Global manufacturing brings increased demand for 3PL
Amethyst Group is a relatively young company in its present form and Business Development Manager Peter Hughes, 50, was recruited in 2000 to help it develop in new directions. Alison Withers spoke to him about 3PL and the company’s impressive growth
Written by Alison Withers & Produced by Paul Radbourne
Hughes’ background was in service provision – largely in marketing services, including working for the ad agency J Walter Thompson for ten years. Amethyst has its roots in the motor industry. It was formed in 1974 as MCL (Mazda Cars Ltd) and it has come a long way since 2000, when Japanese company Itochu Corporation formed a partnership with MCL renaming it Amethyst group. The partnership was dissolved in 2004, when Itochu became sole owner. In 2005 Amethyst restructured into automotive machinery and two new consumer divisions, the newest being e-fulfilment, as specialists in 3PL (third party logistics), offering a complete logistics outsourcing service from packing right through to end delivery.
Meteoric growth
The move into logistics for other products, (principally toys, consumer products and fashion) alongside the motor division, was the brainchild of the company’s CEO Bob Kemp, former owner of MCL, says Hughes, who was recruited three months before the 2000 launch to help drive the process forward. As manufacture moved to cheaper locations around the world, Kemp foresaw the need for increased warehousing and distribution in the UK. “The business started in 2000 with not very much,” says Hughes. “There was one warehouse of 120,000 sq ft and we extended it to one other, giving us 200,000 sq ft.”
Amethyst has head offices in Tunbridge Wells and now operates from 6 distribution centres, each with warehouses dedicated to a number of different clients and covering a total of 1.2 million sq ft of warehousing. In the last year it has built two new warehouses to keep up with the business expansion that was Itochu’s first five year plan, which was to triple its business through acquisition and organically. The new warehousing was built to cater for the company’s fast-growing client list and especially its newest foray into e-fulfilment, organising the delivery of goods bought by consumers online. In clothing, clients include Oasis, Coast and Burberry, and this month went live with a new client, the clothing retailer Uniqlo, with Lipsy about to come on stream and Karen Millen due to be launched in August.
Because the motor trade was the first to take on board the lean and efficient throughput systems of Kaizen and 5 Sigma, these two systems were already in place in Amethyst, says Hughes: “To us these are almost old hat, but they’re valuable for underpinning the ISO and IIP accreditation.” They were necessary in the motor industry, he says, because of the need to operate “just in time” delivery of parts to car manufacturers: “If you are assembling 1,000 cars a day with 10,000 components, get one thing wrong at any one time and it stops the whole line. Because it’s a very expensive product it has been worthwhile.”
More important to 3PL are the IT systems, he says: “We are heavily dependent on the technology systems we use to support us, I can’t stress how much. There’s an interplay between that and processes in the warehouse. When technology leaps ahead we adopt it and we continually review the interplay.” This means that the company has just invested around £1 million in a new IT warehouse management system from Infor – a software provider with over 70,000 customers worldwide - which is specifically designed for 3PL. The system is being rolled out over the next 9 months. “For our kind of logistics it’s crucial,” says Hughes.
Infor’s SCM Warehouse Management system solution enables Amethyst to see what inventory is or will be available, organize work and align resources and labor to satisfy customer requirements. It also helps the company optimise fulfillment and distribution processes to ensure that products are delivered on time and in full every time. The result has been improved supply chain management with end-to-end fulfillment from order inception to delivery.
“We have 35,000 individual products in one warehouse for one client and we have to pick thousands of orders a day every day with a high level of accuracy. Our total error rate is less that 0.7 percent, which wouldn’t be achievable without IT,” Hughes explains.
Not surprisingly, the company operates continuous questioning and review to ensure maximum efficiency. The head office has just 15 staff, concentrating on business development and accounting, while each facility has a general manager on site, effectively operating as its own business.
Finding capable staff has been a key issue given the company’s rapid growth. Its newly-re-registered IIP (Investors In People) certification following changes to the rules is an indication of its commitment to staff development and training. Appraisals are designed to identify career development and training needs and wherever possible policy is to recruit from within.
With a total workforce of 550 (and an extra 200 temporaries to prepare for seasonal peak times like Christmas) Hughes says it was just not possible to recruit enough people with the right abilities from the UK and the company has benefited from the numbers of Eastern Europeans who have been coming to work here. It’s very careful to check their entitlement to work, he says, and to verify they have adequate and reliable accommodation.
Ambitious future targets – no problem
Having more than achieved the targets in the first five year plan, partly thanks to a big fillip with acquisitions, says Hughes, the next target, to be achieved by the end of 2008 is to double the business. It’s well on the way to achieving that through organic growth now that it has an established reputation with some big name customers on its books.
This phase will be achieved essentially through organic growth as their customers’ businesses also grow, though obviously there will still be a focus on winning new clients. However, says Hughes, that process has grown easier as Amethyst’s reputation has grown and although for the next few months there will be an emphasis on consolidating the business with recently-acquired clients like Uniqlo, Lipsy and Millen, the company will still be on the lookout for new customers, with some already in the pipeline whom Hughes says it would be premature to name.
He says: “People are now beginning to approach us and one notable example is in e-fulfilment. We now appear on people’s shortlists because of the success we’ve had.”
While it will mean increasing the warehousing space, probably by two more units this year and two more next year, using a combination of building warehouses and leasing them to provide more flexibility, there is unlikely to be a need for new systems, especially as the new IT system was bought with growth in mind.
Expanding the workforce will also continue: “We are quite strong on temp to perm,” says Hughes. It will also be good news for Eastern Europeans, a source of recruitment the company has found to be very successful.
All workers are paid more than the national minimum wage, says Hughes, though there are regional variations on how much more, and the company is open to recruiting people of all ages, not only because of the anti-ageism legislation of October 2006.
Says Hughes: “Warehousing has seen huge growth and it’s just not possible to get all the staff we need in the UK. If anything we’d like people to carry on beyond the age they currently do.”