Author: Giuseppina Schiavone
A travel in time, back to the Italian Economic Boom till the end of the 90ies, the most polluting years.
Is your business experiencing the same challenges in a more digital, connected and vulnerable world?
In this post I want to share my personal link with the logistics sector.
The post is the result of collected memories from conversations with family members. Some memories go far in the past and do not come from direct experience but from word of mouth, therefore they might be imprecise, inaccurate and incomplete.
Neverthless, It is a post full of sensory details and imagery, facts and emotions, where I care to provide a sense of the family business evolution over time, its challenges, successes and failures, intertwined with geo-political changes, such as the formation of the European Union, the adoption of the European Single Market, the development of the Trans-European Transport Networks, and technological developments, such as the first computer-based systems, the Electronic Data Interchange and Enterprise Resource Planning software.
With this post I hope to connect with small-to-medium business owners and professionals in the logistics sector. I believe that many of the challenges encountered by my family business keep existing today in a modernized form and I would love to know more about the experiences and points of view of todays’ actors and movers of the logistics industry, from the bottom to the top.
It was the end of the II world war when my grandfather and his brother, from my father’s side, started their own business in the southern Italian regions. They were using carts with horses to assist funeral ceremonies, transporting coffins from homes to churches, from churches to cemeteries.
FROM HOURSES TO CAR
The business went on across the 1950s, then the competition, with better looking carts and improved services, brought the family to change their business model, from transport of coffins to transport of goods and people. They got a van to carry meat from slaughterhouse to slaughters in the region, and they would use the old cart to carry tourists from the local train station to their holiday’s accommodations and back.
THE ITALIAN ECONOMIC MIRACLE
It was the mid-60ies and the Italian economic miracle was transforming the country from a poor, mainly rural, nation into a global industrial power. The automobile sector was flourishing and cars were becoming more and more accessible to upper-middle class families, so that my grandfather sold his cart and horse to buy a second hand trendy Bianchina car. He would use his Bianchina for driving the family around and for running his business of transport of goods across town and in the surrounding rural areas. He would offer transport services for home relocation and, having won a tender with the Italian railways, he would load packages from the town’s train station and deliver them to recipients, either individuals or private organizations.
INTERCONNECTED BUSINESS AND VISIBILITY
Because of this very interconnected business everybody knew my family in town and could, with some genuine hilarity, recognize my grandfather miles away because of his impossibly loaded car, from the inside, all the way to the top of the car roof.
CRUCIAL ROLE OF RAILWAYS AND THE ITALIAN DIASPORA
Finally, the business started to fly, they bought new vans and eventually opened a service office in town with first employees for deliveries, bookkeeping and customer service. The office would work both as a warehouse and as customer service front desk. The business grew primarily due to the partnership with the national railways. In that period the Italian railways played a crucial role in transporting goods across southern Italy, connecting major cities and industrial areas, and providing efficient means of transporting bulk goods, such as coal, agricultural products and manufactured goods. Not to mention that it was still a period of reconstruction, after the war, and the second big wave of migration, the Italian diaspora, after the Industrial revolution, was taking place. Many southern Italians were moving to northern regions within and outside Italy, such as Germany, Switzerland, France, Belgium, and the United Kingdom, where industries were expanding and where they could find better employment opportunities. Movement of people meant also movements of goods and thus better business for my grandfather.
FROM FATHER TO SON
My father, born in 1945, single brother of two sisters, was introduced to the transport activities from a very young age and because of the strong patriarchy family model, where business and responsibilities are by necessity transferred from father to son, there was no other thinkable alternative to develop his career differently. Despite his love for the work and his family, and the liking of the visibility he was gaining among the community, once in a while, as any young man in his place, he would lament not being able to keep studying or enjoying life like his peers. He quickly developed an entrepreneurial character taking over his father’s business, obviously not without conflicts. He was a playful, gregarious and somehow charming man with a very stubborn character, incredibly devoted to his work, a good salesman and marketer for his time. His leadership style was very authoritarian, which in hierarchical culture, such as the Italian one, induced a sense of trust and credibility among some clients and employees, at the expenses of others.
MODERNIZATION OF PORT CITIES
Around the mid-70ies, my father won another tender with the Italian railways that allowed him to take the place of an existing transport service company, which owner was in retirement. This meant relocating the office to the province capital, the city of Brindisi, just at the side of the train station and acquiring an existing business together with its personnel and clients. The location was optimal and strategic for the business expansion, not only for the direct connection to the railway but also because of Brindisi’s Port. In the 70’s the Italian ports underwent a series of modernization and expansion to accommodate larger vessels and increased trade volume.
