Reference no: EM133308957

Question 1. what's the IDENTIFICATION OF PROBLEM( only need one problem)?

Question 2. what's the SWOT ANALYSIS?

Question 3. what's the DECISION CRITERIA?

Question 4. what's the 3 ALTERNATIVES?

the case link about "Offering Fleet Automation: SmartFleet in the Need of Smart Decisions" is: or the content as follow:

Birth of SmartFleet

Pahrsek, a seven-member startup was being supported by IdeaSpace, 1 a Philippines-based non-profit incubator with about half a billion pesos 2 funding in the last 5 years. 3 "Pahrsek", as mentioned on their website, a play on the word 'parsec', the largest unit of distance, reflected their intention to provide fleet companies with technology solutions allowing them to go the extra mile.

SmartFleet, the first suite of products of Pahrsek, was born during Maui's work at his previous startup, RideIn, a commuters' reward platform. Maui realised the need to manage the fleet of vehicles during his interactions with taxi operators. The initial name for the product was Taxi-SPA (Services and Process Automation), but it was changed to SmartFleet to reflect its potential to cover a larger market, consisting of all types of fleets, rather than just taxi fleets. The mission statement of SmartFleet was to "enable fleets with innovative and cost effective technology solutions to achieve higher operational efficiency, pro-activeness, and profitability", and the tagline was "Transforming Fleets". Although these tools were new for the Philippines market, similar tools have been popular in other countries.

SmartFleet targeted fleet of trucks engaged in logistic operations in the country and taxi operators in Metro Manila (National capital region of the Philippines). Although Analytics was mentioned on their website as one of the features, analytics capabilities were not added in SmartFleet in 2014. Maui and Minnax were still considering if they should add on the analytics modules for two tools being offered.

Features of SmartFleet

The two products of SmartFleet which were offered in 2014 were Operations Automation Tool (OAT) and Fleet Management Tool (FMT).

Operations Automation Tool (OAT)

Maui and Mannix noted that fleet operators were spending about 20% of their revenue on maintenance of their fleets. SmartFleet OAT was at an elementary level, a cloud-based, advanced substitute for the dated methods of maintaining paper-based back office and administrative processes. It could store information like vehicle inventory, drivers, parts inventory, and could suggest maintenance schedules (automatically). It provided accurate operational visibility for any fleet company. It included a sophisticated online dashboard with a powerful and intuitive interface, capable of tracking revenues and expenses, thereby saving their operational cost. Five modules of SmartFleet OAT were:

i.Cashiering module to manage target revenue, collections, damage/charge, and bond withdrawal forms.
ii.Maintenance module dealt with odometer data and maintenance schedule trackers.
iii.Inventory Management module managed delivery/Issuance, and Inventory forms.
iv.Provisioning module contained driver profiles, driver lists, and cab list trackers.
v.Reports module was planned to have the following reports: daily remittance, driver boundary, trip count, driver ledger, parts purchased, parts issuance per taxi, and the maintenance cost per taxi. The last three reports were in the process of being deployed.
Fleet Management Tool (FMT)

FMT helped in tracking personnel and vehicle locations in the field, efficiently dispatching of tasks (such as pickup and deliveries), and monitoring of task performance within the dashboard, such as vehicle speed, and task status as idle or busy. The tool leveraged on cost-effective and easy-to-deploy smartphones to track vehicles. It provided both, current as well as historic routes. It could notify fleet owners about the availability of their vehicles, thus increasing their revenues significantly. SmartFleet FMT was also available in form of a mobile application. Five modules of SmartFleet FMT were:

i.City map with current locations of all vehicles being tracked, along with additional information about each vehicle like speed, or busy/idle status.
ii.Provisioning module consisted of a driver and vehicle form that maintained the current list of each driver and vehicle, their tracking IDs and vehicle plate numbers.
iii.Task Management module maintained a list of the tasks, with information about the customer, pickup, and delivery address, assigned driver and their current status.
iv.User Management module maintained a list of all administrative personnel and dispatchers.
v.Reports module provided filtered snapshots of all tasks and corresponding information. Tasks could be filtered by time period, customer, driver, or status.
Exhibits 1 and 2 present the snapshots of OAT and FMT dashboards, respectively.

