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Power to the people

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Chris Munro grew up in a small Scottish village. During his teenage years his father, a former Lieutenant Colonel in the British Navy, ran a correctional facility for youths aged 14-18 years. It was in that environment that Munro, Linfox’s new chief executive officer of the Logistics Group, learnt a lot about people, leadership and opportunity.

The boys in the facility were among the worst in the community having committed murder, rape, assault: many associated with drugs and drug use.

“Looking back on that time it taught me some important lessons. The first was the huge value of discipline as well as the importance of communication, leadership and of celebrating success. The correctional facility was a tough, tough environment, but people excelled because they were given a clear direction,” he says.

During the summer holidays Munro’s father would give him the responsibility of looking after some of the boys, sometimes 50 at a time. “I started to realize that I liked working with people; organizing and leading to get results.”

Groundbreaking solutions

And strong leadership qualities are what you need to follow a career path like Munro’s. In 1989 Munro joined Exel UK running their industrial supply chain business, then managing their UK and Western European retail and consumer business. This was a good time for Munro. “[We were] putting together groundbreaking industry supply chain solutions, things that people hadn’t done before. Taking a group of customers and forming new joint venture companies - and those things still exist today, so it’s nice to look back.”

After eight years in the UK, Munro then went to Exel in the US for nearly four years, tasked with helping them become a truly international supply chain business. “[We had a] really good practical strategy, with big teams and people and skills, and the whole approach of looking at the business, rather than managing it as a commodity. We more than tripled our business in three years.”

Transforming businesses is a driver to Munro’s career. His last post before taking the lead at Linfox Logistics was with an ailing CD manufacturer, Inoveris, which he turned into a solutions company. It had a workforce of 1200 people which he reduced to 250. He took the company’s revenue down by 75 per cent and through bankruptcy. He turned it from a manufacturing company into a solutions provider and the company was subsequently sold for five times its current earnings. “It was difficult, it was exhilarating and it was a fantastic result in the end.”

Family ties

For Linfox, one of Australia’s largest privately owned companies with 9,000 skilled personnel and annual revenue in excess of $1.2 billion, hiring so high outside of the family is a bold step. And perhaps even bolder of Munro to accept. “I took the job because having looked at the company, the people, the customers and the marketplace I became convinced the strategic intent is valid and the potential to harness our assets significant.” Munro has been in the driving seat since 20th January 2005 and says that although he hasn’t liked everything he has seen there have been no nasty surprises. This is credit to the candid discussions with Peter Fox and the family before accepting the job. Munro believes in being forthright. “Life is very short and you need to have an environment where you can say it as it is – constructive criticism.”

And he has plans. He praises the base competency that Linfox has built up over the last 40 years “but you can imagine, that for me is the building block, rather than the endplay”.

Growth potential

Munro says that Linfox has to leverage this past to begin a very smart, focussed and aggressive growth pattern for the future. “The company now has got to become a fully rounded supply chain partner for its customers, it has got to accelerate the leverage it has in its technology to help customers manage their supply chain; to help consolidate the market in Australia and New Zealand; and it has got to accelerate its growth organically and through acquisitions in Asia.”

“We already have significant organic growth potential inside our customer base and we really have got to bring much wider, more innovative supply chain solutions to these people - from demand management, through to sourcing, basic transportation and warehousing and wrap that all up with returns. That really is the proposition.

“And we use technology first, not assets. This is about being smarter rather than just relying on asset intensity.

“The company has made some significant acquisitions recently. Now it needs to be very selective [choosing] acquisitions that give a specific organizational or geographical capability. And that’s where I use the word smart – this isn’t a blind rush.”

People power

Munro’s experience at the correctional facility continues to shape the CEO he is today. He strongly believes in investing time in and empowering employees. “We owe it to every single associate that we have to recruit, retain and develop them as individuals and as professionals. That is something that beats hard in my heart, we have an obligation to do that.

“There’s also got to be a flip-side - that you expect energy back from your employees. That will, on a very systemic basis, run across our business.

“In terms of recruitment, we need to be significantly more flexible on part time drivers, flexible drivers, weekend staff. We need to make sure they are trained and looked after from a health perspective, so they want to stay. It then feels like a good place to work.

“We need to let people see a good long-term career path in this organization. I came up through that route and you grow very quickly when you are thrown in the deep end.”

One of the toughest challenges the industry faces at the moment is how to attract new people. “It’s a very tight market in Australia, you need to hang your sign outside and say ‘we are a really good comp to work for’. A lot of people do not perceive the supply chain industry. There’s a lot of ignorance about it. We need to help educate people at a local level, at a school level and at an industry level that this is a really fun place to be in terms of the industry.”

He believes the Linfox has a part to play in this education. “As a market leader there is a significant responsibility in terms of shaping policy, image and the industry as it evolves. Part of that responsibility is educating people.”

Vision of the future

Munro has a very strong vision of the future. “I don’t believe the next growth will be in logistics services. I personally do not get excited about significant investments in assets - buying trains all these sorts of things. I don’t think that’s where it’s at.

“New age supply chain companies will be asset light, information-intensive, solutions companies, that can deliver real shareholder value by managing the total chain.”

Munro plans to leverage Linfox’s existing assets, its technology and then to put in place skilled supply chain strategists. “You’ve got to have some dirt under your fingernails so you can then manage [the company] from a position of knowledge, not like consultants - from a position of theory. And that’s the difference.”

Munro has made some initial observations of the Australian market. “As markets mature there has got to be some form of self-regulation. What I do not see [in Australia] is a market maturity where competitors compete and behave and co-exist very well. [Companies] must learn to smartly co-exist, otherwise margins will decline to European levels and that’s not healthy long-term.

“The old days of running around cutting each other’s throats in a relatively small market is very naïve and I have already, in my tenure, seen that sort of behaviour.”

Simple solution

Munro is typically forthright in his impressions of Australia’s peculiarities, though he stresses that it’s very early days for him to be forming hard opinions. “I am amazed at the lengthy and public debates that go on about transportation and rail infrastructures and the politics - if you ran a company that way you would be fired as the CEO. So in my opinion [Australia must] try to remove the public debate and rhetoric and really concentrate on something simple: this is one country, with 20 million people with a geographical logistical challenge and there’s a very simple way of solving it.

“This is not America, this is not mainland Europe and this is not a bunch of interconnecting Asian countries that need an Asian railroad strategy. This a much simpler problem to resolve. Mixing energy and bottom line service focus with long-term government funding, inside a long-term plan is a powerful combination if the roles are clearly defined.” n

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