INSTINT TO GROW AND BUSINESS DIVERSIFICATION
The cooperation with the railways remained the main contributor to the company revenue, and it consisted in collecting and distributing packages in the province of Brindisi that were being transferred by train to a big distribution center in Bari, the region’s capital.
The natural instinct to grow, especially when one is doing well, and my father’s ‘conqueror’ attitude allowed him to keep the business diversified, offering additional services to private individual and business owners, including services for home and office relocation, transport of products for business-to-business across Italy and Europe, working as Third-Party Logistics provider (3PL), and gaining other tenders with the Italian government.
EMPTY MILES, PRICING AND AFFORDABILITY OF SERVICES
The quality of his work, and his simple marketing strategy, helped to build a good reputation and a solid network of clients over time. This would also allow him to manage and reduce empty miles, planning in or serving last-minutes small clients on the way back from long travels. In these particular cases, he would generously accommodate the requests of clients that could not afford to pay a full price for the service, he could compensate for the empty miles and offer the service at a lower cost.
MASSIVE INVESTMENT IN ROAL INFRASTRUCTURES
The 1980s till mid-90ies were certainly the best years for the business, particularly due to the massive investment in infrastructure development to improve connectivity, efficiency and reduce travel time. Examples of these investments include the construction and expansion of highways, such as the Autostrada del Sole or A1, connecting the southern regions with the north of Italy.
NEW TECHNOLOGIES, PROCESSES, SERVICES AND FREIGHT MODALITIES
Other technologies and modes of freight were also emerging, for example: the adoption of containerization, which revolutionized the shipping industry and made cargo handling more efficient; advancements in logistics and supply chain management, from quality management and lean principles to reduce waste and optimize processes (such as Total Quality Management, Just-in-Time and Lean Manufacturing), to the increase of 3PL providers allowing businesses to outsource logistics expertise, infrastructure and technology while focusing on their core competencies; the adoption of computer-based systems, including the use of Electronic Data Interchange (EDI) that facilitated electronic communication and data exchange between trading partners, improving the speed and accuracy of information flow, the first software for Material Requirements Planning (MRP), Distribution Requirements Planning (DRP), and Enterprise Resource Planning (ERP) systems, integrating various business functions, such as inventory management, procurement, and finance, into a single software platform; the transformation of some airports into important hubs for air cargo, such as Bari Karol Wojtyła Airport.
THE TEN-T AND THE SINGLE MARKET
The beginning of the development of the Trans-European Transport Networks (TEN-T) and the adoption of the European Single Market, sharing common goals of improving connectivity, facilitating trade, and fostering economic integration across Europe, were making the southern Italy’s transportation system increasingly integrated with European networks.
As the demand for goods, products and services transfer grew and the infrastructures were serving the purpose, my father’s business, still remaining of the size of a small enterprise, grew in the number of heavy trucks owned and the number of employees. The new office was bigger, with a lounge waiting area for the clients, a private space for meetings and a room for deskwork equipped with telephone lines and the first basic Electronic Data Processing (EDP) systems consisting in a mainframe computer, terminals to interact with the mainframe, dot matrix printers for generating hard copies of reports, transaction records, and other documentation from the mainframe system. I have vivid childhood memories of the dimensions of these machines, covering a considerable space of the office surface, the constant electronic noise and the specific smell of printed paper, together with the smell of tobacco, pallets, cardboard, packing tape, coins, metal and offcourse gasoline. The warehouse was also larger, directly connected to the office and equipped with a couple of forklifts, but no sophisticated sensing to monitor the physical conditions of the room apart from standard safety measures for fire extinction and emergency exit. Outside, a wide parking area would host a number of trucks and visitors‘ vehicles. Because of the proximity to the railways, you could often hear the noise of cargo trains running at high speed on the tracks.
PROCUREMENT AND SUPPLY
My father would manage procurement and suppliers in his own way, he would be periodically visited by vendors of new vehicles and office equipment. Despite being a very good car mechanic and having a profound knowledge of engines, gained during his military service, his spending choices were mostly guided by feelings and first impressions not by data. Once a vendor convinced him to purchase some new generation vehicles that stayed for years parked in his garage without being used.
