DX Business Direct – The Interview

DX Business Direct, the specialist courier company, was born in September 2008 after the DX Group (DX) bought Business Direct Group’s In-Night secure parcel logistics operations. Nine months later, June 2009 sees DX formally introducing the new-look DX Business Direct at the 2009 Mail & Express Delivery Expo, where the two businesses are sharing a stand.

Based in Nuneaton, Warwickshire, at the centre of the mainland UK transport network, DX Business Direct continues to grow in the present tough climate through its development and refinement of ParcelXchange, the UK’s largest network of ‘intelligent’ drop boxes. These combine with the company’s expanding In-Night pre-8 am logistics service to provide secure support for field engineers and service personnel relying on time-critical parts and equipment for their customers.

The man leading the transformation of one of the UK’s leading logistics businesses is DX Business Direct’s Managing Director Ian Cummings. Ian joined the company in October 2008, after 20 years with DHL, followed by spells with niche logistics providers and consultancy. He’s been very busy since he arrived. As Ian recalls, “The old Business Direct was in administration but the various operations it owned had plenty of potential, especially ParcelXchange, and the new entity, DX Business Direct, provided a secure financial platform from which to grow. Our first priority was to provide financial stability and ensure “business as usual” for our customers, and then to bring the businesses together.

“The integration isn’t complete yet, but we have made substantial progress so far. We’ve gone from two companies with two networks to one business with one network and integrated trunking and courier routing solutions, and we’ve just moved our Rugby hub to bigger DX combined premises in Nuneaton,” states Ian.

The new single network gives DX Business Direct plenty of scope for growth. The integration has seen targeted investment in services and infrastructure, including the latest modular ParcelXchange, better IT systems, new equipment and route reorganisations, all now in place. The new organisation is not only achieving but exceeding its Service Level Agreements, and work has started on the next stage of the ParcelXchange network.

DX Business Direct’s In-night network provides three different services – ParcelXchange (PX), In Boot delivery and Pick Up, Drop Off (PUDO.) ParcelXchange deliveries are complete by 8am every day and In Boot and PUDO by 7am. DX Business Direct’s service levels have improved since last autumn to between 98-100% every night, says Ian, and customer feedback is “extremely positive.” The integration has met its other objectives of returning the business to profit and securing jobs for the combined workforce. Some organisational change, role redefining and training is now under way and assisting in the company’s transformation and success.

DX Business Direct has all the backing it could need for a successful future. Its parent company the DX Group was formed in 2006 after a merger between DX Network Services and Secure Mail Services, led by Candover Partners, the venture capital company. With annual sales of £175m, DX is the leading independent mail, parcel and secure logistics company in the UK and Ireland. It provides a wide range of B2B and B2C courier services including next day B2B mail, of which it is the UK’s second largest provider after Royal Mail.

“DX Business Direct was an excellent fit for the DX network, who already operate an extensive nationwide network of document exchanges,” Ian points out. Although relatively small in size compared to the DX Group, DX Business Direct represents a good growth opportunity for the group.

The ParcelXchange opportunity

Following the successful integration, Ian Cummings sees his role at DX Business Direct becoming increasingly more customer–focused. He is actively involved in developing relationships with existing clients and new prospects, and building partnerships with other major third party logistics companies. The other key area is strategic development of the ParcelXchange concept.

Business Direct was formed in 1993 and first introduced ParcelXchange 10 years later. The network now comprises over 5,000 ‘intelligent’ drop lockers, which serve as exchange units in 360 locations across the UK. The exchange starts with clients ordering collection of parts and other items from a central stock location for in-night delivery. DX Business Direct receives the order when it goes ‘live’ on their system, collects the parcel from the customer’s depot or supplier and brings it to Nuneaton for sortation to local depots and endpoints. At the locker, the driver scans in the deliveries and scans out the returns. All activities on the ParcelXchange are communicated live in real time via GPRS. When the exchange at the locker is complete, the end user/engineer receives a text and goes to the locker, collects his parcel of spares and scans them out.

DX Business Direct currently has over 100 active accounts, all companies with field service operations, from as few as 10 or more service engineers to over 500. The client list includes UK utilities, Eon energy, Scottish and Southern Energy and Npower and in the ‘W&L’ sector, forklift truck companies Toyota Material Handling and Jungheinrich (see case study on other page.)

Jungheinrich source spares for delivery to UK-based field service engineers using a combination of in-boot and ParcelXchange deliveries from ‘near-Europe’ locations. DX Business Direct also operates a reverse logistics process for the return of parts to Germany through the network. The ParcelXchange system is also ideal for High Tech, health care, telecoms, automotive, and the materials handling industry.

Three ParcelXchange locker sizes are available, small, medium and large, to accommodate clients’ needs, and are located in convenient locations close to areas of high population density, often petrol station forecourts such as Tesco or Murco, which represent around a quarter of the total number of exchange locations. Other sites include storage companies, industrial parks and logistics companies, including the DX sites.

