Express delivery

Speed is of the essence for TNT Express, which means any failure in its IT systems could prove disastrous. Diana Milne meets the man in charge of ensuring the worst never happens, TNT Express’ head of IT Shwan Moubarak.

Downtime is not an option for a company whose business survival depends being able to deliver the goods – fast.

That is why the head of TNT Express’ IT systems, Dr Shwan Moubarak has set a target of 99.97 percent for the availability of the company’s systems – a target which he is proud to say, he has never failed to reach: “In our view we have to provide extremely reliable systems. So our target for our infrastructure system is to be available 99.7%. And we always exceed that year after year.”

TNT Express’ network of operations is vast, spanning 200 countries around the world, with 750,000 staff employed worldwide. It delivers 4.4million parcels a week using a network of 2,331 depots, hubs and sorting centres and operating 26,760 road vehicles and 47 aircraft.
Moubarak has the task of co-ordinating IT operations across the group, which involves managing hundreds of applications, including tracking systems for customers, RFID and GPS solutions and mobile worker units for the global network of drivers.

To make the task easier the group has implemented a unified IT structure across all its operations – this also ensures that the customers interface with the same system wherever they are in the world: “A common infrastructure and system means we can deliver a consistent face to the customer globally,” says Moubarak. There is one track and trace system for our customers. They can review any package from the UK to Singapore and it’s the same screen that everybody sees. Using this unified system we can maximise efficiencies with our suppliers and we can support the IT of TNT Express at an incredibly low percentage of revenue.” Elaborating on how having one uniform IT system enables the company to save costs, he says: “We don’t have to reinvent the wheel all the time. Each process is only done once instead of eight times. So for example we’ve only got one common SAP implementation for finance and administration.”

This wasn’t always the case. When Moubarak took up his role as head of ICS in 1993, the company’s IT systems were fragmented across different business divisions. He describes  how he succeeded in restructuring the IT infrastructure: “When I got here, in the international business alone, there were three operational systems, four sales and marketing systems and at least two or three finance systems. We got rid all that. We also had four or five data centres. We consolidated all that into the UK where we now have a worldwide computing centre for help desk and support and processes. We replaced the entire system and rationalised it from an organisational, infrastructural and applications point of view.

The organisation is currently in the process of migrating to a  Linux operating system and Oracle databases.

Logistics is one of the industries that benefits most from time saving technologies and TNT Express is quick to capitalise on the latest cutting edge technology to make its business more efficient. It has deployed RFID for parcel level tracking and plans to roll out GPS, which is currently used for vehicle tracking, across its entire fleet: “RFID is currently used for parcel tracking on certain traffic lanes and for specific global accounts. It is used throughout our road network and is being introduced on the air network. Wholesale use of RFIDS to track every one of the millions of parcels we deliver each week will come sometime in the future,” says Moubarak. He goes on to say that  GPS is already deployed for vehicle tracking on parts of the Express fleet and will be deployed across the whole Pick Up and Delivery and Linehaul fleets in the coming years.”

Mobile worker units have been deployed by TNT Express for its drivers since the 1990s however the company has recently upgraded the technology and now plans to roll it out to drivers in 17 additional countries by the end of the year: “Our new breed of Windows based mobile solutions are being deployed to replace the earlier devices,” says Moubarak. “We have over 10,000 of our PUD drivers implemented and total replacement is on track to complete during 2009. Early issues which related to maturity of the technology have been resolved and we now expect high levels of reliability,” he goes on to say.

Regardless of this spending on new technologies however, Moubarak believes the most important investment the company can make is in skilled IT professionals as it is the human element within the technology infrastructure that plays the most crucial role in keeping it running: “We manage hundreds of IT applications but the key thing is our people. The secret to successfully managing the IT applications is having professionals in place who understand the business processes and the technology and link the two together,” he goes on to say. “To be honest any company can buy this technology. We all have the same suppliers but our competitive advantage is our people and the challenge is to keep them, add to them and make sure they are with you.”

