Special Report: The journey is the destination

Travelling on and moving ahead to your goal of greater profits

Human history and culture are full of little platitudes, proverbs and random pieces of wisdom relating to travel, about how we - and our goods - get from point A to point B.

You may have a need for speed - yet haste makes waste. The road of life twists and turns, yet no two directions are ever the same. It is true that what we leave behind is often less important than how we got there.

The same can be asserted to be true in the channel. What is the point of getting all the pre-sales and marketing right, offering the correct technological solution for an organisation's specific individual needs, only to fall at the final hurdle when the goods are delivered to the customer? Our lessons do indeed come from the journey itself, not the final destination, although the road to hell is paved with good intentions.

Mike Gammie, head of customer service operations at online reseller Misco, says that his 35 years in the IT channel have underlined to him how important the logistics and transport function is to success. Yet getting it right is another task that, like many,
is far easier said than done.

"I look after customer services, technical support, and all those things," he says. "I have been involved in IT sales and distribution for most of my life. And we are quite diverse at Misco, we are not niche."

Delivery leaves indelible mark
Gammie maintains that the penultimate leg of a sale - the delivery of the item or consignment - tends to be the experience that leaves the most indelible mark on the mind of the customer, and can dictate whether or not you ever receive another order from that customer.

Often, the channel company will not get another chance. So it is important for Misco to manage that phase and create not only a good customer service experience, but a strong impression of its brand and its values, he says.

And the more complex the company's operation, the more diverse its portfolio, and the more technical the products being delivered, the more challenging the task is for any carrier. The potential variables seem almost infinite. Therefore, says Gammie, you must choose your carrier with care.

"It could be pallets. It could be boxes. It could be simply a 52in television screen to be sent to a flat in Heathrow," he says. "When a carrier comes to Misco, they are looking at a pretty big beast and we are doing a lot of shipments every day. And, the way I look at it, the carrier needs to be an ambassador for us."

Like the official ambassadors of a nation state on a posting abroad, the company that delivers for the IT channel needs to be a skilled diplomat, navigating a precarious path that enables it to keep its client - the channel company or companies - and the customer happy with its performance, says Gammie.

And at the same time, the transport company needs to completely understand all the logistical challenges and technical issues that may come up when delivering IT to a customer. Staff may need to have the details of any one consignment or product at their fingertips at short notice, if they are not to risk embarrassment -
or worse.

"It is our name you will find in the consumer space, on the price comparison web sites [posted in reviews by customers], and that bleeds over into B2B as well," says Gammie.

He adds that Misco currently uses City Link, which has been performing well - despite some glitches during the Christmas period last year, largely related to the unusually severe cold weather.

"They are aligning themselves to our business," Gammie says. "We have gone to some carriers and said, ‘can you do that', but they tend to stick to how they want to do things. It is very important that a carrier can build its [operation] around us."

Flexibility is crucial
Simon Evetts, operations manager at distributor group Midwich, agrees with Gammie's viewpoint. Midwich uses a logistics company called Kuehne + Nagle for its warehousing, which is a veritable industry goliath - combining air freight, sea freight, road and rail, contract logistics and lead logistics divisions - based in Austria.

"We have a location in Dudley and another one in Erdington in the West Midlands. They are very close to the M5 or M6, so we can pick and pack until pretty late in the evening and still get it into the network to be delivered the next day," he says. "We had a warehouse in Norfolk until 1996, but the carrier would only work until 4:30pm and then we would have to give up and go home."

Flexibility - as well as an ability to deliver on time despite constantly changing circumstances - can be key, suggests Evetts. As is scalability, and having a clear view of who is responsible for what. Kuehne + Nagle provides Midwich with a service that includes all the necessary warehousing, for example, which was provided by another third party until about 1998.

"They provided some warehousing, but we filled it up in about 18 months so we had to look elsewhere," says Evetts. "Warehousing is not our forte. Our forte is buying and selling IT goods, so we look for someone who can provide a package to look after those services."

Another key, he says, to a smooth journey for customer and IT channel partner is negotiating the right KPIs and SLAs with the carrier or logistics partner.

"However, our KPIs are not massively onerous. We have some figures that they have to achieve. We have targets whereby everything they receive into the warehouse by 3pm, for instance, has to be ready to be shipped the same day," he says. "And they achieve these. There are also some related to returns and other minor issues."

