Upstairs, downstairs, Butler's have the facility
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by bin Sherriff
GOODS worth £50m are stocked at the Greenford warehouse of Butler's Warehousing Distribution Ltd, and a further £30m in total at the company's other three depots, Avonmouth, Runcorn and the newly opened Long Eaton. Each depot has a security system to match its contents, but each system is different, otherwise they would not be so secure.
"Our customers include 15 of the top 30 in the FT index in the country and we've got to look after them," said Mr Ron Patterson, Butler's md. At the same time he made the point that goods are warehoused under the conditions of the National Association of Warehouse Keepers. "And that means that our customer carries insurance for his goods while they are in our store," he added.
First-class security is one of Butler's selling points and the management agree with conviction that an insurance broker will not load a premium once he has examined their security network. Among Butler's "top 15" at Greenford are Rank Xerox, Beechams, W. H. Smith, TLT, Debenham, Raleigh and Schweppes. The latest addition is the Government of Egypt.
The siting of Butler's four warehouses has been influenced by three factors : n The kind and volume of traffic emanating in an area; El The population density; The accessibility of the national road network.
The Greenford depot covering 44,592sqm (480,000sqft) was chosen in preference to the Thames wharves because, said Mr Patterson: "The river was drying up."
A drop in loose cargo, containerisation, a poor trunk road network, and little or no industry all contributed to the dismissal of the Thames. An increase in air freight, a developing industrial complex in Middlesex, easy access to Ml, M3, M4 and London's North Circular Road made Greenford a natural, said Mr Patterson.
Because 30 per cent of Britain's population and wealth is concentrated in the South East, food and consumer durables were automatic warehouse markets. Among the lines in store there are pallet loads of beer, dog food, chocolate biscuits, garden furniture, kitchen units, soft drinks, washing machines and refrigerators.
At Avonmouth the traditional stock item is tea : 14,864sqm (160,000sqft) of it stacked two, three and fourhigh, It represents 10 per cent of the country's tea consumption. This warehouse is located close to the point of import and on the doorstep of Wales and the West Country and adjacent to M5, It is also used to cope with seasonal peaks in traffic from other areas, but in addition it has its own customers, among them electrical goods manufacturers, food processors and customers requiring packaging services.
The 9,290sqm (100,000sqft) Runcorn depot has its own transport fleet and covers the industrial North West, North Wales and Midlands. The main products in store are detergent, canned canned goods, newsprint and light consumer durables.
The new depot at Long Eaton near Nottingham with 6,503sqm (70,000sqft) is stocking up with fast-moving food products. The principal one at the moment is locally produced biscuits. Again, motorway access to MI and M6 is within easy reach of the warehouse.
In a general sense Butler's management regards the company, owned by Town and City Properties, as physical distribution consultants. Mr Gerry Hawkins, a graduate of the London Business School, who is the company's market and business development manager, hastened to caution me : "We are not in business just to advise people what they need, but in addition to fulfil the need."
I asked Mr Patterson : "Assume that I have goods to warehouse—how do I go about selecting a warehouseman?"
" Let's get it right," he replied. " It's not a case of selecting; we've got to agree to take you."
After an initial introduction when, according to Mr Patterson, "each side is weighing the other up," they go away and discuss the prospect from their own ends of the deal. The next meeting begins to consolidate the relationship and if things go well at a subsequent meeting, contracts are signed. A large percentage of Butler's work is on contract.
Mr Hawkins made the point that much time could be saved if potential customers armed themselves with a checklist as reproduced here.
" Using this list to assess the suitability of available warehousmen is the surest way of finding the most suitable shortlist," said Mr Hawkins.
Butler's have two checklists of their own; one deals with the customer's products—the other with the customer's requirements. When each party is armed with the completed checklists, the work is measured in volume and value, and a contract agreed.
Even following such a well regulated research there can be factors which change temporarily the operating pattern. This is something which the warehousekeeper should anticipate and build into his contract price. For example, Beechams were moving 1,000 pallets a day on 35 of their 32tonners during the Christmas period. This was, according to Butler's, a massive increase in their normal usage.
Investment
Why, I asked, do large wellfinanced companies use rented warehouse space in preference to wholly owned property adjacent to their production lines?
Three factors influence the decision to rent space, according to Mr Hawkins. The question of capital investment is an early consideration. Is it wise for a company to invest available capital in property rather than on improving or increasing the quality and output of its product?
Another factor is distribution area in relation to production area. For instance, if 30 per cent of the biscuits produced in Nottingham are consumed in the South East then there should be warehousing for that quantity in the consuming area.
Fluctuation of production, pre-stocking for a sales campaign and seasonal requirements all lead to varying warehouse demands. Empty warehouses are on-costs which manufacturers can ill afford. The skilled warehouseman arranges his contracts so that his available space is almost fully occupied throughout the year. "One man's peak is another man's trough," is the warehouseman's guideline.
The skill lies in marrying the two. "One large South East retail store planned to launch an aggressive sales campaign back by TV and newspaper advertising," Mr Hawkins told me. I! The management, although unused to this method of trading, were far-sighted enough to examine their warehousing and distribution requirements." They approached Butler's, contracted for 10,668m (35,000ft) of floor space and coped with the launch 60 well that the demand for their goods had escalated as had their warehousing requirement.
Nat all consumer durable suppliers show the same foresight, according to Mr Patter son. "TV advertising can increase demands by 120 per cent overnight," he said, "and unless that has been built into the warehouse facility the campaign becomes a costly adventure."
In addition to straightforward warehousing, Butler's provide a transport facility, but not with their own vehicles. Customers who have vehicles can garage them at the warehouse and can have offices provided on the premises for their transport staff. Two companies who operate in this way are W. H. Smith and Son and Rank Xerox. Butler's provide the warehouse and loadingbank staff. It is practice not to change the staff unless it is essential. "This breeds a loyalty to the customer, and after a few months, I have to remind myself that the warehouse staff are Butler's employees," said Mr Patterson.
Processed goods in cans, jars, bottles or other small containers can be delievered the warehouse in loose bulk. Before they are stacked Butler's can carton and palletise the complete consignment.
Imports
In addition to its conventional warehousing the company operates 9,290sqm (100,000sqft) as an Inland Clearance Depot. This has led to an increasing demand from importers for warehousing space.
The importers find that by employing a sales force only in the UK they can sell in a highly competitive market with minimum overheads. Goods are shipped into Greenford, passed through the ICD, packed and palletised, taken into stock and finally delivered to retail outlets on hired transport against salesmen's orders.
Butler's have been toying with the idea of operating their own fleet of vehicles rather than hire-in. "Our customers are of the calibre that require a clean, well maintained and well manned vehicle," said Mr Patterson. "In some cases we have been fortunate enough to get contractors to provide such vehicles in self colour with a pair of brackets on the side to carry our customer's livery board—this is ideal." But he is concerned.
Vehicles are readily available today, but Butler's management are apprehensive that if in 18 months' time a promised upturn in the economy is felt in haulage their hired-in transport may depart to pastures new. So one of their 1976 exercises is to look at future' transport demands.
Another big job is to service the newly won contract from the Egyptian government. Last week they were appointed the sole official export agents for Egypt. This will mean handling 60,966 tonnes (60,000 tons) of cargo a year with its attendant documents between manufacturers and the vessels of the