Delivering quality: how TWT Logistics competes past the price
TWT Logistics is one of the fastest growing companies in its sector, achieving growth of over 200 percent over the last two years. The company’s Operations Director Steve Rees told James Hurley about TWT’s commitment to flexibility, high service levels and why he’s determined to address a skills shortage that’s affecting the entire logistics industry
Written by James Hurley & Produced by Paul Radbourne
TWT Logistics developed a reputation for handling time-critical consignments in the print industry following its inception in the 1980s. These good working practices were soon established at the heart of the company's culture, enabling it to develop tailor made logistics solutions for many blue chip organisations including the Hoover/Candy Group, St Ives Plc, The Sony Corporation, Technicolor, Tesco and the Welsh Development Agency.
The company operates from its fifteen-acre headquarters in South Wales with over 100,000 square feet of warehousing and offices, as well as purpose built workshop facilities. As a result of its network of strategic partnerships, TWT can utilise similar services and facilities are at over 100 locations across the UK.
Service levels will prevail
TWT is a company that prides itself on the level of service that it offers. Its philosophy is to work closely with its customers to develop an extensive understanding of their unique business needs, enabling it to deliver bespoke logistics solutions. The central principals behind its customer partnerships are innovation, exceptional quality and value for money. Other companies in the logistics and haulage industry don’t always share this quality led vision, however. This has led to fierce competition on price.
Steve Rees, TWT Logistics’ Operations Director believes it is important for the industry as a whole that the service ethic approach taken at TWT is adopted elsewhere. “It’s not just about coming in and giving cheap rates,” he says. “There’s a lot of that in this industry but we need to try and move away from the undercutting culture in haulage. I think, like in Germany, we should be able to compete past the price and on service levels. It’s easy to think that cheapest always wins but that doesn’t mean customers will get the right service levels. We’re trying to say that service levels will prevail.”
Rees believes that good communication is the basis of this service ethic. “We try to get it right as often as possible. If we are going to be late, we make a call to the customer. Communication is key with us; we’re up front because it gives customers a chance to make preparations. It’s about knowing your customers, knowing what they want and having a workforce that thinks and plans that way.”
Rees joined TWT in 2005 as General Manager, following a successful career at various transport and logistics companies in South Wales. He spent 13 years heading up everything from operations to sales at Cardiff logistics company Rhys Davis, helping to achieve a rise in annual turnover from £1 million when he joined to £29 million when he left. Spells as Sales Manager at Hills Transport and Depot Manager at Leggetts followed.
“TWT was a smaller company when I joined, a two or three man band. Following the acquisitions, we’re playing with the big boys and there’s a higher profile for the company.”
The company has a turnover of £10 million in South Wales and acquired Switch Transport in Andover, Hampshire in February 2006, which is responsible for a further £5 million in annual revenue. This £15 million total turnover represents a 200 percent increase in just two years. Rees says that TWT is also looking to partner with other companies of a similar ilk, and expects the company to experience further year on year growth of between 20 and 30 percent.
TWT’s largest account is Hoover Candy, contributing £3 million of annual turnover. The company works with Hoover Candy to deliver anything up to 40 loads a day to outlets including Currys, Comet, and Argos. Another significant client is Abington Carpets, who supply seven to eight loads a day to Carpetright. This is a four year deal that was recently increased from three years. Rees says that longer contracts are indicative of successful customer relations. “In the old days, our customers wouldn’t want to sign up for anything long term. Since then, we’ve had to commit to a lot of costly material, machinery, vehicles, livery and trailers. For us to do that, we would look for a bit of a commitment. In years gone past, the commitment from customers wasn’t there, but it’s happening more and more and seems to be the way of the world now, especially for us.”
Flexibility
TWT aims to cover all parts of the UK on a daily basis, but Scotland and Northern Ireland can be problematic, so those areas are currently served on a two to three day frequency. Rees says that there are plans to find a suitable partner or acquisition in the North East that will allow the company to serve Scotland and the North of England more effectively. Meanwhile, the depot in Andover allows TWT to cover Europe by running five to ten trucks to the continent on a weekly basis.
“We’re growing and we’re flexible,” he says. “We’re not into one particular product and we’re trying to be adaptable by taking on any item that can be palletised bar chemicals. That’s where we’re finding growth.”
Having a flexible approach is absolutely crucial in the logistics industry. “Because some of our customers’ work profile is so variable - they might go from wanting 40 trucks today to 60 tomorrow - it’s difficult to manage, but ‘no’ is not in the TWT vocabulary, it’s just a question of ‘how’ and that’s where the importance of information and planning tools comes in,” Rees explains.