TRACKING BUSINESS OPERATIONS WITH PEN AND PAPER
Unfortunately, he was also not attuned to technology, the cooperation with the railways was the main driver for having purchased electronic equipment for recording and transferring transactions. His preference remained pen and paper. I can recollect his agendas filled with numbers, names and appointments, a huge cabinet filled with business archive folders full of paper documents and maps and road atlas everywhere. He believed that this approach and his memory were sufficient to have everything under control, which also caused him to have very low tolerance for mistakes or oversights of his employees.
Part of the workforce, for warehouse work and on the road driving, was hired on demand, and this consisted of the so called ‘padroncini’ or freelance drivers who owned their private van and offered transport services. They would go directly to my father’s office to offer their service or they would be contacted by my father through a network of word of mouth for on-demand courier services. The recruitment process was very pragmatic: my father would look at the vehicles’ capacity and conditions, test for the driving ability, decision making and optimal road planning in imagined scenarios and for quality control of the first or important assignments he would send a company’s employed driver to assist in the delivery work. Within this context everything was tracked on paper and was ruled by verbal agreements and many things could go wrong and sometimes they did, from delivery delays, to thieving and robbery, and road accidents, with obvious consequences on business efficiency, costs and reputation to some extent. As for the company’s employees, they generally received decent salaries also accounting for the fact that most of them had families with children to support, which was a point of attention for my father having five children at home on his own. On the other hand, there were no options for training or career development, my father would build strong hierarchical relationships with his employees and, excluding festivity gifts, he would only occasionally promote them for their successes or for their long-time commitment to the company. This attitude didn’t play in his favor in the long run, affecting his ability to retain his personnel.
A STRESSFUL JOB
It was definitely a stressful job, he would often come back home late and have little energy or space in his head to develop healthy family relationships with wife and daughters. The few family holidays out of the town were often combined with business travels on trucks, pretty adventurous and exciting for us as children. He was extremely worried about his reputation and having only daughters in the house was an additional source of stress, considering his very male-dominant upbringing, he would have a father-master, ‘padre-padrone’, parenting style which would become more and more difficult to deal with as we were growing up. In good times, he was an adorable man and affectionate father. I loved our weekends watching matches at the local football stadium.
COMPETITORS, TECHNOLOGY, GOVERNANCE AND REGULATIONS
The business started to struggle by the end of the 90ies: due to increasing trades, competition was also increasing and my father’s business strategies and leadership style didn’t apply anymore in a wealthier society, more and more technologically driven and diversified. First Global Positioning Systems (GPSs) for navigation and vehicle tracking systems; telematics systems, combining telecommunication and informatics, and mobile phone, fastening communication, started to appear but they were still very expensive or not integrated in existing systems. The introduction of On-Board-Diagnostics systems for heavy-duty vehicles to monitor emissions-related components was also soon going to be mandatory. Advanced Driver Assistance Systems (ADAS) to improve driving quality and safety; Fleet Management Systems for tracking, monitoring and managing vehicles, optimizing routes and providing maintenance alerts and many more technological and infrastructure developments were to follow, also supported by the adoption of new European directives. The increasing liberalization and privatization of state-owned Italian railway systems, having the objective to modernize the railway sector, introduce competition and improve efficiency, played also an important role in the deterioration of the family business. Road transports were starting to predominate among the freight modalities, which meant more and more trucks on the road from an increasingly number of 3PL services’ owners, competing for their stake on the market with various and diverse strategies including: lower pricing, higher quality, more efficient services, innovative business models, better labor conditions, technologically-driven solutions, strategic partnerships, custom-driven services, compliance to legislations.
The ‘one-man-band’ attitude of my father, his inability to delegate and to include other professionals’ perspective, his resistence towards new technologies, combined with all other aspects of aging, didn’t allow him to keep up with the business, which finally closed between the end of the 1990s and the beginning of 2000s.
At the time my father’s business was running, I was just a child in development, despite appreciating some parts of his work, such as discovery the world on the road, feeling connected with people and getting powered-up when sitting in the cabin of those huge trucks, I was not attracted by it: it made my father restless and it was still a very male-dominant business, considerations towards women’s capabilities were scarce and superficial, this didn’t make me feel comfortable.
I began to appreciate the fascinating complexity of the business and its impact on society and the environment only at later times.
In the post Advisory lessons for improving resiliance in your business I share my learnings about the successes and failures of my family business.
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