  The fundamental premise of their business plan was to utilize Global Positioning Systems (GPS) technology to create innovative, real-time applications for end-users.  

   It was in 1999 when the three founders began to bounce ideas off one another, trying to decide on the direction of the company.   From the beginning, George knew he wanted to focus on wireless communications that would work with the premise of an intelligent network. 

   One of the first major decisions they saw before them was the decision on pursuing either the B2C or the B2B segment.  While the B2C market was a lucrative one in terms market size, George felt that there were fewer application possibilities.  He also recognized the fact that a B2C business plan would require large amounts of initial capital in order to properly market themselves to that segment.  With a B2B model the application possibilities were more promising.  They could offer a tailor-made product for any of their clients. 

   This led them to concentrate on tracking assets through the supply chain.  There was discussion if they should create hardware or maybe instead focus on software development.  It was George who thought that software was the path they should take.  He argued that hardware would tie up initial capital as well as have a longer development time.  If they instead used existing hardware they could enter the market faster and with less initial capital. 

   Next, they decided on the name GlobeRanger.  Created by both George and Shrikant, it reflects the business they were in: a global company that would act as a “trusted agent” for location based services.  Next, they went out and created a Board of Directors with well-connected people to help assist them in the pursuit of funds.  A business plan was created and the first round of funding was received. 

   Once they were able to begin hiring a team to work for their newly created organization, George took careful lengths to ensure a good fit into what he envisioned for GlobeRanger’s corporate culture.  He wanted an environment that fostered diversity, fun and where everyone could do their job effectively. At this early stage, they could not afford to have a support staff to take care of day-to-day activities.  With a team in place, GlobeRanger was ready move forward with its business plan.

George Brody – Co-Founder and CEO

Before starting GlobeRanger, George worked in the high technology field for twenty-six years.  At Nortel, he held the position of vice president and general manager of Nortel's Wireless Network Solutions. He worked on Nortel’s Satellite Network Solutions, Wireless Intelligent Networks, and a business incubator called Wireless New Business Ventures. Through these positions, he had developed extensive experience in the management of digital technology for mobile communications systems.[1]

Roy Varghese – Co-Founder and Executive Vice President, Strategic Alliances

Roy brings vast experience in the start-up of new companies.  Before GlobeRanger he was the co-founder of Telscape International, a publicly traded telecommunications company.  Telscape currently offers a comprehensive Internet and e-commerce strategy in the Latin American Marketplace. He was also the co-founder of VISystems, a systems software company that developed a migration product.  Clients included Motorola and IBM.

Dr. Shrikant Parikh – Co-Founder

Shrikant worked for many years with a research department at IBM.   It was he that started toying with the initial ideas of GPS and what other novel applications it may have.  Shrikant left GlobeRanger to pursue other opportunities but remains as an advisor for the company.

Other Key Players

Chris Hanebeck

Chris was previously a senior management consultant for eight years.  He also has prior experience in startup companies.       

Rakesh Garg

Rakesh, previously at Netscape, brings with him a strong background in Internet technologies as well as software architecture.

Rakesh concentrated on the technical aspects such as the general architecture, partner software integration and building the highly skilled team of developers whereas Chris built the first business case based on the architecture and worked on the presentations for the investors.

To explain the true value added by GlobeRanger’s supply chain visibility and asset management products, it is first necessary to explain what supply chain management is and its strategic importance in today’s business operation.

Supply Chain Management

A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request.[2]  The supply chain not only includes manufacturers and suppliers, but also transporters, warehouses, retailers, and the customers themselves.  The main objective of a supply chain is to maximize the overall value generated, which is the difference between what the final product is worth and the effort spent by the supply chain in filling the customer’s request.  To accomplish the above objective, firms will apply Supply Chain Management (SCM) strategies to improve their competitiveness and maximize profit.  Supply chain management is “primarily concerned with the efficient integration of suppliers, factories, warehouses, and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize the total system cost subject to satisfying service requirements.”[3]

   Supply chain management is becoming an invaluable strategic tool in today’s business operation.  Freight, inventory, and administrative expenses have increased while increased competitiveness has driven prices to the consumer down.  The magnitude of cost of a product attributed to the supply chain is easily understood by looking at the percentage of cost of a product that is not related to raw materials or labor.  For a traditional firm, marketing expenses make up 27% of a product’s price, manufacturing costs make up 48% and supply chain costs make up 21%, leaving 4% for profit.  The supply chain adds to cost much more than it adds to value, and savings in supply chain costs go directly to bottom line profitability.  An example of supply chain cost is exhibited by the amount of money spent nationally on supply chain related activities, which corresponded to 10.6% of the national GNP in 1998.  58% of these costs were incurred for transportation and 38% for inventory costs.

