With e-commerce now a major focus for Wincanton, the 3PL has taken the rapid expansion of omni-channel retailer Screwfix in its stride through a combination of pace, agility and flexibility.
If there’s one contract that perfectly illustrates Wincanton’s determination to offload loss-making elements of its business and drive growth through less mature markets, it’s the 10-year partnership it has developed with Screwfix.
The tie-up has been an outstanding success for both parties and saw Wincanton scoop our Operational Excellence Award for 2020.
Last July, Wincanton chief executive James Wroath told MT that the big winners in retail contract logistics would be those involved in areas like e-commerce – retailers that are omni-channel, pure play and agile enough to support online fulfilment.
Wincanton’s contract with Screwfix fits neatly into that philosophy, alongside other lucrative deals with the likes of Sainsbury’s, Argos, Morrisons, Co-op and B&Q. The 3PL returned to growth in Q3 2020, the biggest increase being in digital and e-fulfilment where revenue was up 40%.
To underline its growing commitment to online retail, last October Wincanton disposed of its container business to Maritime for around £1.5m, reducing its annual revenue by about £60m but increasing the group’s underlying profit.
A month later it sold off repair and maintenance company Pullman Fleet Services (PFS), once again to focus on more profitable core markets.
“The thing about third-party logistics is that even if the economy isn’t performing well, if there’s more outsourcing going on then our industry can be successful,” Wroath told MT. “There are still opportunities because in-house companies think more openly about outsourcing.”
What’s particularly impressive about the Screwfix deal is that Wincanton has managed to drive safety and service levels higher and keep costs down despite Screwfix continuing to enjoy rapid growth in volumes.
Sales for the omni-channel retailer passed the £2bn mark earlier this year, while last year it opened 30 new stores, creating over 500 new jobs. This rapid expansion has meant every peak period has been bigger than the last – the challenge being to ensure delivery targets are still met.
Rachel Gilbey, pictured, is MD for general merchandise at Wincanton and runs the Screwfix (part of Kingfisher) contract. She’s been with the company for over 17 years, beginning as a graduate and working her way up on the retail side of the business.
So why does she think Wincanton won out over the other exceptional candidates in this category?
“Wincanton is less constrained than our international peers,” she explains. “We’re able to move at pace; we’re agile and flexible. We’ve been with Screwfix since they had less than 100 trade counters and we’re now over 700 so they’re continuing on that growth trajectory.”
Gilbey agrees that the market is currently experiencing a huge shift in channel demand: “The million dollar question is how consumers are going to buy in the future, as we move through the remainder of Covid and post- Covid,” she says. “And nobody really knows. We have to be future-proofed to continue to adapt.
“There’s been a shift in how people are spending their disposable income. Nobody’s been able to go on holiday, people aren’t eating out, and many are working from home so there’s been a shift to DIY and the trade market. So yes, we’ve seen an uplift in volumes. It’s been a record year in that respect.”
Wincanton supports all of Screwfix’s omni-channel retailing, which amounts to 30,000 products that can be ordered online for next-day delivery.
“We do all of that from our DC and we do all of the store fulfilment,” Gilbey says. “So we do both routes to market and myriad things in between and then we execute the transport to store which is where we won the award. So we really are an end-to-end supply chain partner.”
So what makes Screwfix such a great company to work with? And what benefits does the retailer see in dealing specifically with Wincanton rather than any of its competitors?
“Our agility is one of the things that they like, and the fact that we’re not bureaucratic,” Gilbey says. “Working at pace and making decisions is really easy relative to our peer group.
“It’s the same with Screwfix – we have great relationships with their supply chain and logistics teams so we have full sight of what they’re planning strategically and we work with them on their three- and five-year strategic plans and help shape those together.”
Wincanton’s approach is to “add value through collaboration” Gilbey says, using its vast scale and expertise in the UK market to bring benefit and value to the Screwfix operation.
Technology to plan routes has been key to its success. The company achieved an increase in routes of just 6% last year, despite a 20% rise in the number of trading counters it delivered to.
“The core of everything is sweating the assets and making sure we provide the best cost to serve that we can,” Gilbey explains. “It’s dynamically scheduling the routes that go out and maximising the number of trade counters that we can go to on every delivery.”
On-time delivery targets have also been exceeded, up from 99.65% in 2018 to 99.89% in 2019. This meant Wincanton needed fewer trailers, the number falling from 367 in February 2018 to 308 in February 2020.
“We have brilliant people who really understand the UK road network and the pinch points and we learn from what we see around specific geographies,” Gilbey continues. “The stores feed back to us if there are local challenges like traffic lights going up near a store, for example.
“And then we have a plan to stick to that we execute every day and we monitor ourselves against that plan. That continues to evolve and we continue to learn and to refine it and make it the best it can be.”
Driver efficiency
Wincanton has seen significant improvements in efficiency from drivers and a big reduction in collisions. It has installed the Dynafleet telematics system to monitor driving styles and this, combined with driver training, has seen the average weekly idling time across the fleet fall from 5.65% to 4.77%.
“We use the data to educate, train and enhance our drivers’ experience,” Gilbey says. “When they’re learning and being coached in the right style they’re really welcoming of it.”
Wincanton also has driver trainers and a central driver resource: “We know there’s a market shortfall because of the ageing population but we’re very good at retaining, attracting and developing drivers. We’ve also invested in inclusion to try to attract female drivers. We’re passionate about that – particularly myself, being a female!”
The company is also working with the government on improving welfare facilities, learning from the bus and rail industry which have seen an uplift in female drivers. It has also been able to open up pop-up operations in some of its other customer distribution centres, benefitting from being able to move labour, assets and people.
Like other operators involved in e-commerce and e-fulfilment, the pandemic has only served to increase its business. Where firms in other sectors are exercising caution, Gilbey says it’s “full steam ahead” for the Screwfix deal.
Working at pace
“We’re supporting the growth and the shift to online sales,” she says. “So we’ve had to be resilient in what’s been an extraordinary 10 months. The safety of our colleagues is our number one priority and we always put that first. And then we work at pace to do what we can to service the Screwfix customers.
“As an example, at short notice we opened up another fulfilment centre for Screwfix. That’s gone in and gone live and been a huge part of being able to deliver through Covid and provide us with the extra capacity that we’ve needed this year. So it’s all about being agile – making some mistakes along the way and learning from them. But it’s been unprecedented and I’m very proud of how both teams have responded. It’s been phenomenal.”
The biggest remaining challenge, she says, is retaining that flexibility and pace while being able to adapt. “We have to be very focused on the short term but keep one eye on the future to make sure we’re supporting their growth ambitions.”
As a UK-focused supply chain partner, Gilbey highlights the potential for Wincanton to see additional demand for its services as a result of the Brexit trade agreement. This will include a need for warehouse space as people move volume into the UK to have it sourced more locally because of the potential friction at the borders.
However, capacity issues are unlikely, partly because of Wincanton’s Virtual Access to Storage and Transport (VAST) platform – an online tool for matching buyers and suppliers of warehouse space.
“We have a really strong strategic partnership and we’re constantly looking three, four and five years ahead in terms of supporting Screwfix and their growth ambitions,” she concludes. “We will provide them with the services they require to underpin that and add value in terms of delivering change. Kingfisher and Screwifx are a perfect customer in terms of strategic alignment with what Wincanton is trying to achieve.”