PRESS INFORMATION - March 2004

In A League Of It's Own.

AK Worthington reckons that like Manchester United, the team it supports, it's a quality organisation with quality team members and aims to be competing with the premiership players in the near future. Simon Jack reports.

It's only natural that Tony Worthington, Chairman and managing director of AKW Group - and a keen Manchester United fan - should use a football analogy to describe the development of his business. "Five years ago we were like a third division club but I would say we are now just about at the top of the first division," he says.

The company might not yet be a major Premiership force like United, whose ground is walking distance from AKW headquarters, but Worthington is ambitious about the future.

After starting the company in 1981 aged only 21 he has grown it to an organisation with a £12m turnover and this summer brought its previously separate warehousing and transport arms together under a group plc banner. The company has invested heavily in all its operations in the past three years and is achieving growth of around 11%.

"The next 12 months could be dramatic ones for us. It is going to be an exciting year - if you're not developing as a business you're dying," Worthington believes.

Bringing the two sides of the business under one umbrella is allowing the transport operation, AK Worthington, to offer services provided by its warehousing operation, World Freight Centre, and vice versa. Worthington says that in the past at least one contract was lost because the company was unable to provide a one-stop shop of services.

"We want to offer everything from taking goods into the warehouse, manipulating and packing the products, sortation, storage and the ability to deliver everything the next day within the UK and Ireland," he says.

Julian Richards, managing director of AK Worthington, says that there are large-scale opportunities from being able to do this. "We believe there is 10-15% growth available from providing more services to existing customers," he says.

There are also advantages in terms of financial control as group finance director Mike Lyons explains. "Cost control is automatically improved because all the business is operating under the same disciplines and you are able to do things like offering customers a consolidated invoice for all the services they use," he says.

The size, as well as the type, of contract the company is tendering for has become larger in the past few years, as Worthington explains.

"We now tender for contracts between £500,000 and £3m per annum. Often those are too big for local firms but too small to interest the larger players. Five years ago even something worth £1m might have been too big for us," he says.

By bringing the two businesses together Worthing has come full circle, as five years ago they were divided into two entities. "I split them into two companies mainly because I felt that it was getting too big a beast for one person to control," Worthington says.

Each was given a separate management structure, each operated from separate premises and at that time the two had very different client bases. Since then both businesses have moved into areas where cleanliness and quality are overriding requirements, which has created the opportunity for cross-selling services.

In both cases their client base is mainly in food and drink, clothing and higher value merchandise such as toys and games. Recently, the task has been to reintegrate the two sides.

"Bringing them back together brought its own challenges as the two companies had developed in their own way, even to the staff wearing different coloured overalls," Worthington says.

Another change in the last five years has been the move away from being a family-run firm. Worthingtons mother has retired from the business and although his sister is human resources director and his brother works in the garage and as a driver, neither, Julian Richards or Tom Greene, managing director of World Freight Centre, is a family member. Nor is Mike Lyons.

"In the past five years we have created an established and professional management team," Worthington says.

As well as building its management expertise the group has invested £100,000 in IT over the past two years to help it provide performance information to customers and accurate costings when pitching for contracts.

In one instance AK Worthington temporarily lost some work when another firm undercut the company by 14%, only for the work to return a few weeks later when the competitor could not provide the right service at the price they had quoted.

"Knowing our costs means we know what we can provide at what price. It also means we know at what point to walk away and say that's not fair to us," Lyons says.

However, there is anyway a shift of emphasis when talking to customers. "Price is no longer the main issue for us, quality is. We have moved into a different arena where clients have different aspirations," Worthington says.

Greene adds: "As our quality levels have increased we have attracted customers that require higher standards."

Richards says that the IT investment has been vital in satisfying customers, who now demand measurement of and adhere to clearly defined key performance indicators. "Customers like information and they like it quickly," he says.

Information can be used to help customers cut their own costs. In one instance a customer's level of product damage was found to be far higher than the average for AK Worthington customers. Once this was pointed out it was found to be due to poor quality cardboard boxes and led the customer to change their supplier of this type of packaging.

"Five years ago we probably wouldn't have known what the percentages fro damage were," Worthington says.

As well as raising its profile among customers, the group has also become more attractive to potential recruits. When it advertised for a business development manager four years ago it received only a few applications but when it did so recently it was inundated. The applications were of a high standard and out of 13 who went for the job there were 10 good candidates to choose from.

The group now employs more than 150 staff and inevitably it is more difficult to have day-to-day contact with everyone involved in the business. "Its one thing I really miss," Worthington says.

But overall he is still as enthusiastic as when he started. "I've never woken up and thought, 'Oh god, I've got to go to work today.' I still get a buzz and a thrill out of running a business."

The transport arm of the group, AK Worthington, has transformed itself in the past three years. At one stage much of the work was general haulage of commodities but now 60% of it involves food-related products, including finished grocery items, packaging and ingredients. Much of the remainder of the business is made up of clothing, electronics, printing materials, household goods and toys and gifts.

"To achieve that we have had to dramatically raise the quality of the operation and have invested in a new fleet, our staff, the management team and IT," says Richards.

No vehicle in the fleet, the vast majority of which is made up of Scanias and ERF's, is older than 18 months other than some double decker trailers.

Mostly the company buys specialist equipment and leases more mainstream units, although some trucks have been brought outright. The trailers are liveried in red, white and black - like Manchester United - with silver cabs reflecting, Worthington says, "the trophies United are going to win this season".

In the past few years the operation has greatly improved its coverage of the UK and Ireland. As well as making direct deliveries with its own fleet AK Worthington is a member of the Palletforce network.

In addition, it has formed partnerships with 14 other haulage firms around the country, from Aberdeen to Newton Abbot in Devon. Under these agreements loads are trunked to the partners who then carry out the final delivery. In return they trunk their loads for the North West to AK Worthington.

The criteria for choosing the partners, is that they are privately owned and are in the quality distribution market. We have no weak links in the chain," Worthington says.

When we began to set up these agreements we approached the other partners to see if they were prepared to link up with us. By contrast, most of the last six or seven partners have approached us."

Staff issues are taken very seriously and, although like all hauliers it is not easy for the company to find drivers, Richards says that AK Worthington has not experienced the serious problems some other companies have. This is partly because of the nature of the work, which involves dealing with clean products, and because of the company's rewards for the loyalty and performance.

The drivers' views are taken very seriously and, when the company was considering buying new vehicles, they were asked through a circular what features they thought were most important. "We don't just put them into the truck with a set of keys," Richard explains.

Worthington adds: "Drivers are your lifeblood. When they get out of that gate they are your business."

Reproduced by kind permission of Motor Transport

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