While TNT clearly plans to continue investing in cutting edge technology and trained personnel. the organisation, like all companies in Europe faces the prospect of a hard year ahead. Already the company’s profits have plunged – particularly within the TNT Express division. A report published by the company in December 2008 regarding TNT’s financial position revealed that volumes in the premium Express market in Europe continue to decrease and are now “well below levels of the comparable period in 2007.” According to the statement, “TNT does not assume improvement in these economic circumstances in the immediate future.” The company now plans to take “aggressive steps” to reduce its costs to protect revenue and margin levels. TNT as a whole is now targeting structural cost savings totalling €270-330 million.  As part of this TNT Express is targeting structural savings of €170-210million to be achieved by 2010, of which €90-125 million will be achieved in 2009.

These figures mean TNT Express has been unable to publish a full year 2009 outlook and is instead publishing its results on a quarterly basis.  It has however set out some objectives for the year ahead including improving intra regional connectivity in emerging countries and intercontinental connectivity and refocusing the organisation on a regional basis.

Despite this gloomy outlook Moubarak remains confident regarding the company’s continued investment in IT and the management’s understanding of the role of technology in driving the company’s business objectives: “I’m a member of the board and I report directly to the CEO which shows that they are committed to this (IT). At the end of the day our impact ton the business processes and the business itself are very high. So, frankly, if the systems go down our major hub with all the planes going in and out will stop . IT itself is fully integrated with the business and it’s not a luxury item.”

Moubarak’s own background as a mathematician means he is well prepared to tackle the technical complexities of his job – but he says his professional experience has taught him, that as a discipline IT should be regarded as a business process first and foremost: “You have to look at IT from the point of view of running a business. And you’ve got to be close to the business to understand the role it plays in that. There are people who think IT is all about technical wizardry but I think you have to think about it in a more down to earth way in terms of how it adds value to the business. It is about relationship building and about putting the business case forward in a coherent and articulate fashion.”

Investing in information technology
Delivering information as quickly and safely as parcels and documents requires solid information technology (IT). The possibility to “track and trace” consignments is but one application of IT. TNT also uses innovative technology to offer electronic booking services, reduce costs, and speed its processes.

For example, TNT relies on imaging to accelerate customs clearance. The efficient use of digital signature technology will) allow TNT Express to offer secured electronic invoices in over 30 countries, including most EU Member States, Australia, Singapore, Hong-Kong, South Africa, Kuwait, and the United Arab Emirates. For customers, TNT’s e-invoicing service reduces paper processing costs and improves the accounts payable management process. TNT Express estimates that it could eliminate up to one million paper invoices per month. TNT is putting considerable efforts into upgrading the IT systems of the companies it acquired. Since March 2008, all the 168 offices of Speedage, TNT’s road express arm in India, have been connected to TNT’s global IT system Global Link. As a result, businesses shipping goods by road in India can track and trace their consignments in real time, 24 hours a day. The IT upgrade is a major step towards the transformation of Speedage into a full-fledged express delivery services business.

TNT’s information and communications services team, which employs 500 people in Atherstone (UK), provides IT systems and services to TNT’s entire express division. It operates servers, computers, and communications networks used both internally and by customers. More than 60,000 clients use TNT’s website every year (300 internet hits per second).

Given the breakneck changes in IT, TNT prefers to be an early evaluator rather than an early adopter of new technologies, which may lack maturity. For the past six years, TNT has investigated the effectiveness of RFID (radio frequency identification). Six years that saw new standards emerge and unit costs go down. TNT implements several RFID-based solutions. It has built the IT infrastructure to put RFID tags on more packages once the technology has proved mature, reliable and cost effective enough.

TNT Express: A global focus
TNT’s express division is a global player delivering shipments to over 200 countries, with fully owned operations in 65 countries. However, the group focuses more on domestic and intra-continental markets than on the intercontinental business. That is because the biggest express delivery markets are domestic. Less than 10 percent of volumes shipped in express delivery networks move between continents. TNT thinks that building local and regional strength is the best way to capture the strong growth in China, India, Brazil, and other emerging markets.
TNT pioneered the shift by international express delivery companies toward interior India, China and Brazil when others focused on exports and imports. Building road infrastructures inside these countries and connecting them to international routes forms the core of TNT’s growth strategy. To accelerate its expansion, TNT acquired local road-delivery companies and gradually transforms them into real express operators.