- Dairy Crest Collaboration
- ‘Missing masses of opportunity’
- Grow the business
- ‘The problem is real’
“I don’t like cherries, avocado is horrible, and I can’t stand Brussels sprouts,” he says, as we take a tour around Fowler Welch’s Teynham depot, in Kent. “And don’t get me started on tea either – drinking it makes me physically sick!”
Unlike his selective approach to food, Hay is much more open when it comes to trying ways to improve efficiencies in the food supply chain.
In his six years in charge at the logistics firm, he has strived for closer collaboration with food manufacturers and producers to better understand their needs and concerns, and by doing so, adding value to their businesses.
And, with recent successes that include the rapid growth of joint-venture firm Integrated Service Solutions (ISS), and a new distribution deal with Dairy Crest, there is plenty to suggest the ethos is paying off.
Owned by holding company Dart Group, Fowler Welch operates nine distribution sites throughout the UK, which together, provide a mixture of services for ambient and chilled manufacturers and producers.
Dairy Crest Collaboration (Back to top)
In June this year, the company teamed up with Dairy Crest to share storage and logistics at the dairy company’s national distribution centre in Nuneaton – a move that Hay says works for the benefit of both parties.
“Having divested their milk business to Müller [UK & Ireland Group], Dairy Crest had two main objectives for Nuneaton – maintain its cost of distribution, and look after 108 staff,” he explains.
“Taking a pragmatic approach, we went back to them with a proposal that protected both. Their staff were transferred over to us, and both companies are incentivised to fill the volume shortfall left by the divestment.”
According to Hay, the 10-year deal was only made possible by taking the time to understand what Dairy Crest wanted to achieve from the site.
All too often, he claims, the relationship between manufacturer and logistics operator becomes commoditised, making it impossible for companies like Fowler Welch to bring more to the party.
“If you give me a prescribed tender, and you want to beat me up on each element of that prescribed tender, then I can’t add any value. I can’t understand what your issues are and how we can help fix them,” he says.
‘Missing masses of opportunity’ (Back to top)
“Larger manufacturers in particular tend to have procurement professionals in place, who commoditise everything. Now, don’t get me wrong – I understand they do it so they can compare prices. But, they are missing masses of opportunity,” Hay adds.
He points to the growth of ISS as a prime example of the possibilities that can be realised when moving away from cost. Founded in 2014 as a joint venture between Fowler Welch and Direct Produce Supplies (DPS), ISS takes up 15,800m2 of the 35,000m2 capacity at Teynham.
With four chambers to store produce, six ripening rooms and 22 packing lines, ISS’s focus is on taking cost out of fresh produce supply chains by consolidating services that would otherwise be offered elsewhere.
“Fundamentally, Fowler Welch’s history in Kent has been as distributor for produce suppliers, and we typically collect from 40 to 60 locations a day.
“However, we realised we were fetching some items from companies that didn’t trade in fresh produce at all – so all we were doing was adding time and cost to the supply chain,” Hay explains.
That’s when the idea of a consolidated service provider on a single site took hold. “To date, we’ve spent £4M on packing and ripening equipment, and we’ll be spending another £1M over the next 12 months to increase the number of packing lines,” he says.
Grow the business (Back to top)
In its first year, ISS packed 2.8M cases. Last year, that grew to 5.8M cases, and in 2016 the company expects to top 8M. Hay says there is currently scope to grow the business to 12M cases, within the confines of the current capacity.
“Suppliers that use our services are saving potentially up to £5 a pallet, because of the reduction in the handling and transport,” he says.
“But customers are not obliged to use our full services – we can tailor to their needs. Equally, their level of involvement in the site is entirely up to them.
“Some have technical managers based here, and conduct their own quality assurance checks, while others, we rarely see.”
While Hay is optimistic about the continued growth of ISS, he is not oblivious to the potential headwinds faced by Brexit, and the associated currency fluctuations and commodity price rises.
“The big problem for us at the moment is the uncertainty Brexit is creating. Fundamentally, the driving issue is the exchange rate, which really feeds through to the supply chain,” he says.
‘The problem is real’ (Back to top)
“Everybody is putting pressure on us in terms of cost as well. So, we know the problem is real.”
Despite these concerns, Hay believes UK food manufacturers will be able to ride out the storm.
“I think Brexit is not necessarily something to be afraid of, and some manufacturers will benefit from it.
“Others, constrained by cash flow, may have to drive volume through their business to get through it – so expect some very hard promotions to come in. But it really depends on the category and product type.”
And, putting a further positive spin on the situation, Hay claims a manufacturer’s problem can be an opportunity for Fowler Welch.
“If you bring me a problem, what I want to do is understand what the problem is before I come back to you. Rather than saying ‘this is the price we’ll give you’, listening is at the essence of everything we do. It’s the only way to add true value to a business.”
Nick Hay – at a glance
JOB TITLE: Chief executive officer, Fowler Welch
DOMESTICS: Married, with three children.
CAREER HIGHLIGHTS: A civil engineering graduate, Hay started out on the Exel Logistics graduate programme as a trainee manager. After a number of operational roles, including stints at Arla Foods and Innovate Logistics, he joined Frigoscandia in 2002, where he was fast-tracked through to his final role as operations director. In 2005, Hay became md of Samworth Brothers Distribution, where he oversaw 70% growth during his five years. Hay was appointed Fowler Welch md in 2010, and this year, he was elevated to chief executive officer.
AWAY FROM WORK: A former national 400m hurdler, Hay now competes in triathlons. He is also an avid Sheffield Utd FC fan.