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HomePeopleRoles and ResponsibilitiesOperations management: The Wincanton Way

Operations management: The Wincanton Way

Wincanton’s mission is ‘delivering supply chain solutions across Europe’. The company is customer focussed: its aim is to help its customers become more efficient and more successful by enabling them to set up facilities and systems that guarantee them the supplies they require, when they need them.

Wincanton is one of the leading logistics firms in Europe and it is the UK’s second largest logistics company with 13% of the overall market. It is the UK market leader in grocery distribution, automated warehousing and petrochemical distribution.

In 2004 Wincanton:

  1. had a £1.6bn turnover
  2. employed over 25,000 people
  3. operated over 100 major warehouses
  4. deployed 6,000 vehicles
  5. operated in 15 European countries.

Currently, the UK accounts for 62% of Wincanton’s turnover and produces 83% of the company’s profit.

The company’s activities include:

  1. moving bulk raw materials
  2. organising the movement of supplies to companies
  3. managing the movement of finished goods to customers
  4. managing warehouse facilities.

Wincanton ensures that products are delivered appropriately labelled and in a suitable condition. It can track and trace where these products are at any time. It can also integrate its warehousing systems with its customers’ systems to improve the efficiency of stock ordering and delivery. It can help firms with package design and provides consultancy services in areas such as project management and warehouse development.

It can also help with record keeping and data management. Its business, therefore, is not simply moving products from one place to another. It involves fully understanding the client’s operations. This ensures that the flow of goods to the client absolutely matches their needs and provides them with the reliability, flexibility and cost effectiveness they require.

Wincanton’s Products and Services:

  1. transport and distribution e.g. delivery of goods using road, rail, and barges
  2. warehousing e.g. providing temperature controlled warehouses
  3. specialist services e.g. helping with records management
  4. added value services e.g. labelling and package design
  5. information technology e.g. modelling and simulation, enabling firms to track goods
  6. management e.g. consultancy work linked to warehouse design and project management.

Many of Europe’s best known businesses use Wincanton’s services, including:

  1. Sainsbury’s, Somerfield, Tesco, Waitrose, Co-op (Food Retail)
  2. Bosch, Kellogg’s, Mattel, Nestle, Procter and Gamble, St Ivel (FMCG)
  3. BASF, BP Castrol, Exxon Mobil, Tesco, Texaco (Petroleum and chemicals)
  4. Bostik, Ineos, Saint-Gobain (Industrial)
  5. BMW Motorcycles, Honda, Renault, Volvo (Automotive)
  6. Argos, B&Q, Comet, Gucci, Next, WH Smith (General Merchandise).

To ensure it maintains its position as one of Europe’s leading supply chain management and logistics companies, Wincanton makes full use of its business development team.

The team’s role is to find new opportunities for the organisation. It presents proposals for possible projects to senior managers. For a new project to be accepted, the team must demonstrate that the venture is highly likely to achieve a revenue target specified by senior managers. Wincanton is constantly developing new areas of business and the company’s annual turnover increased by over 68% in 2004.

Once senior managers have accepted a project, it has to be ‘made to happen’. The rest of this Case Study looks at what is involved in delivering one such project: a client’s request for a new warehouse facility.

New business development may involve:

  1. new contracts with established customers
  2. new customers
  3. new areas of business
  4. strategic acquisitions of other firms to enter new business areas (e.g. MidiData in January 2005 to strengthen the position in the High Technology Logistics sector).
  • the ease of access to transport links such as motorways, rail networks, ports and airports
  • costs e.g. land prices
  • the availability of a suitable workforce.

When developing the warehouse, Wincanton has various options. It can:

  • develop an existing facility
  • build a new, specially designed facility
  • share facilities within an existing warehouse.

Wincanton will discuss with its client the costs and time required to deliver each of these options.

As part of its service to clients, Wincanton will:

  • decide whether to buy the land and facilities or to lease them
  • organise insurance for the warehouse and goods
  • manage contractors during the building phase to ensure completion on time and within budget
  • develop, introduce and manage a Health and Safety plan (including staff training)
  • handle the transfer of the client’s existing operations to this new facility if required
  • test the system before “going live”. This may involve running an old system and a new system in parallel until all risks associated with the switch-over are fully understood and completely under control.

It is clear from this that setting up a new warehouse facility is a complex project requiring specialist skills for its successful completion.

Project management tools, such as critical path (or network) analysis, help to organise activities in the right order. They also enable managers to focus on the key activities that must not be allowed to over-run. These critical activities have no float time – even the slightest delay with them would cause delay to the whole project.

Human Resources

Whilst developing a new warehousing facility Wincanton will also be working on the workforce plan. This sets out the firm’s future human resource requirements and develops appropriate strategies for meeting those needs. Wincanton may have sole responsibility for this task or may develop it with the client.

The workforce plan will include:

  • an outline of the jobs required at the facility, including the terms and conditions involved e.g. the method of payment, holiday entitlement, period of notice, sickness pay, and dismissal and grievance procedures
  • proposals for attracting applicants e.g. where to advertise the vacant positions (which will depend on the nature of a particular job) and co-operation with local job offices
  • the range of methods of selection to be used for each job category
  • a programme of training, including induction training when employees first join the business e.g. an introduction to the organisation, the facility, Health & Safety, the job and their colleagues. Wincanton is committed to training. In 2004 the company provided more than 30,000 hours of training for its employees.

Finance

Wincanton’s financial team is responsible for negotiating the contract with the client. This involves agreeing the terms and conditions under which the facility will be developed.

It will include many aspects of financial planning such as:

  • estimates of the capital expenditure involved, such as the building costs
  • the expected breakeven point
  • the likely return on the investment.

The financial team will be dealing in large sums of money and significant levels of investment: a purpose-built automated warehouse is likely to cost between £20 million and £40 million. The customer usually finances this although, if required, Wincanton can help with finding sources of funding.

Wincanton’s effective operations management team and good workforce planning usually mean that a project such as this can be completed within a few months.

The Information Technology (IT) team at Wincanton focuses on defining the system requirements and identifying the most suitable IT specifications for the warehouse facility. This involves working closely with the client to understand existing systems, ensuring the links between the two and also with the rest of Wincanton’s systems work effectively. The team’s work will include installing and testing the system as well as training employees.

The IT team will also be responsible for developing a Disaster Recovery Plan (DRP) as part of contingency planning. In its contracts with clients, Wincanton undertakes to provide them with a service 24 hours a day, 7 days a week, 365 days a year. The purpose of the DRP is to ensure that Wincanton is in a position to fulfil this promise, no matter what happens.

Wincanton also uses IT to support the work of the other functions of the business, such as operations, finance and human resource management.

Most people seldom think about supply chains until something goes wrong and yet they make a huge contribution to our personal welfare. Wincanton is in the business of ensuring that ‘things going wrong’ remains a rarity.

By managing supply chains effectively, Wincanton enables other firms to improve their own efficiency. The company provides many different products and services related to the movement of goods around Europe. To do this well requires close co-operation with clients to understand their needs.

This Case Study highlights the way in which the company has tackled the challenge of operations management and has organised itself with a view to maximising the quality of its service to its clients.