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HEALTHY OUTLOOK

10th September 1998
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Page 44, 10th September 1998 — HEALTHY OUTLOOK
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Own-account operator Superdrug claims a switch to agency drivers, as part of a three-year shake-up, has provided a tonic for its distribution operation.

As the price war continues to rage on the High Street there has been a quiet revolution taking place behind the front lines in the distribution department at Superdrug Store. Almost everything has changed during the past three years: manual systems replaced by IT; inefficient vehicles replaced with ones giving better productivity; depots double-shifting Monday to Friday instead of relying on expensive weekend overtime.

The difference between then and now is like night and day, says Arthur McLelland, transport development manager. "We've put distribution through a lot of change. We felt we were behind the times in distribution terms and we've come a long way in a short time," he says.

Superdrug Store, part of the Kingfisher Group, is now number two in the health and beauty products market behind Boots. According to Gary Grindlay, head of distribution, the gap between the two is closing, so the Superdrug strategy is obviously working.

Grindlay is seen as the catalyst for this change. Three years ago he joined Superdrug from Christian Salvesen, where he was general manager of the Belshill, Glasgow, distribu

non centre. "Superdrug was certainly the worst operation I had looked into. It had not moved forward with the times," he says.

Now all that has changed. "We've reinvented the wheel and gone back to basics," says Grindlay.

Volumes The list of changes seems endless. Three years ago there were no warehouse management systems so workers were pushing cages around 40,000m2 of warehousing by hand; now picking takes place with small trucks and a dynamic transport scheduling system has been introduced. Depots were working between Sam and 4pm Monday to Friday. This meant that volumes could not be matched with orders so premium time at weekends was needed to catch up. Now the depots work a two-shift system with capacity to handle about two million cases without weekend premium time. The changes have resulted in a 40% increase of case volume throughput.

One of the most recent changes has been to make redundant 65 drivers—who were supplying 44% of Superdrug's driving requirements—and contract out to the agency

Driving Edge. The company was already using agency and third parties for its other driving needs. The move was the result of a review of driving requirements at distribution centres in Croydon and Pontefract, and was made to cope with competitive pressure and changing drivers' hours regulations, says McLelland.

"We did it to give us the flexibility needed to take the company forward so that if we wanted to change the depot structure we could," he says. Undeniably productivity has increased: three years ago drivers worked an average 38-hour week but were guaranteed payment for 54 hours Monday to Friday. This year, drivers worked an average 52 hours in a Monday to Friday week. The transition to agency drivers has been relatively smooth, says McLelland, although some are still having trouble finding the back door to some of Superdrug's stores.

Structure

The company's 710 stores are serviced by four distribution centres, two of which— Pontefract and Croydon—are in-house operations. Mossend in Scotland is run by TDG Harris as part of a shared-user scheme and an outbase at Westbury, Wiltshire, is run by Merlin Distribution. Pontefract holds the high-value, slow-moving products, such as perfumes and cosmetics, for the whole of the country, while Missend and Croydon are fast-moving centres holding paper goods, drinks and toiletries. Inter-depot trunking is carried out daily. The whole transport operation costs Superdrug £7.5m a year.

Something the company has been keen to increase is backhaul loads. Grindlay says he can cut a customer's transport costs by 10% by collecting the product on Superdrug vehicles. Backhaul revenue now tops £1.2m compared with 135,000 three years ago.

Another change has been the types of vehicles used and the way they are used. Traditionally Superdrug has run a fleet of Leyland Dafs with numbers creeping up over the past three years from 104 to 122 tractors. However, after running trials of several makes of truck, 30 new Scanias were bought at the end of last year. The P124LA4x2NA 360 tractors are double-shifted on trunking runs out of the main distribution centres.

Although it is early days, McLelland is pleased so far with the Scanias. "The trials showed that they returned good fuel consumption and have higher anticipated re sidual values than existing vehicles in the fleet. We expect lower whole-life costs over a five-year operational life," says McLelland. "The Scanias are returning between 9.2mpg and 9.6mpg. They're not as good as the Leyland Dafs in inner London but they're better on the long driving legs," he adds. The Leyland Dais are 75 Series plated at between 32 and 38 tonnes.

He plans to add 12 vehicles to the fleet this year—likely to be the same model of Scanias. McLelland also operates 11 rigid Leyland Dafs which are I 74onners. Three of these will be replaced this month, again by Scanias.

Introducing a different make of truck to the fleet meant changes to servicing requirements. When the fleet was solely Leyland Dafs it was serviced by Leyland Daf dealers. With the introduction of Scania vehicles, servicing south of the Scottish border is now carried out by Pullmans Fleet Services, which is part of the Wincanton Group, on a threeyear contract. TDG Williams carries out maintenance for the vehicles at Mossend. The profile of the trailer fleet—currently at I 6.5— has changed. Instead of the 42ft standard boxes Superdrug now uses Wilson double-deck trailers which carry 76 rollcages in Scotland where delivery frequency is rising. Superdrug will take delivery of another eight Wilson double-deck trail ers which hold 108 roll-cages at the end of this month. These will be used for inter-depot trunking. The aim is to maximise space on trunking runs and halve trunking mileage. In addition, 42 triaxle trailers are used so maximum weights can be carried.

Rai!freight

One area of potential change the company is keen to investigate is the use of rail. Between August and December last year 900 road loads were carried on rail from distribution centres at Pontefract via Wakefield railhead and from Mossend via its railhead to Superdrug's Croydon site, via the Gravesend railhead. The trials were successful in that the rail journeys were cheaper than road movements.

"We're now speaking to rail about developing a partnership to see whether we can use it on a daily basis," says McLelland. "We had a good trial period and learnt a lot. Rail offered more flexibility as far as moving volume is concerned but fewer re-timings," he says. Superdrug may have been trapped in a time warp a few years ago but it is not only distribution that has been turned upside down. Hundreds of millions of pounds have been spent on the changes including refurbishment and modernising outlets to become

"concept stores" that is serving the communities in which they are located.

"The changes allow the company to grow and move with the times. Everything that has been done and that we do is geared towards that," says McLelland.

L by Nicky Clarke FACTFILE: SUPERDRUG BASED: Croydon. FOUNDED: 1963 and taken over by Kingfisher in 1987. CONTACT: Arthur McLelkmd, transport development manager. FLEET: 122 tractors, traditionally Leyland Dafs, and mostly 75 Series. Most recent purchases: 30 Scania P124LA4x2NA 360 tractors. 165 trailers, mainly double-deckers carrying 76 or 108 roll-cages. Also 42 triaxle trailers. SPECIALITY CONTRACT: Own-account health and beauty products. TURNOVER: £750m last year.


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