Stefano Perego is logistics director of Rexel UK, the British arm of the world leader in the distribution of electrical parts and equipment to professional installers in the industrial, commercial and residential markets. Perhaps unusually, he has no direct ‘reports’ within the territory but this is, he says, an advantage, enabling the company to go with the highly localised character of its business without interference at country level.
Perego explains: ‘Our business is regional and even local – not everything can be handled centrally. Regional direction has to move many of the variables including logistics and purchasing in response to customer needs, while we control and support it centrally.’
Recognising this, Rexel is currently engaged in regionalising procurement.
Perego says: ‘It’s important to establish regional relationships with suppliers. In the past, we have missed the opportunity to capture money and develop a stock management competence at the regional level so we are moving toward a regional procurement structure, albeit one controlled from HQ.
‘For example, in the UK we had a nationwide carrier contract. This didn’t work. The carrier had no sense of belonging in the region and regional directors saw the contract as an imposition. So we are renegotiating. It may be that the same national carrier will get the business but the contract will be regionalised.
‘One of the concepts I like most in logistics is flexibility. The organisational model needs to be flexible . We can’t target London with the same logistics strategies as work in East Anglia or the North-West. Equally, we need flexibility with suppliers. Three-year contracts are not right – we need to be able to make changes on a yearly basis. As a growing company our critical mass keeps shifting and we have to make efficient use of the resources that come with our acquisitions. This doesn’t mean we have to benchmark everything every month but we need to review major contracts at least once a year. We don’t want to be tied toservice suppliers without the possibility of changing the organisation or the service.’
Perego says UK suppliers are generally more flexible than those in, for example, some Latin countries, but overall ‘we are trying to boost our flexibility by changing mentality at the branch manager level and getting away from the “We’ve always done things this way” state of mind. We need to adapt to the area and the customer, and in the UK at least we have the grounds and the mindset to play like this.’
Perego doesn’t believe Rexel can learn a lot from its direct competitors, ‘but we can learn a lot from our mistakes if we have the maturity, and we can learn from other sectors like retail and pharma. Electrical wholesaling is one of the most primitive distribution businesses – behind even plumbing – and the wholesale environment needs to wake up.’
He compares the UK with France, where Rexel has a dominant market share and, he says, ‘our distribution is much more like, or even better than, that of other businesses’.
In the UK, (or the US for that matter) where Rexel’s share is smaller and the customer base has many more locals and independents, ‘there are a lot of opportunities for big gains in the logistics cost structure and service delivery’.
Perego is an enemy of logistics dogma. For example, the dogma that dictates you must have national logistics centres. ‘Two years ago we had one in the UK. We closed it down because it was too costly and was inappropriate to serve our customers’ needs. The most successful DCs are those with synergistic profitability – ones that increase the opportunities for payback on the structure. We need to think of logistics structures that are not just dedicated to major contracts or replenishment functions, but are also open to other types and sizes of customer.’
- Stefano Perego graduated in management engineering in 1997 from the Polytechnic of Milan. His first post was in materials management with Black & Decker in Italy.
- He then joined a German pharmaceuticals distribution company as a logistics analyst, developing and implementing KPIs for logistics and purchasing in the Italian operation.
- He moved to Rexel first as logistics manager for the Bologna region, then three years ago was appointed operations director for Italy. Seeking Anglo-Saxon experience, he also spent time for the company in the US but at the beginning of this year was appointed logistics director for Rexel UK, managing the whole supply chain and developing logistics design and performance.