Posted by Patrick Connaughton on March 5, 2008
CHEP Brambles, best known for their pallet and containers services, announced on March 3rd that it has agreed to acquire LeanLogistics for $45 million cash.
LeanLogistics is a transportation management solution (TMS) provider who competes directly with Sterling Commerce as well as other smaller hosted TMS players like MercuryGate and Transplace. (See the January 29, 2008 "The Forrester Wave: Transportation Management Solutions, Q1 2008" report for more information)
This acquisition does raise a few questions. First and foremost, why would a pallet provider buy a TMS vendor? Certainly, there is an opportunity to leverage the software within their own operations, but does CHEP really want to be in the software business?
To learn more, we spoke with Pete Stiles, VP of Marketing and Strategy, and Dan Dershem, President and CEO of LeanLogistics.
Forrester: Can you give us some insight into why CHEP made this acquisition?
Forrester’s take on the acquisition:
Clearly, this acquisition is all about profiting from the wealth of supply chain visibility data CHEP is sitting on today in their network by bringing new service offerings to the table for carrier benchmarking and collaboration opportunities. That is not going to happen overnight, and in the meantime Lean will need to continue to build out their TMS aggressively to compete. Otherwise, over time, they risk being marginalized as just another tool in the CHEP portfolio of pallet service offerings. In the immediate future, LeanLogistics customers should rest easy that they will remain a wholly owned subsidiary. Over the next two years, we expect this vision to start to materialize and they will be able to bring new value add services to their subscription customers. We think LeanLogistics is a great option for TMS buyers seeking a less expensive, easier to implement solution than the traditional on-premise TMS, and really separate themselves from the pack when it comes to outsourcing services, industry expertise, ability to provide extensive carrier benchmarking, and trading partner collaboration tools.
Patrick Connaughton, Senior Analyst - Supply Chain
Business Process & Applications