Contract Warehousing

5PL - the way of the future

Inwards goods at Contract Warehousing’s East Tamaki warehouse

With an annual turnover in excess of $4 million and more than 90 clients across New Zealand, with a branch in Auckland, the Contract Warehousing group has moved from simple trucking and handling in the late 1970s to delivering third party (3PL) warehousing and logistics solutions as well as 4PL supply chain services.

More recently, it was approached by a client to take on a more holistic management role within the client’s business, buying stock on their behalf valued at $300–$400K per month and providing full logistics, inventory, ordering and accounting services. Contract Warehousing founder and managing director, Rod Giles, says they are not aware of any other logistics operator in New Zealand offering this kind of 5PL support. "It’s a huge responsibility taking on someone else’s business,” he says, "but we have the experience.”

Indeed, Mr Giles is known as something of a guru in the New Zealand logistics sector. He has been at the forefront of logistics innovation for over 30 years, and has been awarded several times for various initiatives. He was chair of the Logistics Cluster Group back in the early 2000s, an initiative driven by the Manukau Business Association with funding from the New Zealand government.

System support

Mr Giles has always been an early adopter of software systems. 5PL the way of the future for Contract Warehousing Rod Giles, managing director of Contract Warehousing He developed his own system for the company when they first started, running with it for 13 years whilst the company grew. He then redesigned the system and brought in a separate accounting program – not a long-term solution as it meant double-handling of all paperwork. He then swapped to another off-the-shelf logistics program that worked well for 10 years, until technology developments overtook its usefulness.

"The introduction and rapid adoption of the Internet changed everything,” Mr Giles says. "You can’t afford to stand still in this business. Our customers were growing, and we had to keep ahead of them. I could see we needed a full system with webbased capabilities so tried another program – and that turned out to be an expensive mistake.”

Then early last year, with the new program implementation going nowhere, Mr Giles approached TransLogix, a leading Australasian supplier of transport and logistics solutions. Its transport management and 3PL suite is used by more than 400 customers ranging from small familyoperated businesses through to large, publicly listed multi-depot transport companies.

Over a period of around six weeks, Mr Giles worked with TransLogix’ New Zealand country manager, Trevor Ammundsen, and his team, eventually selecting their Sapphire suite as the backbone of Contract Warehousing’s complex service offering. "I was really impressed by Trevor’s approachability," Mr Giles says. "His honesty and level of understanding of the market during our discussions were incredibly refreshing. TransLogix is developing its products with a real purpose. It knows who and what they are and where the market is going.”

The message from other logistics operators across Australasia was consistent too – TransLogix was the way to go. "Everyone told me they’re great to deal with and they do what they say they’ll do,” Mr Giles adds. "This industry is no longer about trucks and sheds. It’s all in the service offering. We know the opportunities that are out there, and TransLogix will equip us to meet these.

"By outsourcing logistics and associated financial services to us, companies can more easily and profitably enter the trans-Tasman marketplace. Without the need for bricks and mortar assets and staff, they can cut warehousing costs and management time by 20–30%. Our 4PL and 5PL clients only have to support a rep while we run their business. And it offers us both great returns.”

A sustainable future

Trevor Ammundsen concurs: "Rod Giles and his Contract Warehousing group is a prime example of where the smart logistics operators are heading, with a tight focus on service levels and a sustainable future. When he first came to us requiring 3PL services for some customers and 4PL or 5PL services for others, from one integrated software solution, we needed to make sure that we understood their requirements in detail.

"We demonstrated that Sapphire’s functional depth and great flexibility is able to manage this complex mix of services ‘out of the box’. Sapphire will streamline Con t ra c t Wa rehousing’s operations and provide ‘one version of the truth’ across the whole business while creating much-needed visibility to support both management and customers.”

Mr Giles expects that with the new system in place, the Contract Warehousing group will be able to maintain current staff levels while continuing to grow profitably. "We’ve had positive growth since we started 33 years ago, and December was our busiest month ever,” he says. "The selfservice web portal within the new system will put daily reporting of stock levels and activity at our customers’ fingertips. This makes our business more accountable and also provides clients with a greater comfort level.”

Training is seen as a key component of the new Sapphire system, and Contract Warehousing has had its core staff testing and using the system throughout the implementation phase. Their initial feedback is very positive. "I’ve always been a strong supporter of training onthe- job – many of my warehouse staff have come to me straight off the dole,” Mr Giles says.

"I see Contract Warehousing and TransLogix strengthening each other over time as we work to improve the sophistication and efficiencies of warehouse-centric logistics,” he adds. "We look after people’s products, their companies and their business. We’re completely honest with them – if we make a mistake, we tell the client, and then we fix it. That’s our philosophy.”