Menlo Worldwide – A new star in the logistics sky

The new brand "Menlo Worldwide" will assure the American CNF group of its place among the world’s top logistics firms. In contrast, the old Emery logo is on the way out. ITJ editor-in-chief Ursula Schmeling recently spoke with John H. Williford, President and CEO of Menlo Worldwide, in Amsterdam about his business strategy.
Mr Williford, why has CNF chosen the relatively unknown Menlo brand for the joint identity of the three CNF subsidiaries, instead of the better known Emery logo:’

Internationally Emery is a very well established brand. However it is predominantly associated in the public mind with airfreight, although Emery also offers seafreight and other forwarding services and is now establishing itself in the contract logistics business. Emery has, for example. tripled its turnover in seafreight in the last three years.
With Menlo Worldwide, we want to create a business group that is able to offer shippers worldwide complex supply chain solutions in procurement and distribution. I am convinced that it will prove easier to position a new brand in the market than to change the perception of a well-established brand like Emery.

But you do not intend to drop the Emery logo immediately:’

No. We intend to proceed carefully, so that we do not alienate existing customers. For the next two years or so. Emery’s forwarding business will continue under the name Emery Forwarding. Only then will we replace Emery with kulo. Emery however no longer operates its own aircraft fleet, and will be a pure forwarder, buying in aircraft capacity as required.

Was the decision to merge the three subsidiaries and to create a new brand made before the Emery aircraft fleet was grounded last .summer?

The decision to merge the businesses under the Menlo brand had already been made in April 2001. Since I established Menlo Logistics about ten years ago, I have seen the demand for complex I T-based logistics solutions from our key accounts grow dynamically.
What’s more, we are able to realise a return on investment in this area of around 60%.
To improve our position in this high growth potential market, we decided to merge Menlo Logistics with its turnover of around U SD I million with Emery (turnover of approximately USD 2 million). Menlo contributes experience in the contract logistics business and Emery global experience, recognition and international connections. The division of labour is already clear. As its name suggests. Finery Forwarding will operate the forwarding business, while Menlo Logistics is a 3PL and 4PL. We will operate a common back office hut retain separate front offices, although of course in the case of big acquisitions we will act in concert publicly. Furthermore, we see a lot of hitherto underexploited potential in cross selling.
Menlo Worldwide Logistics’ services include dedicated contract logistics engineering and operations. multi-user warehouses and distribution centres and supply chain services such as con-
figuration, light manufacturing, pick and pack. kitting. order fulfillment, vendormanaged inve lit ory, postponement, transportation management. merge-in-transit, pooling, dynamic slotting, reverse logistics.

V ector SCM a joint venture between
Menlo Logistics and General Motors,
t S. t. also forms part of the new business. However, this business is to retain
its own brand identity.

We plan to run Vector SCM (supply chain management) under the Menlo Worldwide brand as an independent business. In this case too, the companies will cooperate closely and we plan to fully exploit back office synergies.

What is the strategic goal for V ector

Vector SCM aims to reduce the supply chain costs between material procurement and the production line and between the production line and dealers. Similarly. it aims to reduce the time elapsed between the placing of an order by a customer and the delivery of a finished vehicle. Vector S(’M services are charged on the basis of cost savings achieved. Given total distribution costs of USD 1.5 billion, which Vector SCM as (iM’s 4PL manages. the potential for savings is considerable.
Up to now we have enjoyed considerable success with this business. Certainly. we are not making any losses. We have already cut the time between the placement of an order and its fulfilment at (iI to 80 days. Our goal is 22 days.
Of course, we plan to sell this successful concept also to other car makers. Negotiations to this end are already being conducted.

Menlo Worldwide Technologies also form.s part of the new company. What services are offered by this business unit:’
IT services that facilitate internal and external processes. This business unit supports the others by managing supply chain engineering contracts or by providing interface solutions, enterprise application integration, data management, transportation and warehouse management solutions.
In total, we employ up to 1000 IT specialists. This demonstrates our strong orientation toward new technologies.
Since the beginning of this year we have also been providing suppply chain technology consulting services which will focus on leveraging Menlo Worldwide’s human capital in logistics execution and supply chain management.

Why was Con-Way Transportation not merged with the new business?

Con-Way provides road haulage in the USA with its own truck fleet. This is a very specialised business. Menlo World-
wide is a pure non-asset forwarder and logistics services provider. Con-Way simply does not fit in there.

Whom do you regard as your main competitors in the USA and in Europe?

Naturall the big postal service conglomerates and logistics companies liky’ Kuehne & Nagel, Panalpina, Expeditors and Ryder, which 1 read about regularly in your magazine.

Where are your core markets?

Of course, pride of place goes to No h America. We generate 25% of our revenues in Europe. With Emery, we are also well represented in Asia and are among the top ten forwarders, as we are also in Europe. Emery has over 600 offices in over 200 countries.
Currently we are growing faster in European markets in terms of revenue
and income than in the USA. Naturally. we want to continue to grow strongly in all markets, especially in the European contract logistics market. We will therefore reinforce our marketing activities here in the next few months.

Nonetheless, you made a loss in 2001.

That’s right, but we will be back in the black in 2002.

Are you planning to s e ur rate pf’growth through acquisitions?

We have not planned anything definite. We prefer to rely on organic growth. It will be enough of a challenge over the next few months to fuse these four business units with very different histories into a powerful, effective integrated business. I am, however, confident that we will be able to measure up against the best.