04.01.2016

Nationwide reverts to in-house deliveries

UK-based Nationwide Platforms will end its current machine delivery outsourcing contract with Wincanton Transport at the end of February and revert to an in-house delivery service.

The move comes just one year after the company decided to outsource the delivery of its machines to one of the UK's leading logistics and transport specialists. No reason was given by the company for the change, although we understand that the challenges of outsourcing what is a complex task, proved far more challenging than either company expected. See Nationwide announces transport partnership

The company provided the following statement: “We confirm that Wincanton’s logistics contract with Nationwide Platforms (the UK trading company of Lavendon Group), will come to an end by March 2016. In order to better support the group’s growth plans and the development of an increasingly sophisticated customer service offering, Lavendon and Wincanton have jointly taken the decision to bring the management and delivery of the transport logistic requirements for Nationwide Platforms in house at Lavendon and under its direct control".

"Consequently the partnership agreement with Wincanton will be brought to an end, with the transition to an internal service delivery anticipated to be completed by the end of February 2016. A consultation process, in accordance with relevant regulations, is taking place with all affected employees”.

Vertikal Comment

This move is no surprise and has been rumoured since before Christmas, while outsourcing deliveries makes total sense in most industries - where products are produced and then handed over to a specialist - it is a totally different proposition for a rental service where the delivery is part of the product.

If this ‘experiment’ was going to work at all then Wincanton would have been one of the very best partners, it has enormous experience in delivering a wide range of products – but in almost every case it is simply delivering a product, whether that be bulk sugar, milk or boxes.

A rental company delivery however is a service to an incredibly varied customer based, with highly volatile and unpredictable demands, requiring a wide range of different delivery vehicles to be efficient - using a large low loader to deliver a single Power Tower to a residental address for example will not work.

A rental company buys equipment in order to rent it out on a short term basis. Its 'product' is made up of several factors: 1. Having the right machine in stock, or knowing where to get it. 2. Delivering that machine to the right place on time and handing it over in a safe and professional manager including familiarisation etc… 3. Responding promptly and efficiently if anything goes wrong and sorting it quickly. 4. Collecting the machine on time and invoicing it correctly.

Over the years a number of large companies have tried to outsource one or more of these elements, from outsourcing the entire service/repair function, to having manufacturers own or lease the fleet, or as in this case, outsourcing the entire delivery function.

While such efforts could and should work, the reality is almost always the opposite. For the outsourcing of a service to work properly it needs a very long term commitment on both sides, an extremely close working relationship and the understanding that it will not necessarily be the cheaper option. Finally outsourcing any one of these tasks, hands over a key opportunity for differentiation.

It would be very interesting for the industry as a whole to see what actually happened in this case, and what was really behind the decision to give up on it so soon. The idea has merit, but making it work seamlessly is something else, and putting customers through the learning curve not an acceptable option, unless the current system is broken.