For carrier duties, Midwich also uses City Link, which liaises with Kuehne + Nagle directly regarding logistics. Carrier KPIs centre on delivering as many parcels as possible, in as perfect a condition as possible. It is inevitable, Evetts suggests, that some shrinkage and damage occurs from time to time, but this can certainly be minimised with the right security, processes and resources.

"City Link took over Target four or five years ago, and there were some teething troubles," he adds. "But once again the working relationship with those guys is such that they really do look after us. And they are able to respond as things change."

Evetts asks, however, why - with rising costs all around - some VARs take delivery from a distributor or vendor, and then deliver it again to the customer - effectively charging for delivery twice.

Importance of technology customers
Duncan Faithfull, sales and marketing director at carrier City Link, says its B2B work with technology customers has become increasingly important over the past four years, since it bought B2B-focused carrier Target Express. It is now two-thirds B2B, with a large chunk of that coming from IT deliveries.

"As a business, we are focusing on only four categories in terms of how we are going to add value to the supply chain, and technology is the most important," says Faithfull.

He adds that City Link recognises that in transport and logistics for the IT channel, security is paramount. The company aims to be the most secure carrier in ICT, with the latest track-and-trace technology combined with GPS, and in-van CCTV camera surveillance trained on the parcel cages. This has required considerable and ongoing investment, which is needed to tackle what in years past have been industry-wide issues concerning security and shrinkage.

Cracking the security code
"The story starts for me personally a year ago when I joined the company. We were doing a lot of research about current customer businesses, and what they wanted. From the technology guys, the message came back loud and clear: ‘If you take your eyes off the security ball, we do not want to talk to you'," says Faithfull.

City Link has found that the way access to products is managed is very important in creating and deploying the right transport solution for the channel. It has also invested in telephony, customer care, and an accounts management team that specialises in the IT channel.

It is the company's unshakeable belief that a successful carrier of ICT must not only understand the sector and have the ability and flexibility to cope with changes in demand, but understand the technologies it delivers, Faithfull says.

"We have a network that is security-caged from start to finish," he adds. "The opportunity for both damage and any sort of shrinkage is minimised. When you receive the technology shipment, it goes into a secure cage that is not opened until it gets to the depot."

City Link also uses secure tote boxes within the cage, and parcels are traced using GPS from pick-up until delivery, supplemented with customisable insurance, while according to Faithfull its "van cam", which points into the cab, takes security to a new level.

"You can see what is going on with any parcel at any time," he says. "And of course, all our drivers have handheld PDAs, recording the GPS tracking on every parcel."

In addition, the MyCityLink portal now allows customers to find out where their consignment is at any time using the GPS co-ordinates.

"Our service levels for deliveries are now at about 99.6 per cent, using our proof of delivery notes," he adds.

Pricing can be by item or by volume, depending on the type of consignment. If you are delivering 20 large-format displays to one address, for example, you can only fit so many into a van and this has to be recognised in the pricing structure. With all the investments made over the past year, City Link is now ready to target increased growth through 2011 and beyond, adds Faithfull.

City Link announced in March that it has reduced its reliance on drivers who are subcontractors, in a bid to increase security following a number of successful prosecutions of consignment thieves in recent years.

The end of the journey
Derek Walton, finance director for northern Europe at Magirus, says the distributor primarily uses Schenker as its third-party logistics company. "We are pan-European and we have a logistics site based in Strasbourg. So all our European deliveries are from Strasbourg," he says.

However, Walton echoes the sentiments of Faithfull, Evett and Gammie. It is critical that carriers not only are efficient at delivering goods per se and do so as securely as possible, but that they understand IT. Often the IT consignment may be complex. Often, it cannot be left out in all weathers, he says.

And then, it is possible that the deliverer may be required to help set up at least partly some of the equipment when it arrives, or understand that it needs to be delivered to a datacentre around the corner - rather than, perhaps, simply leaving it in a heap at the named address, and leaving the customers potentially in the lurch.

Channel players that do not focus on the importance of the transport and logistics function - that consider their job to be done once the goods have been dispatched - are in reality taking an almighty risk, notes Walton.

"Most of the [physical] deliveries we do right now are based on Cisco product, and configure-to-order of Cisco product - Cisco has recently moved into the server market, and we had the build-to-order expertise," he adds. "The distribution and logistics part of that is really important. The product must get there on time, in good condition, and it must work.

"How all that affects your customer is obviously critical."

Magirus offers UCS configuration
■ www.channelweb.co.uk/1878651