Logistics Industry in the Philippines

As per the Department of Transportation and Communication (DoTC), transportation and logistics account for as much as 43.8% of the wholesale food prices in the Philippines. Road transport in 2006 accounted for 25.9 million tonnes of freight or about 58% of the total transported cargo in 2006. In the light of forthcoming ASEAN Economic Community in 2015, an efficient transportation and logistics system would become even more important, when it more closely pits the Philippines with the other countries in ASEAN. According to the World Bank's Logistic Performance Index (LPI) survey, the Philippines achieved a mixed improvement in the global rankings in logistics performance, rising from 65th rank in 2007 to 44th rank in 2010, but then dropping to 52nd rank in 2012. Singapore ranked 1st in the world, Malaysia 29th, and Thailand 38th.

As per the Supply Chain Management Association of the Philippines (SCMAP), a typical logistic provider company in the Philippines had between 50 and 350 office workers, 500 to 5000 workers in warehouses, and up to 4000 drivers and helpers in the field. Logistics companies, in general, apart from the usual activities, also need to make sure that their warehouses are managed well, and the routes are well planned to deliver the goods efficiently. Delivering the goods to customers on time is important to logistics operators, as failing to do so can lead to financial penalties and a significant damage to their reputation. Bad traffic jams or crawling traffic can cause unexpected delays, so operators need to factor them in when trying to deliver on time.

In February 2014, Metro Manila banned eight-wheeler trucks and cargo vehicles heavier than 4500 kg from entering the city roads between 5 AM and 9 PM. However, due to congestions in ports, the ban was removed in September 2014. This regulation resulted in a significant negative impact on the business of logistics operators. In general, in the Philippines, for a logistic operator, transportation expense was about six percent of their total operating expenses. Therefore, optimisation of fuel and maintenance expense was not a major concern for logistic operators. Logistic operators preferred to focus on increasing revenues by making better utilisation of their trucks. Often, the trucks were used to deliver their cargo, but once on road, the fleet operators were unaware of the status of their individual trucks. If trucks could be tracked in real time, the number of deliveries could increase. As a result, logistic operators wanted tools to optimise their deliveries. The biggest player in the logistics industry in the Philippines in the year 2014 was 2GO Logistics with hundreds of trucks and many subsidiaries.

Taxi Industry in Metro Manila 2010

In 2014, taxi industry in the Philippines was regulated by the Land Transportation Office (LTO) for registration, and the Land Transportation Franchising and Regulatory Board (LTFRB) for granting regulated franchises. A franchise was valid for a period of about 5 years, and the permit allowed operator's cab fleet to traverse a particular area, e.g. within Metro Manila to Luzon. Granting of new taxi franchises remained indefinitely suspended by LTFRB in 2014. That's why the only possible way to enter into the taxi business in Metro Manila was to buy a franchise from a willing operator or to get partial ownership of taxi units and franchises of large taxi companies. An operator in Metro Manila could buy a second-hand car/cab for about PHP 300000 to PHP 400000, or a brand new car/cab with the cost twice of a second-hand car. An old cab had to bear a higher maintenance and fuel cost, as well as a decrease in the number of passengers due to their concerns about safety and comfort. Many banks offered taxi cab financing and auto loans in the Philippines. Operational lifespan of a taxi was 10 years.

In 2014, taxi operators in Metro Manila earned a fixed revenue from their taxi units on a daily basis. The operators needed to pay for the maintenance, e.g. repairs and insurance expenses of their cabs. Drivers were paying for the fuel. Operators were providing rewards to drivers for their good conduct towards the passengers, and for their loyalty. In addition, there were incentives in form of sacks of rice or groceries for drivers for hitting daily target revenues for a month, allowing a lower target revenue during weekends, or deficits to be paid within a time period. Total expenses of a typical taxi operator were about 15% of their revenue. Most of the drivers used to rent a car for 24 h to provide taxi service with a target revenue of PHP 1000 to PHP 1500. Most of the drivers were making sufficient profits, and taxi operators were successful in retaining the drivers for a long term. Among the most influential owners of taxicabs in Metro Manila is the Enriquez family that owns MGE Taxi, EMP Taxi, R&E Taxi, Sturdy Taxi, Teresita Taxi, and Pollane Taxi, totalling around 3000 taxicab units.

