LeanLogistics defies the dip

October 24, 2009
| By Pete Daly |
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HOLLAND — Based on what Dan Dershem has been seeing in the world of logistics, the economy has bottomed out — not that the recession has apparently slowed the growth that LeanLogistics has been enjoying since it was founded by Dershem and several others in Holland in 1999.

The company, with a headcount of 111 is vacating two smaller facilities in exchange for one larger one at 1351 Waverly Road in Holland. It expects to add about 580 more jobs over the next five years and invest about $11.2 million in new equipment during that time.

The Holland City Council has approved an Industrial Facilities Tax exemption on $3,280,500 the company plans to invest in the next 24 months, starting in November.

LeanLogistics is also moving about $180,000 worth of equipment from the Zeeland facility it moved into one year ago, and Holland also has agreed to transfer to it a Zeeland tax abatement on that investment.

The move into the new Holland facility will start in November and is expected to be complete by Dec. 15.

According to a tax exemption application submitted by LeanLogistics, most of the 580 new jobs will be Java software developers, database administrators and logistics professionals. There also will be new jobs in finance, human resources, sales and marketing.

Weekly salaries for slightly more than 500 of the management/professional staff will range from $1,016 to $1,116 during 2010 to 2014, according to the tax abatement application. Another 66 or so employees will earn between $1,459 and $1,594 per week.

LeanLogistics is an on-demand transportation management system with related network services. It was originally based in Holland but growth eventually required expansion into a second facility in Zeeland last year; now both of those first two sites are too small.

"We were very fortunate, even in tough times, to continue growing the business," said Dershem.

LeanLogistics developed transportation management software called LeanLogistics On-Demand TMS (transportation management system), which went online in 2001. The Web-based infrastructure was developed in partnership with Sun Microsystems, the creator of Java software.

That $11 million in new equipment is "primarily" computers, said Dershem.

"We not only write the technology (for logistics management), we run the technology," he said.

A client company leases LeanLogistics software and accesses it via the Web. The client sends information on its transportation needs, which is integrated into the LeanLogistics Web-based transportation network. On-Demand TMS then provides daily planning, execution, settlement and procurement functions for the client.

Across the network, more than 32,000 shippers, suppliers and trading partners interact with more than 5,000 carriers, processing millions of transactions.

The LeanLogistics process is a business model known as software-as-a-service, or SaaS. Rather than delivering software to its customers to install on their computers, the software resides in two LeanLogistics locations: a primary data center in Grand Rapids and a real-time backup center in Orlando, Fla., according to Dershem.

LeanLogistics’ first client was Meijer Inc. It now serves many other major corporations including Proctor & Gamble, Ace Hardware, Dannon, Barilla America, Unilever, WhiteWave Foods, Breakthrough Fuel, Pennant Foods and others

Earlier this year, LeanLogistics was included in Supply & Demand Chain Executive Magazine's 2009 Top 100 Providers.

"In terms of what we believe is relevant, we do have the largest (logistics management) network in North America now," said Dershem.

As for the recession, "I think we're at the bottom, based on what we can see," he said. "Our system has over $5 billion in transportation that it's planning, so we have a pretty good view into what's occurring."

He said that the decline in business that started last summer seemed to have stabilized by August this year, and September "looks similar." He noted, however, that the LeanLogistics staff is not yet seeing any broad-based growth in the economy.

Certain industries, he said, naming construction products in particular, are "still way down." However, LeanLogistics has a diverse client base that has allowed it to continue growing. He noted, for example, that "food and beverage has been pretty steady."

Typically at this time of year, he said, there would be a surge in business purchasing going into the fourth quarter — "and we're not seeing that." He said that leaves him with the impression that the economy through the holiday season ahead will be flat, compared to the same period a year ago.

In March 2008, LeanLogistics announced it had been acquired by Brambles, an Australian firm with operations in 45 countries, for $45 million. LeanLogistics is now part of the Brambles CHEP division, which owns millions of pallets and containers leased throughout the United States to manufacturers, distributors and retailers.

At the time of that announcement 18 months ago, the LeanLogistics employee roster numbered 56, and Dershem told the Business Journal it was handling about $4 billion worth of transportation costs.

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