Howard Tenens walks the walk – A pro-active partnership is key for 3PL success

Among some minds the impression about engaging third party logistics (3PL) partners is that it is more costly than providing one’s own logistics operation. Not only is this impression often false but there are other financial reasons that makes 3PL outsourcing an attractive proposition. A good example that proves the point is the 60-year old, family-owned Howard Tenens group with an impressive list of blue chip clients but what is special about this group that explains its enviable client base and financial strength in what has always been “an extremely competitive market,” says the company?

As with buying forklifts, price is always viewed as an important factor when negotiating new 3PL contracts but the wise buyers will look to the life cycle costs of any contract. This is where Howard Tenens (HT) differentiates itself by demonstrating efficiency savings it has won for its other clients. The group is fortunate that some of its key clients promote a partnership approach to business. This involves pro-active suggestions, agreeing and implementing efficiency-saving initiatives which are tracked throughout the contract’s life and the monetary benefits shared with the client on a percentage basis.

To exemplify its partnership approach, take its 5-year contract with Costa Proud to Serve and Costa Express which supplies the entire ingredients supply chain. During the initial 12 months relationship with Costa Express, HT achieved a smooth implementation of both a new IT system and 3PL provider with no loss of service. Stock was centralised from nine locations to one. Stock availability reached 99.9% and there was a 50% cut in stock holding at partner sites. Delivery refusals fell by 50% and annual logistics costs by 30%. Annual CO2 savings were 70 tonnes.

This last environmental benefit is a key attraction to blue chip clients keen to establish their ‘green’ credential and in this HT arguably leads the 3PL industry for it walks the walk like no other competitor. Some 88% of its heavy goods vehicle fleet over 18 tonnes, for example, now have dual fuel capacity which is the highest proportion of dual-fuel vehicles of any large UK fleet. They have invested in re-fuelling infrastructure with three grid-connected re-fuelling stations which are all open to third parties to re-fuel and dispense compressed natural gas (CNG). They also have a fourth re-fuelling station for biomethane. CNG versus diesel, says the company, can return savings of about 16% and biomethane up to 60%.

The 3PL industry, however, faces challenges, one of which is the reducing supply in warehouse stock in certain areas following a cut in developers speculatively building large facilities. In this respect, however, HT is well placed owing to its 3.5 million ft2 of warehousing, most of it freehold, spread nationally over 15 sites. This freehold ownership enables them to offer customers the warehousing flexibility they require that often comes with seasonal fluctuation in stock holding. Within the group there is also its own pallet exchange network for competitively-priced pallet haulage.

Another problem that HT would like Government to help solve is the introduction of the driver CPC, which could mean driver scarcity will become more of a challenge facing the industry. “The more the Government can do to encourage and promote the vocation the more it would ensure longevity of supply of professional drivers in the market place,” says the company.

For companies deciding which 3PL should take on their business, which is a major step change not without high risks, three questions should be uppermost in their minds. Does the company have a long-term track record of reliability, is it financially sound, and can the prospective 3PL prove how good they are at making big savings for their existing client? If all answers are positive then that will help to guide the choice more safely, and HT ticks all those boxes.