   The reason for the increased supply chain costs is a direct result of today’s business environment.  Obstacles to achieving an efficient supply chain included the increasing variety of products, decreasing product life cycles, increasingly demanding customers, fragmentation of supply chain ownership, and globalization.  In addition, detailed supply chain management strategy execution requires highly talented employees.  Firms deal with these obstacles through four supply chain drivers: inventory, transportation, facilities and their location and information.  Increasing inventory allows a firm to supply uncertain demand and take advantage of economies of scale through ordering in larger lot sizes, while adding to the inventory cost of tied up capital and risk of salvaging the remaining inventory.  Faster transportation shortens lead-time allowing inventory levels to be reduced, however at a higher cost.  A firm can utilize multiple facilities located closer to customer demand to improve responsiveness, but this also increases cost.  Finally, the sharing of information between stages of a supply chain is critical to achieving integration, although at higher IT costs.

   Some supply chain management techniques being used in industry today involve increased integration of the supply chain, just-in-time (JIT) manufacturing, and cross docking.  Increased integration of the supply chain allows for higher supply chain profitability through overall system optimization as compared to sub-optimization usually performed at the company level.  Examples of this integration include the sharing of critical information with other stages of the supply chain, such as point-of-sale data to improve a supplier’s inventory planning to ensure product availability.  Just-in-time manufacturing is a continuous improvement method to minimize or eliminate costly inventory.  JIT requires parts to be delivered to the work center at the exact time that they are needed for assembly, thus reducing inventory but requiring increased supplier reliability and coordination.  This method requires a high level of integration and synchronization to be effective.  Cross docking is a method developed by Wal-Mart to eliminate inventory at distribution centers.  Trucks from manufacturers deliver to the distribution centers.  At the distribution centers, the manufacturer orders are broken down to smaller retailer orders and put directly onto the distribution trucks for delivery to the retailer.  No inventory is held at the distribution center in this method.  To accomplish this task, high levels of synchronization are necessary to coordinate the arrival and departure time of trucks to maximize the utilization of these assets.

Implementation of Supply Chain Management

   Some of the current challenges facing the implementation of the above supply chain management strategies are:  Poor integration between supply chain stages, poor IT design, and poor delivery status information.  Internally, firms utilize Enterprise Resource Planning (ERP) systems such as Oracle, SAP or Peoplesoft to provide integrated information within a company.  Supply Chain Management software, such as developed by i2 or Manugistics, combine the benefits of ERP but include other stages of the supply chain to allow full supply chain integration.  Critical to the operation of such SCM systems is updated information.  The benefits of real-time information to JIT manufacturing and cross docking are evident.  JIT manufacturing relies on critical delivery status information to minimize inventory levels and avoid assembly line stoppage.  Cross-docking benefits from updated real-time information to provide the synchronization necessary to fully utilize the transportation assets.  Although SCM software provides the supply chain manager with the decision support necessary to plan and manage the supply chain, the integration of real-time information, referred to as “supply chain visibility,” into SCM software has become necessary to accomplish the difficult tasks of JIT and cross-docking.

   In addition to supply chain management, firms are increasingly concerned with the full utilization of assets, referred to as asset management.  Asset management includes planning, locating, and tracking of assets to maximize their utilization.  Examples of asset management include truck back-drive utilization, efficient maintenance scheduling and process improvement.  Truck back-drive utilization is the practice of scheduling a truck to transport goods as it returns to its home location, instead of returning empty and losing the utilization of the return trip.  Efficient maintenance scheduling prevents moving assets from failure while scheduling maintenance during non-critical times.  Process improvement entails analyzing current utilization and improving the processes involved to improve efficiencies.  Real time information and information gathering is required in all of the above examples to successfully manage moving assets.

Figure 1 : GlobeRanger Product Implementation

   GlobeRanger’s products fill the need for real-time information required for SC visibility and asset management.  GlobeRanger has combined the benefits of the Internet, database, and wireless technology to provide the real-time information necessary for the successful implementation of SCM strategy and asset management (see figure 1).  To address the information requirement for SCM, GlobeRanger has developed the SupplyRanger product. 

