Darcy estimates that Nistevo will help General Mills save between 4% and 7% of its total logistics expenditures through reduced administration costs and better use of capacity. Using the Nistevo network to share truck capacity with Fort James alone should save General Mills about $800,000 of the $3 billion that it spends annually on logistics.
"We're already able to do some things with the tool, even though we're not completely up and running yet," says Darcy. General Mills is using Nistevo's contract management component and some of its execution capabilities.
Rules of the Road
Nistevo's alliance partners work jointly to determine rules governing who pays for additional miles traveled to load another firm's freight, what to do about a canceled shipment and how to divide savings. Nistevo builds such rules into its contract management software.
Identifying their own "rules of engagement" will be the key to shippers' success, says Darcy. "We simply couldn't do this without Nistevo's Web-based application," he says. "At the same time, the application is no good unless companies know how to work together."
Trucking industry professionals say they agree that the future of logistics is in Web-based collaboration. According to a statement from the American Trucking Associations Inc. in Alexandria, Va., "Failing to build systems that allow for electronic collaboration among trading partners could spell doom for companies hoping to thrive in the transportation industry."
The Buzz: State of the Market
The Shipping Magnates
While it strains credulity to hear executives claim that their companies face no real competition, it's difficult to pinpoint Nistevo's direct rivals. Certainly, some competition comes from other transport exchange start-ups like Celarix Inc. in Cambridge, Mass.; Logistics.com Inc. in Burlington, Mass.; and nPassage Inc. in Seattle. It also comes from established supply-chain giants like i2 Technologies Inc. in Dallas and Manugistics Group Inc. in Rockville, Md., which are poised to offer similar functionality.
Yet none of those companies provides exactly what Nistevo offers, says Adrian Gonzalez, an analyst at Dedham, Mass.-based research firm ARC Advisory Group Inc.
Nistevo and its contemporaries are playing in the online logistics-exchange market, which Boston-based AMR Research Inc. estimates will grow from about $150 million today to $3 billion by 2004. "Transportation is decentralized and geographically dispersed," says John Fontanella, an analyst at AMR. "It's an ideal application for the Internet and B2B technologies."
Nistevo appears to be at a disadvantage because it focuses solely on truck transportation within the U.S. while its rivals manage international freight across all modes of transportation.