Competitors of SmartFleet

One of the most fierce competitors of SmartFleet in developed nations was Fleetio, an OAT offered by Rare-Step, a company based in Alabama, the United States. Maui and Mannix calculated the potential price of Fleetio as around PHP 40 per vehicle per month. For FMT, the competitor was Prova Systems, based in the US that provided Fleet Genius Pro, a tool that provides services similar to FMT, at a rate of around PHP 360 per vehicle per month, according to the calculations of Maui and Mannix. The competitors were not charging any fixed fee from their clients.

Although in 2014, the competitors of SmartFleet were not targeting the Philippines, there was a possibility of their entrance into the Philippines in near future, especially after the ASEAN integration in the year 2015. Exhibit 4 provides details of the competitors of SmartFleet.

Present and Potential Clients of SmartFleet

SmartFleet obtained its first client, UNO taxi, who agreed to use OAT for a fleet of 55 taxis in September 2014. Pahrsek agreed to drop the one-time implementation fee of PHP 10000 for their first customer. The tool was deployed in UNO and was under the stage of pilot testing. Other potential clients targeted by SmartFleet in future were 24/7 Taxi and Ryo Aki, each with fleet sizes of more than 100 taxis. Mannix was hoping to sign a deal with them in the subsequent months.

For FMT, SmartFleet was negotiating with NN-ATS Logistics, a subsidiary of 2GO Logistics, with a fleet of small and large trucks. NN-ATS Logistics wanted to start the pilot test in October 2014 with their 30 out of 140 trucks. Mannix confirmed that NN-ATS Logistics seemed happy with their presentation on the capabilities SmartFleet tools, and the deal was expected to be finalised soon. Maui and Mannix planned to get the contract for the remaining 110 trucks of NN-ATS by December 2014.

Other potential clients of SmartFleet included Cliqnship with 35 trucks and ACommerce PH with 25 trucks. They were targeted by Mannix for signing up in the month of October and November 2014 respectively. The projected numbers of vehicles that will be loaded with OAT and FMT from September to December 2014 is included in exhibit 3.

Testing Time for SmartFleet

Although both Mannix and Maui were hopeful of the growth of their startup, they found that some interested customers were finding their existing prices expensive. Price negotiations were tougher with potential customers having large fleets as compared to the customer having a small fleet. They were also worried due to the cheaper prices of their potential global competitors. The initial plan of Maui and Mannix was to charge PHP 10000 for the onetime implementation fee, the price of OAT was fixed at PHP 100 per vehicle per month, and that of FMT at PHP 1200 per vehicle per month. Sales incentives and expenses and application hosting costs were the variable expenses, and other costs like equipment, rent, utilities, advertising, and book-keeping were fixed expenses.

After the first round of discussions on pricing with the board of advisors, Maui and Mannix considered reducing prices of both the tools. Maui suggested a one-time implementation fee of PHP 10000 for OAT, and PHP 2500 for FMT, along with PHP 100 per vehicle fee for OAT, and PHP 1000 per vehicle for FMT, also indicated in exhibit 3 (option A). At the same time, Mannix was more worried about the potential competitors and that's why he suggested reducing the one-time implementation fee of OAT to PHP 5000, and of FMT to PHP 500, along with PHP 50 per vehicle fee for OAT, and PHP 600 per vehicle for FMT, also indicated in exhibit 3 (option B).

Maui and Mannix knew that next year they might have to reduce prices further to be on par with the competition. During the second round of discussions with the advisors, Maui and Mannix informed that they were willing to negotiate the prices further down to PHP 40 per vehicle per month for OAT, and to PHP 360 per vehicle per month for FMT without any implementation fee, if needed, as a preemptive action against potential global competitors. After plugging in the revised prices, they were worried to see that the projected profit trend and projected growth rate figures dropped significantly.

Just before the next round of discussions with the board of advisors, Maui and Mannix were wondering what could be the other strategies they could adopt to ensure a reasonable profit as soon as possible. They were open for a cost management exercise also. However, they were not sure if it will help, and costs on what heads can be targeted. Mannix prepared a list of issues to be discussed and Maui noted down some dilemma they were facing. Should they focus on pricing even if the competitors have not yet entered into the Philippines market? Or should they ignore the potential competition at this stage? Are they ignoring some potential customers for SmartFleet? Is SmartFleet good enough for the market they targeted? Both Maui and Mannix knew that the next course of action after the advice of the board would help them surf the wave towards success, or they would be drifted steadily away from a lost opportunity.