John Pattullo

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To the outside observer the process that has led to the creation of Ceva appears to have been remarkably smooth belying the complexity of separating TNT’s logistics and express businesses, creating a new company and orchestrating the merger with the EGL forwarding business.

John Pattullo is the man brought in to bring together these two organisations and make Ceva an effective competitor on the global stage.

The task has been to build on the strengths of the businesses and to eradicate the weaknesses. TNT Logistics, he points out, was very strong operationally but weaker commercially and was not growing. EGL had great strengths commercially with a real “can-do” spirit but was weaker on process.

The two companies were very different but each understood that the other had something special to contribute, he says.

Pattullo also points out that there was a good fit in terms of both the geographical mix and the business mix. EGL was strong in the technology sector while TNT was strong in automotive. Only eight per cent of the revenues of the two businesses came from overlapping areas.

Pattullo started by setting out a mantra for the new business: “Unity, Growth, Excellence”. Unity has meant integrating the business at the lowest practical level to give customers one face and one integrated product. A key element in growing the business has been the development of a global key account function enabling Ceva to grow more strongly than the market in every quarter of 2008.

It reported a record level of business wins in 2008 – £1.6bn (1.7bn euros), and said the rate of converting pipeline opportunities to wins was also at an all time high. Sales of £6bn (6.3bn euros) in 2008, Ceva’s first full year as an integrated business, compared to £4.5bn (4.8bn euros) in 2007, while EBITDA reached £301m (320m euros). However, the tough trading conditions towards the end of the year meant that, in quarter four, EBITDA was down 42 per cent.

“The pressure on sales and profits in quarter four was mainly the result of customer volumes reducing, particularly in airfreight and the inbound automotive sector. “The group’s senior management is working hard to offset the ongoing impact of the world’s turbulent economy with a number of cost containment programmes. In total, management believes that these savings programmes should deliver in excess of £140m(150meuros) reduced costs in 2009.”

Pattullo points out that historically the logistics industry had struggled to delight its customers. While it would be easy for a 3PL to spend its way to a customer’s heart – the critical issue is to please the customer and make a profit. Ceva has focused on combining a lean approach with a process of kaizen (continuous improvement) and has set some tough targets.

It has developed its zero defect start-up process – a six stage process designed to minimise the risk of disruption at the start of an operation. And it has introduced a series of global standard metrics to ensure that customers get a consistent quality of service right across the business.

The global economic conditions mean that companies are looking to re-engineer their supply chains. Ceva has put together a task force to develop tools and technologies for big discontinuous projects. “And at the operational end we stay energetically focused on lean,” says Pattullo, pointing out that applying lean principles can produce savings of 15 to 20 per cent. “We also keep pushing on kaizen to give customers that extra boost.”

At the same time, the company has identified four key areas for future growth. The automotive market might be depressed at the moment but it offers good longer-term prospects with significant opportunities in China and Latin America. In the technology arena, Ceva has relationships with a number of big players including Apple,Microsoft and Dell. Consumer retail is progressively becoming more global like the automotive industry making it attractive to Ceva’s global team.

The fourth area is industrial – in particular heavy equipment. This might seem a less obvious choice but Pattullo points out that a lot of customers are relative newcomers to outsourcing and are looking to the supply chain as a source of improved efficiency.

Bringing together forwarding and logistics businesses inevitably creates opportunities for cross-selling – in 2008 this increased to a high of £216m (230m euros). However, says Pattullo, there is a bigger opportunity beyond that. “You have to have the gaps between the silos and think in terms of an integrated end-to-end supply chain.”

He points out that not all companies are ready for such a move but says: “We see more and more customers moving towards global structures who are appreciative of a partner to help.”

1974 to 2004: John Pattullo worked in supply chain management with Procter & Gamble. He held 16 different positions for P&G in five countries. These included managing the UK logistics operations, running a manufacturing plant in France, heading European Purchasing and Logistics, and leading the P&G Asia supply chain. In his last role he led the €8bn supply chain for the beauty care business.

2005: Pattullo left P&G for Exel in early 2005 andwas appointed CEO of the €6bn revenue EMEA division (freight forwarding and contract logistics) and was a member of the Exel plc board.

December 2005: When Exel was acquired by Deutsche Post/DHL, Pattullo took on responsibility of the €7bn combined Exel and DHL EMEA Contract Logistics business.

August 2007: Chief executive officer of Ceva Logistics.

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