DX Business Direct’s focus on scanning and the GPRS communication ensures the system is 100% live: drivers and engineers access the lockers through card and PIN system, supported by DX Business Direct’s proprietary IT system “SoftLocker.”

ParcelXchange lockers are either set to be ‘dynamic’, booked for an individual, one-off drop and collection on an ad hoc basis, or ‘fixed’, allocated to a given customer needing regular exchanges. The company’s operations centre works 24/7 providing support to the customers and engineers, with an ability to manage the lockers remotely should any complication arise. For example, if an engineer loses their access card or is taken ill, the locker can be accessed by calling the call centre and fulfilling the necessary security criteria. The lockers are two-ply galvanised steel construction: their locations are equally secure, convenient but discreet, generally in lit and manned areas with 24-hour security cameras and people in kiosks nearby.

To ensure they understand how the system works, field engineers and other new end users get a full information pack and help line support. Minimum rental for dynamic lockers is one night: fixed lockers are on a weekly basis. DX Business Direct estimates it has some 40% of the UK total drop box population, says Ian, but a much greater share of “intelligent” (live) boxes: “The difference between us and our competitors is that our exchanges are all 100% intelligent lockers, not dumb or lock and key ones.”

DX Business Direct’s network makes over 6,000 deliveries and returns a day, using a mix of employees and subcontractors, allowing flexibility at peak times. “The business is growing well,” says Ian, “so we are likely to be looking for more local partners in the near future.”

DX Business Direct currently has 45-50% of the UK in-night parcels market, all of it B2B. Ian Cummings sees B2B remaining the group’s core business, but plans include developing new markets for ParcelXchange, the biggest opportunity being B2C, with consumers using smart cards to collect from drop points in an evolution from postal sorting offices. DX Business Direct is also active in Southern Ireland although there are no ParcelXchanges there at present, but this could soon change as geographic coverage expands.

Ian Cummings and colleagues are actively selling DX Business Direct’s services in the market place and in particular looking to grow the ParcelXchange business. Ian says they could easily double the existing customer base, working with the existing DX facilities in Nuneaton, Leeds, Bristol, Scotland and Ireland. “We’re looking at near Europe, but we also have growing interest from all over the world, including Australia. At this point we’d most likely partner with local expert companies to set up national networks of parcel exchanges and infrastructure.”

On its shared stand with the rest of the DX Group at the June 2009 Mail & Express Delivery Expo, DX Business Direct is introducing the latest modular design for their ParcelXchange units. John Coghlan, CEO of DX Group, will also be there, speaking in one of the sessions about the mail market and what changes it needs to make to help companies in a recession.

The DX Group including DX Business Direct are also used to appearing in public for another reason – collecting trophies. The ParcelXchange intelligent locker system won awards for innovation in 2003/4: DX Group won a Queen’s Award for Excellence in 2004, and Secure Mail Services Group, now part of DX Group, won the Triangle Award for Mail Innovation the same year. In the latest accolade, DX ranks highly in the recent Postcomm Business Customer Survey.

DX Business Direct’s sales revenues are currently growing by more than 20% versus last year. “Our customers are feeling the recession like everyone,” says Ian Cummings,” but they, and we, are also benefiting from it. The pressure is on to save costs all round, but the upside is that many companies have cut back on their outlays for new equipment and are turning to our customers, the field service providers, to keep existing equipment running for longer with servicing and spare parts, which we deliver to the field engineers through our network. Our customers are continuing to look at improving their service offering, and ParcelXchange is a proven way to improve it. Field engineers often waste valuable working time returning to a depot or waiting to get parts: by using our intelligent lockers, we can help their employers improve their service response from 48 hours to overnight. Another area where we can help is that there are many companies holding spare parts in various different locations across the UK. By reducing to just one location and using us to get the parts where they are needed, they can cut their costs and the holding stock levels.”

In the short term, Ian says DX Business Direct will continue to focus on growing the business and increasing profitability: “We want to make sure we’re in a position to avail ourselves of all the opportunities open to us. Going forwards, the immediate challenge is ensuring the integration runs smoothly and harnesses the benefits from it and to continue to grow our profitability.”

Over the next few years, Ian Cummings believes the big opportunity for the company will come about through bringing in the next generation of ParcelXchange units to capture the B2C opportunity:

“The one major area in retail that is growing at the moment is shopping on the internet. Here the big problem for consumers is satisfactory delivery, especially larger items that cannot go through a letterbox, and electronic items and other high value goods that need a signature. Local ParcelXchange lockers can help solve all these concerns, because they are both secure and convenient. If we can get the volumes right, ParcelXchanges could be a very cost effective solution for everyone involved. It will take time and effort, but it’s going to be very exciting to work with the on-line retailers and their logistics partners to make it happen.”

DX Business Direct   Tel: 01788 821200   www.bdpx.com