    SupplyRanger provides critical supply information through a password protected website, allowing the user to access SC visibility information anytime and from anywhere without any additional software.  The information includes reports summarizing the percentage of goods arriving on-time, direct communication with carriers to allow re-routing due to traffic or weather conditions, and critical estimated arrival time information computed using weather and traffic information.  GlobeRanger’s FleetRanger product addresses the need of real-time information in asset management.  FleetRanger includes real-time GPS tracking of moving assets and web-based integration of the location information to effectively improve asset utilization.  Industries benefiting from this product include those that have a significant amount of capital in moving assets, such as construction equipment, trucking and railroad operations.  The information provided through FleetRanger can be tailored to a specific user’s need to provide accurate, up-to-the minute reports allowing the effective management of moving assets.

   The critical success factors for real-time mobile asset information are as follows:

·       User Friendliness:  the user interface should be simple to operate and allow the user to quickly find the information he is seeking without having to manually mine the immense amount of data.

·        User adaptability:  the user should be given the ability to configure the output of the information to allow him to tailor output to his needs.

·        Integration into current ERP, SCM Software: the product should seamlessly integrate into the customer’s ERP or SCM software and enhance the value of those products through the addition of real-time information.

·        Reliability: the product should be reliable and not fail in the field.  This is especially relevant for construction equipment.

·        Low cost:  the wireless equipment used on the moving asset should have a low variable cost so the product will not become cost prohibitive to customers with many moving assets.

·        Information enrichment: the real-time location information should be augmented with weather and traffic information obtained through the web.

·        Information summarization: the raw location data should be mined and necessary computations performed to provide the user with relevant information, such as estimated time of arrival (ETA) and percentage of goods received on-time.  The user should not have to perform any manual computations to obtain the critical information he needs.

·        Two-way communication with mobile assets: the wireless equipment used to obtain the location data should have the option of being augmented to allow for two way communication in any format (cell phone, two-way radio, or e-mail).

To accurately define the complementors and partners to GlobeRanger’s product, it is first necessary to define exactly what GlobeRanger’s product consists of.  GlobeRanger’s product offering is made up of both service and software.  The service portion of the product offering consists of the tracking and delivery of the visibility information to the customer.  The software portion consists of the code necessary to process the location data obtained through a wireless network and convert this data into valuable information for the customer.  Software code is also developed to interface GlobeRanger’s product with the customer’s ERP or SCM software.

With the above definition of GlobeRanger’s product, the complementors to GlobeRanger’s product are the wireless devices and the airtime.  The true value of GlobeRanger’s product offering is the real-time location information that it provides a customer.  Without the use of wireless technology (wireless devices with airtime), the ability to obtain real-time information efficiently is lost.  Suppliers to GlobeRanger include the companies that supply the server farm for the web-site operation, the installation services, consulting services that provide implementation, the wireless device companies and airtime providers.  These suppliers make up the list of potential alliance partners.

The market for GlobeRanger’s services is competitive and is expected to become even more competitive in the future. The competitors are diverse and offer a variety of solutions directed at various aspects of the supply chain, as well as the enterprise as a whole. Their current and potential competitors can be categorized into three parts according to their industry focus (see figure 2):

Figure 2 : Competition Positioning

1. Logistics and Wireless:

In this field, the potential competitors are Qualcomm, @Track, and @Road. Qualcomm pioneered code-division multiple access technology used in cell phones, wireless telecom equipment, and satellite ground stations primarily in North America. As Qualcomm launched its mobile communications product several years ago, they were able to capture the number one position in the marketplace. Today, their equipment is installed in top truckload carriers. Qualcomm's OmniTRACS global positioning system is used by the trucking industry. Similarly, @Track Communications provides services for long-haul trucking companies and operators of service vehicle fleets to figure out where their drivers are. The company's wireless communications system provides data and voice connections between dispatchers and drivers. The @Track system, which operates through agreements with wireless telecom carriers, uses GPS (global positioning system) technology to locate vehicles. On the other hand, @Road currently sells an Internet-based solution using AT&T Wireless' proprietary CDPD network. @Road's mobile positioning system provides vehicle location information, as well as messaging, reporting, and dispatch communications. Customers do not include only truckers but also distributors, couriers, taxi companies, and school bus operators. Using the Global Positioning System (GPS) like @Track to fix a vehicle's position, @Road transmits the data by wireless networks to a service center. This information is available to customers via the Web.

