Case study:

LogiTrak, an innovative venture from Northeastern University IDEA, aims to transform the supply chain landscape by simplifying the complexities faced by smaller firms. Traditionally, startups have had to allocate substantial resources to assemble in-house teams or hire consultants for their supply chain needs, resulting in significant budgetary constraints. Today's startups often spend weeks conducting extensive research to identify providers for various aspects of their supply chain, including freight, storage, quality control, and final delivery to customers. The uncertainty of costs until orders are dispatched can be a challenge. LogiTrak has streamlined this process by introducing a beta version of an online calculator, utilizing proprietary algorithms, along with a web-based dashboard. This integrated solution enables companies to access comprehensive supply chain information in one convenient location, allowing them to anticipate and manage their costs effectively. As a result, startups can enhance cost management and streamline cycle times with greater efficiency.

LogiTrak currently acquires customers through direct sales, and they approximate that it requires about 16 hours of sales effort, including the time needed to onboard a customer.LogiTrak's primary focus is on a specific niche of customers who deal with pre-packaged physical products that need no further preparation. Their strategy revolves around attracting customers who seek precise cost transparency, knowing exactly when and what they will be charged. As LogiTrak expands, its plan is to continue serving these customers and managing their fulfillment needs as they grow. Subsequently, LogiTrak intends to extend its services to medium-sized companies looking to enhance and modernize their supply chain processes.

There are approximately 8,000 startups in the US today that LogiTrak can potentially target. According to the company's estimations, this represents around $30 million in potential revenue. Secondary research findings suggest that the typical startup begins by shipping 3,000 orders per month and increases to 5,000 orders per month within the first year.

LogiTrak has three primary competitors. OceanFreight offers online services but requires customers to have knowledge of both the warehouse location and the optimal shipping methods for their products, potentially making warehouse selection a costly challenge in logistics.XpressLogistics provides end-to-end logistics solutions but places a strong emphasis on serving the e-commerce sector. As for Wilderness Logistics, they primarily cater to larger customers, distinguishing themselves with their customer base preferences.

It is November, and LogiTrak is in pursuit of a $10,000 grant from IDEA's FundingBoard to support the company's growth initiatives. LogiTrak intends to allocate a portion of the funds towards hiring a designer to enhance the user experience on their website, streamlining the customer acquisition process. Currently, the onboarding of customers can be time-consuming as they require guidance through their dashboard. With improvements in user experience, LogiTrak can reduce the time spent on this process and redirect their efforts toward expanding their customer base. Additionally, part of the grant will be used to bring a programmer on board to develop a sales tool. This tool will enable LogiTrak to reach out to numerous businesses that are part of company incubators and have connections with venture capital firms.

LogiTrak also intends to allocate a portion of its sales efforts towards initiating strategic partnerships with company incubators, aiming to establish itself as a preferred vendor and expand its reach within the startup ecosystem. Ideally, LogiTrak aspires to provide relevance to companies involved in physical product supply chains at every stage of their operations. Once LogiTrak has fortified its user interface and successfully onboarded ten paying customers, the company's strategy includes targeting well-known newspapers, magazines, and social media platforms to generate content highlighting the innovative aspects of LogiTrak's business model.

As part of the funding process,LogiTrak has developed projected sales and expense forecasts, both with and without external funding. These forecasts are presented in Tables 1 and 2. As a crucial step in their funding journey, LogiTrak is scheduled to meet with the IDEA Boardto discuss their funding request, strategic approach, and projected business plan.

In anticipation of this pivotal meeting, the LogiTrak team, comprised largely of current or recently graduated software engineering majors from Northeastern University, has sought your assistance. As a student at D'Amore-McKim School of Business (DMSB) who has successfully completed the managerial accounting course, they recognize your expertise in the subject matter and believe you can provide valuable guidance in preparing for their presentation. You view this as an excellent opportunity to apply your managerial accounting skills in an advisory capacity for these budding entrepreneurs. Understanding the significance of managerial accounting data, you anticipate a series of important questions that the IDEA Board might pose. Your role is to prepare well-structured answers to these inquiries, draw relevant insights from the financial data, and provide any supporting exhibits or visualizations that can enhance the clarity of your analysis. To perform these analyses, you will use Excel as your primary tool. In your advisory role, your objective is to equip LogiTrak with the insights and information they need to effectively pitch their business idea for funding.

REQUIRED QUESTIONS

Please answer the following questions in order. Using Excel is required. Upload both the written document and the Excel.

1. Describe the industry and the competitors in which LogiTrak is entering. DiscussLogiTrak's strategy to compete in this market.

2. In what specific ways- financially - would the grant funding help LogiTrak? How would this be expressed quantitatively? What further questions might you want to ask of this venture (and is there any other types of data that you think would be useful?)

3. Classify the costs by behavior using the number of transactions (customer orders) as the activity. Be sure to provide both quantitative and qualitative support when applicable. Does there seem to be an opportunity to substitute fixed for variable costs (or vice versa)? Show the classification of costs in a Table.

4. Prepare a contribution margin income statement by month with and without the funding. Comment on LogiTrak's cost structure.

5. Calculate LogiTrak's breakeven point by month with respect to the number of transactions. How does breakeven with and without the grant financing compare? Show your calculations in detail and provide any assumptions and/or approaches that you took to frame an answer to this potential question posed by the Board.

Assume grant funding for these questions

6. Which forecasts will the Board be most concerned about accuracy and/or not meeting the projections (Describe only the one that is most concerning)? Why? How shouldLogiTrak respond to alleviate some of the Board's concerns?

7. Prepare a sensitivity analysis (+/- 10%) around the average transactions per customer for the Q1 forecasts (present as a contribution margin income statement). What can you conclude from the sensitivity analysis?

* Transactions are orders placedby each customer with LogiTrak. * Transactions are orders placedby each customer with LogiTrak