Insight
Fresh revenue for a time-tested company
After more than a century in the foodservice and grocery delivery business, during which it had expanded to USD 50 billion in sales, McLane was challenged to boost a razor-thin profit margin. But with nationwide distribution and some of the largest retailers in America as its customers already, the company didn't know where to turn.
The IBM Garage led the way toward an entirely new revenue stream that built on the company's existing network of trucks and routes to deliver new services to new customers — without adding capital costs.
Idea
Agile development for trucking
In a collaborative process that brought together IBM technologists and McLane business and operations leaders, the IBM Garage helped McLane to take on the challenge of boosting a profit margin of just 0.5% — in other words, how to generate new revenue without significantly raising costs. The surprising answer took the form of marketing messages on the sides of the trucks, turning what had been purely a logistics company into an advertising firm, using routing information to identify the best trucks for different ads. We also incorporated weather data insights to understand hyperlocal neighborhood demographics to quantify how many people would see each advertisement.
Impact
Bringing new value to legacy infrastructure
McLane, a well established logistics company came to the IBM Garage to spark ideas for innovation and development. The result was a new revenue stream that took advantage of the company's existing assets to provide new services in a very competitive industry. Beyond that, the garage helped them innovate in marketing and HR to supply chain, operations, manufacturing, e-commerce – across many functional and business areas. The process also helped the company experience a new, agile way of working collaborating closely with IBM experts to find new efficiencies for its existing business, further boosting the bottom line. At the core – leveraging cognitive, advanced analytics, and machine learning in new ways – helping McLane take their insights to a whole new era.
The benefits
- Insights driven action
- Collaborative work process with the IBM Garage brought cross-department teams from McLane together with IBM experts
- New, data-driven business model introduced revenue opportunities on existing infrastructure, further expanding the company's profit margin
“ Everyone has opinions, but the truth is in the data. ”
— Kevin Koch, SVP of Accounting, Tax & Finance, McLane
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