You are the Vice President of Global Business Development at a Minnesota company called Sustainable Logistics, Inc.

Your company makes sophisticated semi-trailers that use the truck’s engine heat and movement to dry wood chips that have been harvested in forests and trucked to power plants that use them for fuel.

Your company rides the wave of developments in the sustainable fuel industry—specifically, the use of cellulosic ethanol as a motor fuel. The most promising new cellulosic ethanol technologies involve the creation of ethanol-based motor fuels through the chemical conversion of cellulose (wood), which chemically is a complex sugar with strong molecular bonds.

The most important variable in any cellulosic ethanol venture is the amount of carbon generated in the production of the fuel (“carbon inputs”), as U.S. federal regulations and the subsidies available under them require ethanol production to be substantially less carbon-intensive than other ethanol producing processes, such as that used to convert corn into ethanol.

Cellulose is found in the cell walls of plants. Wood is an excellent and plentiful source of cellulose. Thus, every cellulosic ethanol plant that has been built to-date is located near an ample supply of wood, known as its “feed stock.” The level of Carbon input to any cellulosic ethanol production facility is primarily influenced by two carbon-intensive activities: (1) feed-stock harvesting/processing/transportation; and (2) drying.

Feed stock processing and transportation is carbon-intensive because of the motor fuels burned by portable processing equipment (harvesters, chippers and grinders) and the large diesel-powered semi –trailer trucks used to transport the processed feed stock to the plant. Under current economic models, fuel prices and transport technologies, feed stock processing and transportation becomes carbon and cost infeasible at a transportation radius of about 20 miles, which would severely limit the feed-stock options and profitability of high-production cellulosic ethanol plants—even those located in the fast-growth pine areas or southern Georgia and Alabama.

Likewise, feed-stock drying has its carbon and economic limitations. Freshly cut and processed wood has a water content of about 40-50 percent. In order to enter the cellulosic ethanol production stream the water content of the wood must be reduced to less than 10 percent through drying, which is done by heating the wood in large, costly, stationary dryers that burn fuels like propane or natural gas.

Your company has designed, developed and patented a revolutionary wood-chip transportation and drying trailer. The trailer leverages the two chief carbon inputs of cellulosic ethanol production to radically alter the carbon and logistic calculus of the industry. Here is how:

Using the heat generated by a semi truck’s engine (heat that is normally dissipated uselessly into the atmosphere), together with the air stream made available by a vehicle moving at speed, the wood chips are dried on the way from the forest to the plant . In other words, every mile driven from forest to plant becomes an opportunity to leverage one, and substantially reduce another, major carbon and cost input.

The technology is revolutionary, but it is expensive. The truck and trailer combination costs 3x more than the cost of a conventional truck and bulk transfer trailer.

Conventional Truck/Trailer: $250,000

Sustainable Logistics Product: $750,000

Margin: 30%

Despite the hefty up-front investment, sales in the U.S. have been strong. However, the U.S. sustainable fuel industry is constantly at the mercy of a fickle and unreliable U.S. federal government, which subsidizes development and then, suddenly and inexplicably, eliminates subsidies. Your company’s leadership has come to the conclusion that, in order to survive, it must expand into commercially promising but politically stable foreign markets.

Many developed foreign countries, like Germany and the Netherlands, have much more welcoming, supportive and consistent renewable fuel laws than the U.S. It is your job to get the company there.

Required :

1. What is Statement of the opportunity (market problem)
2. Description of the product solution
3. Market positioning and messaging
4. Market entry method(s): recommendation, analysis, support
5. Sales data (Customer segmentation, Pricing Segment penetration rates Years 1-5 revenue)
6. Manufacturing/technology/fulfillment plan (if applicable)
7. Legal/Regulatory risk management plan

Answer rating: 100% (QA)

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