2. Enterprise and Wireless:

The main competitor in this segment is Entrada Networks. Entrada is refocusing around storage-area network (SAN) routers, and have launched their Silverline router for connecting several SANs over different types of networks, including local, metro, and wide-area networks. About 40% of their sales have come from hardware and software that tie old IBM-based mainframe computers to WANs that are based on newer frame relay standards. The company also makes circuit management and digital transmission products. However, Entrada is expected to dispose of these lines of businesses.

3. Enterprise and Logistics:

The major competitors are Velocity and Manhattan Associates. Velocity develops software that helps health care providers manage clinical and business operations. Its network and Internet-based software analyzes data, measures clinical results, and evaluates operational efficiency. On the other hand, Manhattan Associates provides customers in the e-commerce, apparel, food, consumer goods, and retail industries with supply chain management products and services. The company's flagship PkMS software includes modules for managing shipping and receiving, tracking orders, and counting inventory, and its SLOT-IT software arranges inventory. Manhattan also sells third-party computer hardware and bar code systems.

In comparison to the above competitors, GlobeRanger integrates all three fields involved in supply chain visibility and asset management by bringing together wireless technology, logistics and enterprise resource planning.  Reliable supply chain visibility and valuable asset management are two main strengths of GlobeRanger’s products. They provide customers with service and software to reduce complexities of demand fulfillment commitments, continuous visibility of order status, escalating purchase and operational costs. The only potential competitor in this field is Savi.

Many of GlobeRanger’s competitors and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources, greater name recognition and a larger installed base of customers than they do. In order to be successful in the future, they must respond promptly and effectively to technological change and competitors' innovations. Increased competition may result in difficulties in obtaining market share, pressure for price reductions and related reductions in gross margins, any of which could materially and adversely affect their ability to achieve their financial and business goals.

As the demand by businesses and consumers for location-relevant information increases, we anticipate that the quality, functionality and breadth of their competitors' products and services will improve and that new competitors will enter the market. In addition, the widespread adoption of industry standards may make it easier for new market entrants or existing competitors to improve existing services or offer some or all of the services GlobeRanger offer or may offer in the future. It is unclear to what extent network infrastructure developers and key network operators will seek to provide integrated Global Positioning System, wireless data and Internet solutions, including access devices developed internally or through captive suppliers.

Market segmentation reveals the market-segment opportunities facing the firm. In evaluating different market segments, GlobeRanger looks mainly at three factors: Segment size and growth, segment structural attractiveness, and company objectives and resources.

After evaluating the various segments, three main categories are focused on as marketing targets:

·         Manufacturers

o       Automotive industry

o       Electronics industry

o       Fast moving consumer goods (FMCG)

·         3rd Party Logistics

·         Fleet Management

o       Fleet rental services

o       Private fleets

  Just-in-time manufacturers will schedule their production to maximize efficiency, and therefore keep a minimum level of input materials inventory. When the manufacturer knows where all of its expected shipments are and when they will arrive, the production schedule can be planned and run more efficiently.

 In FMCG industry, the companies must be on time. The company gives the distribution manager the identification number of the truck. The distribution managers can look up trucks by clicking on the zoomable maps to see exactly where the truck is and therefore allowing them to compute estimated time of arrival for the goods.

 3rd Party Logistics companies benefit from the system by increasing the service they provide their customers. When a customer calls to inquire about a delivery, real-time information is pulled up from the GlobeRanger web site so that the location of the vehicle is determined. The customer is informed about the expected time of delivery.

  In fleet management, if a vehicle breaks down on the road or if the driver has a problem, the fleet service will receive a message so that another vehicle can pick up and complete the delivery.

  Additionally, insurers and underwriters can be seen as potential customers and partners. GlobeRanger’s products will reduce the number of claims due to the theft and shrinkage through providing real-time position information of the goods being transported.  GlobeRanger sees the insurance companies to be an integral part for the definition of its location-based service.

As is common in business-to-business marketing, GlobeRanger’s marketing strategy focuses on direct marketing. Direct marketing provides a number of advantages to GlobeRanger.

