IT Reseller spoke with CEVA Logistics' executive vice president UK and Ireland, Leigh Pomlett, and senior vice president IS&S Northern Europe, John Court, about CEVA's underpinning business and environmental strategies, and about how IT plays critical role in ensuring the company best serves its customers in the UK and Ireland.
CEVA Logistics is a global supply chain management company that provides endto- end design, implementation and operational solutions in contract logistics and freight management to large and medium-sized national and multinational companies. Worldwide, it employs around 50,000 people and runs an extensive global network with facilities in over 100 countries. For the year ending 31 December 2008, the Group reported revenues of 6.3 billion. CEVA provides both supply chain management services overseeing a customer's transportation and distribution operations and contract logistics services providing warehousing and distribution to customers on an ad hoc basis. Customers include companies in the aerospace, automotive, consumer goods, electronics, healthcare, print & paper, retail, and utility industries. Formerly known as TNT Logistics, the company was acquired in 2006 by private equity firm Apollo Management. TNT Logistics subsequently adopted the CEVA brand. In 2007, the company began offering freight forwarding services after merging with US-based EGL.
Riding the storm
Leigh Pomlett, CEVAs executive vice president UK and Ireland, recently joined the company, having formerly held the position of chief executive for mainland Europe for DHL Supply Chain. He has joined CEVA at a challenging time when the logistics market, and the UK economy in general, has yet to fully recover from what has proved to be a particularly protracted recessionary period. Neverthe - less, he observes that CEVA is riding out the storm well, partly by a putting in place a cost reduction and productivity initiative, including a small reduction in staffing levels and around an 8 per cent reduction in UK warehouse sites.
By taking such action over the past 12 months, we have largely managed to counteract the effects of the recessionary forces that have taken volumes down, he said. I think theres a truism in that recession often drives better performance.
In our case, we have attended to things that we otherwise might not have done and are now far more critical of ourselves in a constructive way. Consequently, we find ourselves in a stronger and more efficient position in the market place. As regards the companies within CEVAs customer base, Pomlett believes they are planning for better things and many of them have a reasonable expectation that things will improve around the second half of 2010.
Pomlett recognises that one way to protect profitability in hard economic times is to reduce company outlay in terms of things such as fuel expenditure. He is also quick to realise the positive environmental repercussions by putting in place such a strategy. We are very aware of our carbon footprint and continually measure, monitor and improve this in terms of our truck and warehouse operations, he explained. We require it of our business, and our customers increasingly require it of us too. Our truck utilisation is up massively yearon- year, while our truck mileage in terms of achieving the same aims is down. So its about being more intelligent about our everyday operations. We now have a lot more central control over our operational fleet and utilisation has gone up as a result. And the fact that saving fuel costs for our business also helps the environ - ment is one of those joyous situations where doing things right actually makes you more profitable too.
"The fact that saving fuel costs for our business also helps the environment is one of those joyous situations where doing things right actually makes you more profitable too.
The value of technology
Specifically focusing on the Groups UK and Ireland operations, CEVAs John Court stresses that technology plays an absolutely key role in helping the company to win business and improve its operations. Any large-scale sophisticated supply chain is highly dependent primarily on optimised processes, and using the right technology to underpin these processes, he said. So, were always looking to differentiate ourselves in the market through both leading technology and very good practical use of that technology.
He also makes the point that, on the one hand, CEVA is looking to repeat processes to propagate best practice across its operations, but on the other is looking for flexibility to best serve either a particular vertical sector or particular customer.
So, the balance between these two areas is putting in place something that is very repeatable and scalable, while also making sure that we are able to differentiate the solution and customise it to the specific needs of our supply chain, explained Court. For example, some of the techniques that we apply in high-tech supply chains are also extremely relevant for consumer and retail, or even automotive, but other aspects probably arent. So, were always looking to get the right economies of scale across each area, while also focusing on flexibility.
Court points out that CEVA has set out to achieve these requirements by putting in place what he refers to as Smart solutions. These solutions either focus on a specific industry or on a specific activity, he said. For instance, we are a leading layer in two-person, homedelivery products such as furniture and kitchen units to the end consumer. We have well optimised processes, including IT technology, for this sector. Solutions include mobile IT technology such as vehicle tracking, and also use mobile handhelds to notify the customer when were en route to their location, making sure theyre at home and able to receive the delivery, then scanning product at the point of delivery. Court added that CEVA can also refine these technologies and apply them to activity in other countries and other core market sectors. For example, if we are delivering medical product to patients at home, some of the facets of the supply chain are quite similar. So, we need predictability, very tight control, and need to know of any possible exceptions in the supply chain at the earliest possible moment. We also need to be able to notify not just our internal planning and logistics expert but also the end consumer of any issues that occur as they occur. For much of CEVAs mobile capability, the company relies on best-of-breed solutions, such as Microlise for vehicle tracking and improving fuel economy, and Axida for home delivery. We have developed our IT infrastructure with companies such as Microlise such that we had early access to the technology, said Court. He also explained that CEVA uses Masternaut for some of its tracking requirements, such as more generic web tracking of vehicles on its shared user fleet. In addition, CEVAs fleet drivers are supplied with Motorola handheld devices.
For ware - housing, CEVAs UK and Ireland operations rely on RedPrairie, while on the networks side, the company has in place a Vodafone mobile network, together with a BT voice & data network. Court added that, in terms of software solutions deployment, CEVA is very highly standardised. We have one instance of the software solution in a central data centre in Birmingham, we have a team that can configure and support the software and another team that is expert at implementing RedPrairie, he explained. CEVA has approximately 35 warehouses in the UK supporting over 120 customers, and all information related to these customers and their requirements is hosted on one instance of the RedPrairie product.
