From freight-forwarder to lecithin trader: Levan Merkviladze’s entrepreneurial supply chain business
Levan Merkviladze is the co-founder and Head of Business Development at Seven Lines (www.7lines.biz). He is currently in the final year of his Logistics and Supply Chain Management MSc (Executive) at Cranfield School of Management. His MSc thesis focuses on designing an effective network for transporting products across Europe, from east to west. We caught up one afternoon after he attended his last module at Cranfield, to talk about many things, including his current business and also the emerging notion of ‘entrepreneurial supply chain’. Here’s what he said…
His early career…
I began my professional career with a local freight forwarding company in Georgia, specialising in Project Freight Forwarding which involved transporting steel, pipes and all types of heavy equipment for the oil, gas and chemical industries. After five years, I then moved to Panalpina, a Swiss multinational supply chain company, working in many different positions in a number of countries, before I became the Managing Director of Panalpina in Ukraine and Belarus.
After 15 years at Panalpina, I decided to leave the company to join the Logistics and Supply Chain Management MSc (Executive) at Cranfield. My hope was that after my studies, I could go back into the corporate world, most probably in the US, or to start my own business. Within the first year of my studies, I went through all my different options, but finally I decided to start my own business, rather than going back to the corporation. I analysed my strengths and weaknesses to select the most suitable business to embark on. My strengths included; the long standing record in logistics network in Europe and Asia, my knowledge of the legal aspects, customs, international trade laws, and niche network in certain sectors.
Embarking on his own business…
In less than one year, I came up with three business ideas:
- trading and processing wooden pellets;
- building up the charging stations for electric cars;
- trading and processing of lecithin.
After some consideration, the wooden pellets business idea turned out to be less favourable. The pellets industry very much depends on the oil price. When the oil price is high, wooden pellets business can be lucrative, but when the price is low, the business can be risky. Out of the last two, the lecithin business seemed to be more favourable as it does not require significant up-front investment, as the electric charging stations do and it is more stable compared to the wood pellets business.
The notion of entrepreneurial supply chain…
My lecithin business clearly exhibits an end-to-end supply chain. I procure bulk lecithin from four different countries: Russia, Ukraine, Argentina and Hungary, representing a truly global sourcing. Procurement is the starting point of a supply chain. The bulk lecithin is then transported to the processing facility, which in fact is a warehouse. I blend the products, carry out chemical reactions, before the final product is finally ready and packed.
This is a very typical supply chain. The lecithin bulk has to be stored inside the silos. The storage facilities therefore need to be managed properly to ensure the total cost remains low.
I do not invest in heavy equipment, but I invest in inventory. Inventory management is an important part of my business. My money stays with the inventory until I sell the products, so it is crucial to manage the right level of inventory.
On starting his own business in supply chain…
I would advise young people who are thinking of starting their own business in the supply chain area to study supply chain prior to starting their own businesses. This will really help them. The study may not help them in making decisions about what kind of business to start, but suppose that the decision has been made; it’s really useful for anyone to be well-trained in supply chain. If you want to commit to a supply chain related businesses, you have to be good at supply chain. It sounds obvious but supply chain courses will indeed help you to get there. If you already work in a supply chain related business, the course can become an acid test, as to whether you want to stay in logistics and supply chain or embark on other business ventures.
Levan can be reached at firstname.lastname@example.org