First, it allows greater prospect selectivity. The strategy is mainly push rather than pull. The target customer groups that are to be approached are segmented. The solution is personalized and customized specifically according to each customer. GlobeRanger, as the direct marketer, builds a continuous relationship with each customer. Another advantage of direct marketing is that it can be timed more precisely to reach prospects at the right moment. On the macro level, every time when the economy slows down and many companies are trying to decrease costs is a potential time for GlobeRanger to increase sales. On the minor level, becoming knowledgeable about the client company’s problems in inventory or supply chain management is considered to be an opportune time to approach the customer. Furthermore, direct marketing permits privacy in that Globe Ranger’s offering and strategy are not visible to competitors, which is critical at this emerging stage of the market. Finally, response measurements are necessary to determine if the solution has been profitable for the client.  This value-added data can be used as a marketing tool for obtaining new clients.

Tradeshows draw a large number of potential customers who view new products in a few concentrated days. In these trade shows, Globe Ranger has the opportunity to observe how much interest is shown in the new product, how they react to various features and terms, and how many firms express purchase intentions or place orders. Expected benefit from participating in a tradeshow, besides generating new sales, is creating new customer contacts. The critical point in tradeshows for Globe Ranger is revealing the product to competitors and therefore the company must be ready to launch the product at that point.

One of the most crucial decisions is to determine which tradeshows to participate in. Since the target customer base is diverse, the tradeshows participated can vary from American Rental Association Conference to Associated Equipment Dealers or Construction Expos. In addition, the tradeshows should be managed professionally to ensure effectiveness.  

• Estimating the market potential and the market share of GlobeRanger in the near future.

• Analyzing GlobeRanger’s position in the market by addressing Porter’s Five Forces Model.

• Calculating return on investment for a customer.
   

http://www.globeranger.com

http://www.business.com

http://www.hoovers.com

http://www.@trackcommunications.com 

http://www.atroad.com 

http://www.qualcomm.com 

http://www.entradanetworks.com 

http://www.velocity.com 

http://www.manh.com 

Chopra, S. and Meindl, Peter (2001). Supply Chain Management: Strategy, Planning and Operation. Prentice Hall, Inc., 2001.

 D. Simchi-Levi, P. Kaminsky and E. Simchi-Levi.  Designing and Managing the Supply Chain. McGraw-Hill, 2000.

 Cakanyildirim, Metin. Lecture Notes: Supply Chain Management, Spring 2001, University of Texas at Dallas.

 Interview: Chris Hanebeck, GlobeRanger, 04/15/2001

Interview: John Sweitzer, GlobeRanger, 04/23/2001

Market Potential

In estimating the market potential, different approaches are recommended.

The Bass Model

The Bass Model can be used to forecast the sales of a new product or service.  The model can be used to forecast the long-term sales pattern of a product when one of the following is true:
      1) The product has recently been introduced and sales have been observed for a few time periods
      2) The product has not yet been introduced, but it resembles another product in the market whose sales history is known.

The first option is not the case. The product is new and very few sales are spread across different companies. Real data about the cumulated sales in the industry is not known.

For GlobeRanger’s situation it will be more appropriate to use the second case, namely the analogy, and find a similar product to obtain the required parameters for input into the model.  An important point that must be realized is that SupplyRanger and FleetRanger cannot be considered as the same product since one product is designed for supply chain visibility and and the other for asset management. Another important detail is that a vehicle has must be equipped with an asset management product before it can be sold a supply chain visibility product.  Possible analogy products are analyzed as follows:

• Car navigation systems can be an alternative (due to the similarity in location determination) but the target market needs careful recalculation. GlobeRanger’s products are focusing on the B2B market whereas car navigation products are directed towards the B2C market. Personal navigation products such as Webraska have the same drawback.

• The products of ERP and SCM software companies like i2, SAP, and EXE are considered to be another approach for the market potential calculation. However, GlobeRanger covers not only the enterprise software and logistics side of the business as those companies do but also the wireless. Integration of wireless side of the business needs a proper algorithm.

Direct customer analysis

Another method of determining market potential is to examine Fortune 500 companies and categorized these companies according to the customer analysis. The revenues of automotive, consumer packaged goods and electronics companies will be calculated and 10% to 15% cost savings for these companies will be equal to the total market potential for the market. Afterwards, GlobeRanger can aim a certain market share from the total market.

The market potential for 3rd Party Logistics companies can be categorized by either the fleet size (below and over hundred vehicles) or to the ownership (private and non-private). Targeting to equip a certain percent of all fleets or a category in the market is also valid method.

Porter’s Five-Force Analysis

Porter’s five-force analysis provides a means of evaluating the various competitive forces acting on a firm and indicates where competitive threats exist.  The analysis includes the following five environmental forces:

·         Competitors - Threat of new entrants: The threat the firm faces from new competition entering the industry.