And what of CEVAs channel strategy? Court explained that, if there is an instance where broad knowledge in a particular technology area is required, then a vendor/integrator such as RedPrairie, Microlise or Motorola might be asked to undertake the work.
"Any large-scale sophisticated supply chain is highly dependent primarily on optimised processes, and using the right technology to underpin these processes.
However, he adds that, in some areas, the company gains internal economies by supporting product in-house. However, he adds that CEVA buys some of its handheld devices through a channel partner such as Microlise, for example. As well as being a vendor partner, Microlise also acts as a reseller and provides us with a lot of our Motorola handhelds and other types of equipment, said Court. And because Motorola kit is integrated with other solutions, including Microlises own system, it makes sense for us to use Microlise as an integrator.
The data centre used by CEVA in the UK and Ireland is owned and managed by SCC. SCC has also acted as a reseller for many of the servers that CEVA has in place. We moved to the data centre about two and a half years ago, transferring from our previous data centre, said Court. One of the reasons why we decided to work with SCC was that the company had a broad range of skills that were of direct value to us. These skills helped us through the whole company transition process, and if we experienced any instances where we had a skills gap SCC was able to work with us to fulfil this requirement through its range of capability.
Previously, CEVA had relied on an inhouse managed data centre. Court again: Around two and a half years ago we were going through a change of ownership, separating from the TNT Group, and we wanted to move all of our equipment out of the TNT data centre into a thirdparty, co-located data centre. So, we went through a full selection process. We started with a list of up to 15 potential vendors, and narrowed that down to 3, and then went through a detailed analysis of each of those companies before finally selecting SCC.
Future technology deployment In terms of additional technology requirements, what is CEVA looking to deploy in the near future? Court pointed out that the company is currently trialling Voice-directed picking, and has already seen some encouraging results. We think there is a future for Voice within CEVA, where pickers need their hands free; for instance where they are picking quite large items such as tyres for commercial vehicles or lorries, or even where they are picking smaller items such as small electronic or automotive components. What we have found so far with Voice picking is that it maintains the quality and accuracy of goods picking, as well as speeding up the whole picking process. It is comparable to the quality of RF picking using a handheld scanner, but with the speed of, for example, paper-based picking. So, Voice drives productivity as well as quality and accuracy.
In terms of worldwide IT strategy, CEVA is currently looking to establish global economies and standards wherever possible. This is on the basis that, in our opinion, what is generally good in one country is good in another, and it allows us to secure the economies of skill and of scale with a small number of preferred partners, said Court. In the case of warehousing, for example, historically we had 30 or more different products in use. We are now beginning to rationalise this down to a much smaller number. In fact, the ultimate goal is to use one standard warehousing solution globally, and we are currently in final negotiations regarding this. Whether in terms of hardware, software or various types of specialist logistics products, there is only a relatively small number of companies that can actually deliver consistent quality across the key geographical markets in our view. Some simply dont have a presence in some of the key markets, but the larger more credible players do have that capability. In the case of hardware, this tends to be HP, Dell and IBM, while on the software side we use a lot of Microsoft products, an Oracle database and ERP, as well as Oracle financials, HR and administration.
Court added that, globally, CEVA is also looking to consolidate the solutions it uses in the field, as far as is reasonable. The assessment were undertaking at the moment on our mobile systems is considering whether we go for a regional approach in which case thats fine and we get regional economies in, for example, the Americas and Northern and Southern Europe and Asia or whether we use one preferred global supplier. Our starting point is to say we would like one global provider for each key capability. The extent to which this is possible depends on the capabilities of the providers and the capabilities in the market to deliver an acceptable level of service quality.
As regards growing trends within its customer base, Court points out that customers are increasingly expecting logistics providers such as CEVA to have more global capabilities. In the case of a major blue chip organisation who were working with in more than one geographical region, they expect us to be able to repeat best practice across each territory and there are obvious implications for technology here, said Court. He adds that another growing expectation is for CEVA to be increasingly proactive in alerting customers, and internal staff, to any exceptions. In addition, Court points out that a key change in recent years has been that customers expect CEVA to be able to integrate with their systems in real time, rather than through traditional EDI messages. The requirement is for CEVAs and the customers inventory records to be synchronised at any point in time in order for CEVA to be able to process orders as they occur, rather than traditional batch mode. So things are becoming far more advanced in terms of what customers expect from our integration capability, and this is one of the current key challenges for us, Court commented.
"In the case of a major blue chip organisation who we're working with in more than one geographical region, they expect us to be able to repeat best practice across each territory - and there are obvious implications for technology here."
CEVA is also looking to rationalise the number of data centres it currently has globally. The number was in the 20s because of the way the company had grown historically, explained Court. It was partly through acquisition that we had this volume of data centres. We are now looking to reduce the number to an ultimate target of, physically, two, virtually one. This is our stated goal and were undergoing this process at the moment. Currently, we have a number of key strategic data centres per continent; one for most of Europe, one for the US and one in Asia, and were rationalising from the older legacy data centres into that smaller number of data centres.
Pomlett adds that, by putting in place such a strategy of improved efficiencies and further consolidation, CEVA plans to continually improve its performance levels in its core target markets. With this in mind, were going through a process of detailed strategic analysis at the moment, he said. I believe we can become absolutely world class in the aerospace market, for example. Were also very strong in automotive and plan to become even stronger, as is the case in certain elements in consumer retail as well, such as home delivery. Despite the current market climate, I believe the future looks bright for CEVA.