“Hoover can almost give us a week’s notice of ‘work boards’ which show what they’re planning for the next week, which gives us a nice feel of what’s happening. Planning is crucial. We try and ask our customers to let us know by twelve noon for next day delivery – we’re trying to get that image across.”
This approach is informed by the company’s origins in the printing industry. “With print, you can get a call at 3 o’clock saying a customer wants a vehicle at any time in the next five or six hours to take pallets to various destinations. We try and ask them to give us information but we’re flexible and adaptable when needs must. It could change from a planned couple of pallets a day at 7am, to something completely different later in the day. We’re trying to get them to get away from that because it’s a costly exercise.
They have to pay for the vehicle. One of my sayings is ‘when you fly, you pay for the seat you sit on, not the plane.’ If you’ve only got two pallets going, just pay for the two pallet spaces on that truck. On an airline, you take the seats – just as Easy Jet would sell seat spaces, TWT are pushing that profile in the marketplace. It’s giving dividends and helping us in the marketplace. Other people are doing it but you’ve got to do it right. We need critical mass to help us do it.”
Marketing push
While the frequency and quality of the contacts being won by TWT Logistics is improving, Rees still feels that the company has a long way to go when it comes to its marketing operations. “Our biggest failing as TWT is that we haven’t marketed ourselves properly,” he concedes. “We want a higher profile. We’re changing our whole operation and we’re working with other people to improve our operations. We’re getting contacts and the whole thing is better for us and the customer, because everybody is committed to each other and we work together as partnerships, so it’s not a master-servant type relationship.
“We’re seen as an arm of the customer. When we deliver for Hoover Candy, TWT are almost part of the Hoover regime. We’re there to be an arm of the customer. We know that if we mess up, it also reflects on them. To this end, we constantly monitor ourselves with Key Performance Indicator’s and our Hoover Candy operations are running at 99 percent efficiency.” Bearing in mind transport operators have to deal with any number of factors beyond their control, including road traffic accidents, punctures, and late deliveries, this is a remarkable achievement. “We’re doing that monitoring with all of our customers and proving that our service levels are second to none,” he says.
The image of the industry is something that Rees is clearly passionate about and equally determined to improve. “I play a bit of golf and the people I play with don’t understand what I do – they think it’s easy. That’s why we call it logistics, rather than haulage. It’s about being cute, being able to plan, put loads together and being able to communicate with drivers and customers. Even drivers these days have to be like Philadelphia lawyers with the paperwork,” he jokes. “It’s a difficult environment to work in, but when you get it right, it’s a pleasing industry.”
Addressing the skills shortage
Rees does feel that negative perceptions of the industry have had a major impact on recruitment, if not retention. “There are no training funds and the image of the industry is not the best. We have to try and change that. There’s not enough training in skilled people,” he says.
“What we try and do is bring them in as young warehouse lads, bring them in to the office so they can understand the warehousing and how we operate off the desk, and if they want to go out driving we’ll put them out in a van and progress from there. But all that takes time. For employers, there’s a shortage, so it’s a big challenge.” While foreign labour is the answer to the skills shortage in sectors such as construction, the language barrier and lack of geographical knowledge can be a problem in the transport and logistics industry. “The whole industry has improved over the years but it’s not yet seen as a shop window - the youngest guy in our office is 30.
“We don’t get kids leaving school to want to come and drive a lorry anymore – it’s not a fashionable job. It’s not sold or taught in schools. I would definitely say that there’s a shortage of skilled labour in the transport sector, purely because it’s not advertised and sold to the youngsters.” To make matters more challenging, the company can’t take on anyone with less than five years experience because of insurance premiums. Rees believes an industry wide initiative is the only answer to this issue.
“I would like to see hauliers investing in training schools in their areas. Somewhere along the line we have to put together a training body or training type industry together. The hauliers could come together and pool resources. In order to go forward we need people to come on board, but if other hauliers keep undercutting, people will fall over and companies will go bust. Only the strongest will survive.”
“I’m interested in talking to Skills for Logistics to see what they can do for us as I’m worried about the age of people coming in,” he says. Skills for Logistics is the Sector Skills Council which works alongside companies involved in the logistics sector. The organisation's job is to raise awareness of skills issues within the sector and to offer support and practical advice on all aspects of improving skills and training. If Rees can successfully work with the organisation, it’s likely that Rees will have taken an important step towards achieving an industry wide consensus on the issue, which will be welcome news for all.