·         Competitors - Intensity of internal rivalry: The threat from current competitors in the industry.

·         Power of Suppliers: The bargaining power of the firm’s suppliers.

·         Power of Buyers: The bargaining power of the firm’s buyers.

·         Threat of substitute products: Threat of the buyer choosing a substitute product.

The Porter’s analysis on the current GlobeRanger product offering is shown in figure 3.  To complete the following analysis, the following information was used:

·        GlobeRanger product offering: the service (real-time visibility information) and software necessary to integrate the service with the customer’s ERP/SCM platform.

·         Current competitors to GlobeRanger: Qualcomm, @Road, @Track, Velocity, Manhattan, Entrada and Savi.

·         Suppliers to GlobeRanger:

o        Server-farm supplier for web-site operation

o       Installation services supplier for wireless equipment installation

o        Consulting companies that provide implementation of product

o        Wireless device manufacturers

o        Air-time providers

·         Buyers:

o        Manufacturers: Automotive, Electronic, Fast-moving Consumer Goods

o        Third Party Logistics companies

o        Fleet Management Services

·         Potential Substitutes:

o        Buyer’s current method of service, i.e. wireless radio or cell phone communication.

 Using the above input information, the results of the Porter’s analysis are shown below in table 1.

Table 1: Porter’s Analysis Results

        The results from the Porter’s analysis indicate a high threat from new competitive entrants and medium (high/low) threats from the power of suppliers and substitute products.  As shown in figure 3, the threats of new entrants is due to relatively low economies of scale, capital requirements, product differentiation, distribution channel control, government and legal barriers, and retaliation by established producers.  Low economies of scale and low capital requirements result from the fact that the product offering is made up of service and software.  The medium level threat from supplier power is due to a low amount of available substitute products, low importance of GlobeRanger to the supplier, and a high threat of forward integration by the supplier (such as a consulting firm).  The medium threat from the selection of substitute products by the buyer is the buyer’s desire to continue using the current method of accessing supply chain or asset management information.

        Methods that GlobeRanger could use to reduce the threat of new entrants would be to increase product differentiation by continuing to develop innovative solutions to distinguish their product offering.  Also, a customer with supply chain management needs will typically approach a supply chain management consulting firm or a SCM software provider. GlobeRanger should therefore continue to form alliances with the SCM consulting firms and pursue alliances with leading SCM software providers in an effort to gain control of the distribution channel.  Once GlobeRanger establishes a leading position in this growing market, it should develop retaliation strategies to protect itself from new entrants.

        To reduce the power of the supplier, GlobeRanger should develop a strategy to increase their importance to the supplier.  Usually, importance of a customer to the supplier is directly a result of the sales revenue that the customer provides to that supplier.  Because GlobeRanger is in its beginning stages, it will not be able to provide large amounts of sales revenue to any one particular supplier.  However, GlobeRanger should minimize its sourcing alternatives to consolidate as much volume as possible to any one supplier and develop strong relationships with the supplier’s sales representative.  Also, GlobeRanger should reduce the threat of a supplier’s forward integration through the use of innovative, proprietary knowledge in the development of its product offerings.

        To reduce the threat of substitute products, which in this case is the buyer continuing to use their current methods, is to actively pursue a value-added marketing strategy.  GlobeRanger must develop a strong value proposition to the customer using real, bottom-line numbers and return-on-investment.  The value proposition should be measured by applicable metrics so that the value added can be accurately measured after the system is installed.

Figure 3 : Porter's 5-Force Analysis

Return on Investment

      Table 2 indicates return on investment for a customer using asset management products.  The calculation is based on a customer dispatching 10 service vehicles and having two main needs:

• The ability to dispatch the closest vehicle to a job site: It was estimated that dispatching the closest vehicle could save 50 miles per month per vehicle at 0.50 dollar per mile.

·         On-site time verifications: As with all industries, billing disputes sometimes happen and “the customer is always right”. It was estimated that they experience a revenue loss of $50 per month per vehicle.

  Break-even Point = Fixed Cost / (Benefits – Costs) = 11 months

Table 2: Cost-Benefit Analysis

With $40 variable cost and $75 benefits for each track per month, customers can reimburse their investments in 11 months, break-even point. Additionally, they can save  $4200 per year after first 11 months. This short reimbursement time and annual benefits make asset management products more attractive to customers.