John Allan is no stranger to tackling the complexities of integrating sizeable companies. After bringing together Exel and Ocean Group just a couple of years back, the inexhaustible chief executive of Exel is now busy pooling the resources of two of the biggest names in contract logistics – Exel and Tibbett & Britten.
‘We want to get on with integration as quickly as possible and expect to finish the exercise by the end of this year – however, full systems integration might take a little longer,’ says Allan. He has a clear understanding of where the strengths of the two companies lie and how they should dovetail together. His ambition to create a truly global logistics service company has come a step closer.
‘Exel is strong in the US and Tibbett & Britten is strong in Canada. Both are of a reasonable size in Mexico, but Exel offers strength across South America. Over in South and West Africa Tibbett & Britten has great presence, however, in Asia, Exel is much stronger. And in Europe, both brands are very active in Spain, but in France Tibbett & Britten is bigger than Exel.’ All in all, Allan calculates that in continental Europe, ‘we have a business 70 per cent larger than it was before.’
Besides the geographic positioning of the company, where China, India and South East Asia hold an increasing interest, Allan seems keen to fully understand and respond to customer needs. ‘Every customer’s needs are different. There are a number of customers that want someone to orchestrate substantial chunks of their supply chain. But, at this time only a minority want a completely fourth party arrangement.’
Questioned as to his views on the encroachment of consultants and ‘assetless’ service providers on the contract logistics market he remarks, ‘The world changes – the work consultants did ten years ago is now done by our industry – we now have greater capability to offer consultancy… This industry is a rich tapestry – American concepts don’t always play in Europe.’ But both strategic, as well as tactical skills, are now necessary to win the high ground in corporate supply chain deals.
He believes having the right calibre of account manager is crucial to maintaining good customer relations, ‘we need managers that are proactive’, adding ‘it’s action and following up rather than just suggesting and forgetting that’s important.’ And in reference to sharing rewards for improvements in client processes, ‘make sure you document each suggestion, as the client quite often forgets who came up with the idea.’ He goes on to point out, ‘We have a number of contracts where we are taking an increasing share of the value we create – but we are taking more risk. Scale is very much an advantage here, although we are quite careful about risk.’
So what about the topical subject of risk and automated warehousing? ‘There are very real issues of flexibility with automation. However there are instances where automation works very well. Overall, these projects take a lot of effort and commitment,’ says Allan.
Looking to the big issues facing the contract logistics scene, Allan believes a lot of the growth in the sector will be from outside the European economies, principally, Asia – although, East Europe will be important too. The question will be, ‘How can you transfer your skills to these developing markets? Can our industry create and deploy solutions to manage to best effect these long [global] supply chains?’
In information technology, the challenge will be ‘in achieving the levels of IT necessary to deliver value to our customers,’ says Allan. With relation to client partnerships, it’s ‘How we develop a fair share of the cake with our customers. How we develop business models.’
And finally, he turns to people and skills, here he throws down the gauntlet: ‘How can we develop the people for global supply chains – why shouldn’t the UK be a world centre of excellence for developing global supply chains?’ That’s an issue for us all.