O ne thing, as they say, often leads to another, For
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Kammac, diversification into warehousing—and a host of other activities—started with a simple haulage contract for canmaker Nacanco over 20 years ago. We won a contract to take empty cans to brewers in the late 1970s and there was an obvious opportunity there," says chief executive Ted Clucas.
"They needed somewhere to store the cans, so we set up a small warehousing facility, and collected the cans from production, held them in the warehouse, then moved them on to the brewers for them. Afterwards we picked up the filled product and took Et to the retailers nationwide," he explains.
One thing continued to lead to another, and today the company has been transformed from a relatively straightforward distribution service into a multi-faceted operation that includes storage, repackaging and many other specialist activities for a range of food, drinks and paper product customers. The Heinz Baked Beans packaging line at Skelmersdale produces four-packs ready for stacking supermarket shelves. At its headquarters in Skelmersdale, for instance, Kammac stores food and confectionery products for HJ Heinz and Cadbury, tissue paper and toilet rolls for Fort James, and drinks for HP Bulmers and Scottish Courage. And for all these clients it also handles repackaging operations, typically breaking down palletised loads into promotional multipacks for retail shelves prior to delivery.
The company operates on three other sites, one at Knowsley, one in St Helens and another at the Bass Brewery site in Burton on Trent. Its activities range from further storage and repackaging work through to more unusual activities.
For Nacanco, for example, Kammac runs a pallet layer card sorting operation, taking delivery of the cards that are used between the layers of cans on a pallet, checking their dimensions are correct and weeding out broken, torn or incorrect sized cards before supplying them on to the customer's automated palletising line, which demands absolute uniformity on Layer cards.
Beer destruction
Kammac's range of services for Bass includes pallet repair and cleaning, keg and cask maintenance, sourcing, storing and transporting brewing materials, and managing other consumables used in the brewing process. Even more unusual is beer destruction—enough to break any drinker's heart. Rejected beer is recovered from the production process and dyed green prior to being given to pigs (which doubtless improves the flavour of the bacon). The firm also handles beer recovery—extracting beer out of partially filled cans for refilling.
"We'll do any peripheral activity that helps them get on with their core business," says Clucas. "More and more large manufacturers are tending to go back to their core businesses, and we've taken advantage of that."
So is there any activity Kaminac wouldn't take on for a customer? 'Yes," says Clucas. "Anything that makes a loss! Except haulage, that is. We do lose money on that... but we wouldn't have some of our other contracts without the haulage side. It's a support discipline and our core business is serving clients across all the disciplines.
"Besides, the activities all feed off ioh other. For example, if we do ime repackaging we might offer u space for seven days in the rehouse for free. All the differit areas of work are integrated." This strategy seems to work :II for both Kammac and its cusmers. Distribution, warehousing id repackaging each account for ound a third of the company's rrent turnover of £12m. Profits e better in repackaging, accord; to Clucas, with around a 6% rgin, while storage tends to nerate 3 to 4%.
lime strings
eresting, indeed, when you conier the repackaging operation is far the most labour-intensive of 3 three strings to Kammac's w. Of the company's 425 lployees, 260 or so are iployed in packaging operans, with about 60 road vehicle ivers, 90 in warehousing and the St in admin and office work.
It's all a long way from the comny's position in the mid-1980s, ien distribution still accounted • 70% of total revenue and the mpany's annual turnover was Dund the .C.3m mark. As a restart all this change, the company has duced its road vehicle fleet from a ak of 113 tractors to 43.
"We decided that concentrating on mover was vanity," says Clucas. istribution is the most capital intensive 3a to be in. The more balanced proach was to have fewer trucks." The survivors are all Volvo 380hp 125 based at the Skelmersdale site.
e company also has 117 triaxle curtainlers from TIP. However, transport maner Jerry Quinn stresses that they still m on domestic haulage work.
The Volvos all run at 40 tonnes, he ds: "We won't go to 44 tonnes because !yjust won't give us the rates." Another tlem, he says, is finding backloadsto 40% of mileage is empty running.
Inunercial operation
t true to the philosophy that has seen company grow so well already, mmac has found a way of making at St some money out of haulage—albeit ler people's haulage. As the 3Imersdale site is frequently visited by ier hauliers when Kammac's contract esn't include the transport, a truck sh station put in for its own vehicles ; been turned into a commercial openr and has become a nice little earner. "We started it around three-and-a f years ago and it's only available by Jointment," says Clucas. Income from service last year totalled a useful 5,000 and it looks set to grow this year: 000 has already been generated in the first quarter. "If you're smart in business, you utilise your assets," Clucas remarks.
Being all things to all men has its share of problems, however. "The worst thing is balancing everything and being able to flex what you've got with what the customer needs," says Clucas. "But because of our size we are no threat to the major logistics players and the rest of the market is very fragmented."
And the opportunities offered by diversification are worth the trouble, he says: "I think we would have survived if we'd just stayed in distribution, but the more successful you are the more choice you have. And the choice we made was to go for a broader base, higher margin spread of operations. In distribution any man and his dog are competition.
Four disciplines
The trick is, first and foremost, to make yourself attractive enough to use and then to make it difficult for the customer to choose someone else. If there's three or four disciplines involved that they have to replace, that's more difficult. And people will only be able to take the business off you if they're better.
"At the end of the day we're a facilities and people provider," he concludes. "Everything we do is about making things easier for them and respecting their needs as customers."