How finance can unlock efficiencies in warehousing and transport
You may not automatically think of a finance team as people who can see into the future, but the team at XPO Logistics prides itself on being able to do just that, not only for the company itself, but for its partners, too.
Dave Tranter, Head of Central Finance at XPO Logistics Europe, is the team lead for the multi-award-winning finance department and is adamant that the secret to helping a partner business succeed is always to be one step ahead. To help with this, XPO Logistics’s finance department works “shoulder-to-shoulder” with the finance departments of its partners, giving them targeted support and advice to help the partner team maintain their focus in the right direction and boost the bottom line.
He said, “It is fundamentally about how we have structured ourselves. We are an operational financial team with around 80 people working in finance across the UK and Ireland. Still, we continually support our partners, and you will rarely see more than 10 of us in the office at once.
“Our real job is to make sure our partners are aware of the things in their business we think they should be aware of. This could include, for example, knowing how many pallets are in the warehouse or which types of vehicles are best suited for their deliveries. It means we can focus on more of the areas that we can help them make money from.”
Mr Tranter’s team is an expert at analysing data to anticipate what is needed and expected in the coming months. It makes strategic decisions simpler, and if everything is done well, it should mean they are answering partners' questions about how to improve their businesses before they’re even asked.
Mr Tranter said, “We have prided ourselves on anticipating what that question will be, and if people are coming to us and asking us these questions, then we are not doing what we are there to do.”
Forward thinking is done across the board, with sales personnel, in particular, being involved in the discussions. They need to have relevant information to help their business move forward.
Mr Tranter said, “The biggest thing we monitor is expansion. We consider expertise, expectations, and reality. If one person isn’t aware of what is expected and something happens that they aren’t aware of, then finance becomes the bad guy. It isn’t good to keep sales out of the loop, and then you have to tell them something bad. So, we’re always trying to stay one step ahead.”
Simon Evans, UK Finance Director at XPO Logistics Europe, said: “Our ability to support partners effectively results from a strong relationship between the two finance teams. We have always worked to make the difference between a partner succeeding and excelling in how their business grows. By integrating our expert finance personnel into their team directly on site, we have had the largest positive impact, and we will continue to look at the various ways we can use technology, such as AI, to help our partnerships become even more effective.”
One of the most memorable forecasting moments for Mr Tranter was early in his career at XPO Logistics, when he conducted a study for a client that sold and delivered flooring. The company needed to increase deliveries, and the most obvious solution would have been to increase the size of its trucks. This is effective for longer journeys, but given this business's specific needs, Mr Tranter’s analysis identified that the best course of action was entirely different. He said: “The initial instinct would be to get bigger vehicles, more tractor units. But when you looked back at the data, it showed the right decision was to bring in five more rigids, because they are smaller, can make quick local deliveries, and can make two to three deliveries a day due to the faster turnaround. The next week it was implemented. Having that kind of impact from a strategic perspective was a great feeling. There's nothing more satisfying than for someone to take something on once you have told them about it.”
The XPO Logistics’ finance team consider themselves to be “futurists”, so they work in a different way than many other finance teams. This can create a scenario in which partners need to learn how to work with the XPO Logistics team. For example, it might mean the team needs to spend some time initially convincing stakeholders of how they will interact with the existing finance team.
“They might initially take our approach with a pinch of salt,” said Mr Tranter, “but the finance team is there to provide the best way to work together, so we can tweak things and see how best to build the partnership. Our job is to make sure each client can get the most out of the logistics partnership.”
However, it isn’t just about how the finance team can help partners; there is also significant work underway within XPO Logistics itself to reduce costs and improve how the business operates. One of the most important recent changes was the finance team taking responsibility for the insurance team. This resulted in substantial changes to the way various processes are implemented, which have “revamped the way claims are managed”, said Mr Tranter.
He added, “When a driver has an incident, we take control of things, and we’ve redesigned the procedure for submitting claims. If claims get settled faster, we have less need for hire vehicles. Taking two hire vehicles off the road for two days at £100 per day each will save £400. Overall, we have reduced our average claim cost by £800.
“The small stuff adds up to a big saving for the business. It’s having that kind of impact and bringing in our knowledge to challenges like this that we have as an industry, which makes a massive difference.”
As part of this forward-thinking methodology, the finance department is also exploring how AI can analyse data and bring a new edge to planning.
Mr Tranter said, “We are looking more at what we can do with AI and how we use it effectively. It's a fascinating feature. What we are striving for is for AI to be an extension of the way we run our finance and KPI data. It's a big area of investment for the team, giving us new ways that make the job easier.”
You could be forgiven for thinking these are the main reasons that Mr Tranter enjoys his job so much. But there is more to it than that. One thing he said that makes XPO Logistics a great place to work is that the leadership team listens to good ideas, no matter where they come from.
Mr Tranter added, “If you have a good idea, they want to listen, and they are very good at implementing it. It's a business that's run throughout by everyone, and everyone has a voice. We have a culture of suggesting ideas. If it's a good idea, it will be adopted.”
