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The company formerly known as BOC Distribution Services recently celebrated
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its first birthday in its new incarnation. Miles Brignall finds out what's new at Gist. Anyone who spends any time on the UK's motorways will have noticed trucks belonging to what appears to be a new name in logistics—Gist. The purple ball logo has started cropping up on cabs across the UK. However, keen truck watchers out there will also have noticed that they bear a striking resemblance to those once run by BOC Distribution Services, and with good reason.
In June 2001 BOC DS was effectively re-branded as Gist (the middle four letters in the word LoGISTics in case you were wondering) although its still very
much part of the BOC group. The official reason for giving the transport division a more distinct identity was to allow it to develop a broader business base. It seems that customers were assuming the fleet only existed to deliver bottled gasses for the rest of the BOC Group, and it was losing potential supply-chain management work as a result.
Distribution work
There's no such problem now. Gist has a spanking new HQ just outside Basingstoke; the rebranding exercise is being hailed as a success—and it is on track to double in size by 2004. The company that used to be known only
for its chilled distribution 1 for Marks & Spencer has invented itself.
Before we get carried away this success story, it's worth n ing the position BOCDS vw. four years ago. Out of the blui company announced it was v ing away from all of its non-? distribution work after lo money on a number of contr most notably with Sainsbury'
In fact, there were rumou the time that BOC was plan: to sell its distribution arm: all, supplying prawn sandwi was hardly one of its core al ties. Instead Martin Gw recently appointed as mana director, set about building a
Mess offering better returns. ke had got ourselves into a iber of low-margin contracts were offering growth in the ' range," he explains. We ded that wasn't the area of ness we wanted to be in.
tpply chain Fit' same Mile it was clear that narket for outsourced supply n solutions was growing at Ten 30% and 40%," Gwynn ains. "While it was a small ness at the time, it was where Mure lay." ith hindsight, there's little 't that the radical decisions a then had a big impact on Nay the company operates y. Gist is still reliant on ; work—which accounts for 150% of its turnover—and manages all of M&S's foal
ibution. However, the corn
also has its fingers in sev
)ther pies.
partment store
year it won a five-year con-0 manage a distribution netfor the Budgens supermarlain; this now accounts for : io% of its turnover. Earlier .ear the John Lewis departstore awarded Gist the conto manage a new supply operation; it also lists h Airways and Carlsberg among its blue-chip clients. ynn has also spent two years lig up a consultancy busivith a staff of 'a° (turnover L5-6m. advising clients how to improve their supply chains. Moreover, Woolworths in Australia recently asked Gist to analyse its proposed transport strategy and propose alternatives. Naturally enough, Gist also provides substantial consulting services to the rest of the BOC Group, which operates in Go countries: Gwynn says the consultancy division has become a key component in the company's success. Unlike many of its 'supply chain competitors'. Gist has chosen to get involved in e-shopping. It's providing the distribution for a new internet-based shopping service that, unlike its competitors, operates without stores. Ocado will deliver goods direct from its Hatfield depot. although it remains to be seen how successful it will be when the full service starts in the New Year. but it has the backing of the John Lewis Group and is being run by two former M&S staff Gwynn says all the early indicators suggest it will make money for all concerned. One of the things that sets Gist apart from many of its competitors is its return on sales. Last June, at the time of the re-branding, Gwynn went on record as saying that his goal was to double Gist's size by 2004. and so far he's on track.
In November the company will reveal how it performed over the previous 12 months, and most estimates suggest that Gwynn will report that turnover has risen by about 15% to £265m. However, as every operator knows, the key to success is return on sales. Gist is currently operating at around an enviable 9%, which would give a profit of almost £24m. But even that figure is not as good as last year. when it racked up a phenomenal 12% return.
Open book
Interestingly, Gwynn says that the company has recently moved over to signing open-book contracts with both M&S and Budgens, which means it charges the cost of the operation plus a 'management fee' (representing its profit). However, he stresses that this is not a fixed policy; the company will continue to sign the most appropriate
contract for the circumstances.
It doesn't take a PhD in economics to realise that having one customer contributing half your turnover is a fairly risky strategy, even if that customer is M&S.
Yet Gwynn has been quoted as saying he is unconcerned by the firm's reliance on the M&S work; he believes that companies which continue to develop and keep coming up with cost savings will continue to thrive.
The Ocado e-commerce venture will certainly be watched closely by Gist's competitors to see if it makes any money. And while it won't be a disaster for Gist if it doesn't, it will certainly cause more than a headache.