When R.R. Donnelley Logistics purchased CTC Distribution Direct in February, the acquisition represented a dramatic oppor-tunity for both companies. Chicago-based Donnelley Logistics, the shipping and distribution arm of R.R. Donnelley & Sons, acquired a leadership role in the strategic and fast-growing residential package delivery market. CTC, which had pioneered parcel consolidation and zone skipping services to become a leading parcel consolidator in America, found a logistics leader that had the resources, technology and industry knowledge to take the CTC service offerings to the next level.
Nine months later, Donnelley Logistics President John Campanelli reports that customers have been the real winners in the form of improved package services. �Combining two strong organizations creates a service offering that exceeds the sum of the parts,� explains Campanelli. �We have improved service levels, increased efficiencies and broadened our service platform. We�re delivering the solutions our customers have asked for with a business model that is perfectly aligned with a fast-changing marketplace.�
Campanelli says almost 70% of Donnelley Logistics revenues now come from third-party logistics, and he predicts that ratio will increase as the company taps into e-commerce retailing and other markets fueling the explosive growth in residential package delivery. With its nationwide network of 22 package and mail consolidation facilities and its exceptional relationship and expertise with the U.S. Postal Service, the company has a strong platform to grow its package services business.
�The recent news about major carriers forming partnerships with the USPS validates our business model,� states Campanelli. �CTC pioneered zone skipping packages into the USPS for a more cost-effective ground delivery service to homes. Donnelley Logistics developed the same proficiency in print logistics to the home � drop shipping catalogs and other direct marketing materials to achieve cost and service benefits. Combining our print and parcel volumes and operational networks drives additional service and cost improvements and allows us to leverage our postal expertise and volume.�
The numbers alone are impressive. Donnelley Logistics is now the leading parcel mail consolidator, annually processing more than 130 million packages or approximately 40% of the USPS Standard (B) parcel volume. The company also manages more than eight billion mailpieces a year � approximately 15% of all USPS commercial mail (non-First Class) volume by weight. Donnelley Logistics was the first National Business Partner of the USPS and is today the largest based on its volume in packages and other mail. Getting it there requires managing more than 170,000 truckloads, 62,000 air shipments and 14,000 rail moves annually.
Campanelli says Donnelley Logistics has strong ties to the catalog and direct marketers that are driving so much of the growth in small-parcel/package delivery. �We�re customer-focused and market-driven,� says Campanelli. �Our customers have asked us to help them control their package delivery costs, improve delivery precision and deliver market specific solutions.�
These market solutions are a hallmark of the new Donnelley Logistics. The company formed an alliance with Newgistics and USF Processors to introduce the ReturnValet returns solution �a Web-enabled returns process that allows consumers to return merchandise to more than 4,000 neighborhood-based storefronts. Customers get instant credit and merchandisers get a lower-cost, more customer-friendly returns solution. It introduced Storefront Tracing systems to allow customers to deliver end-to-end tracking of packages through their own Web sites. The company also expanded an Express Mailing Service for lightweight parcels and bound printed matter that delivers a two to five day service that is more cost effective than First Class and Priority Mail, while still offering tracking and other premium features.
One Plus One Equals Three
The successful integration of Donnelley Logistics and CTC is delivering service improvements company-wide. The emphasis has been on measurement, continuous improvement and high performance. Six Sigma quality assurance programs and related Black Belt certification have been among the tools used. Here are a few of the operational highlights for package services:
� Operating capacity increased 15% with automated processing equipment for improved performance levels.
� Improved routing through the expanded operations network produces faster package delivery. Transit times have been reduced on average by more than a day and delivery precision by one measure has improved 20%.
� New system optimization software better analyzes freight movements for faster delivery.
� Combined carrier networks improve cost-efficiency.
� Integrated client services provide better customer service.
Servicing DDUs
Another example is DDU entry for packages. When the USPS extended drop shipping discounts to the DDU level for parcels in 1999, CTC developed the complex systems and infrastructure required to translate those discounts into real customer benefits. Since Donnelley Logistics acquired CTC, the DDU network population reach has increased 13%, representing an additional 3.7 million households. An additional 284 densely populated ZIP Codes were recently added, increasing DDU population reach an additional 22% or 7.3 million households. This expanded DDU delivery network now reaches 40 million households and will increase with future expansions.
The Pipeline-to-the-Home
�We�ve built a �pipeline-to-the-home� for America�s businesses. Other companies are rooted in the B2B package delivery market.� notes Campanelli.
�We�re proud of our technology and our systems,� he adds . �But people still drive this or any other business. We�re blending two organizations to create a better company that is aligned with our customers� needs and expectations. Our mission is to provide our customers with superior logistics services that save them time and money while allowing them to concentrate on their core business.�
For more information, call 800-800-SHIP, e-mail logistics@rrd.com or visit the Web sitewww.donnellylogistics.com.
