October Newsletter
October 23, 2008
Welcome to the October edition of our Newsletter. In this issue, our Managing Director, Malcolm Johnstone, shares his thoughts on the turbulent nature of the logistics industry at the moment, and the importance to manufacturers of choosing a reliable and steady partner to provide their storage, distribution and production support solutions.
Malcolm Johnstone – Turbulent Times
Looking back on the recent Food Storage and Distribution (FSDF) conference, it was clear that the recession is affecting our sector with several storage and distribution firms falling into administration. Former leading logistics providers were notable by their absence and the last year has seen big changes to the hierarchy of the whole industry.
Whilst some companies have gone to the wall, others have steered a steady course through the good times are now reaping the rewards of their conservatism. I’m pleased to report that ACS&T Logistics is in good shape, having relied on the cornerstones of stability and sustainability, and resisted the lure of risky pricing strategies. This has left us in a very strong position to weather the difficult times ahead.
The Underlying Causes
As in all sectors, the causes of the underlying recession have had a massive knock on effect in our industry. Power costs have soared in the last 12 months, which has affected all those in the cold storage business and the credit crunch has made capital for investment difficult to obtain.
The ever rising cost of fuel has also contributed to the downfall of some distribution companies. The competitive nature of the business, with companies entering into price wars to please customers seeking the cheapest deals is proving to be unsustainable as running costs rise.
New environmental regulations within the industry, such as the new legislation regarding the phasing out of the refrigeration gas R22 by 2009, will have a big effect on the cold storage industry and those manufacturers who run their own cold stores. The legislation will render many of these stores obsolete, or requiring much needed investment to use alternate gasses, which is out of reach of most manufacturers. Thankfully, ACS&T Logistics’ cold stores are protected from this legislation, as they are cooled with ammonia.
With the economy entering recession, we may not have seen the last logistics provider go out of business. However, at ACS&T, we have a stable business that is ideally situated to face the challenges of the coming months head-on and are confident that we will not be among the casualties.
Supply Chain Efficiency
Without a change in strategy, manufacturers may find that the combination of economic recession, increasing costs and new legislation will render their logistics program unworkable. With the economic climate as it is, businesses need to start engaging with experts in the supply chain, who they can trust to reliably support them. A business is judged by its customers on the reliability of its supply chain and in an increasingly competitive market, the cost of mistakes has never been so high. Manufacturers who supply large retail chains can easily find themselves out in the cold should their logistics program fail to meet commitments.
To minimise the effects of recession on its supply chain, the manufacturing industry needs to safeguard the reliability of its logistics programs by moving away from the simplistic ‘trucks and sheds’ approach to storage and distribution. By outsourcing to experts in the supply chain field, manufacturers can find complete logistics solutions that allow them to reduce their inbound costs, and increase the quality of their supply chain program as a whole.
By outsourcing and consolidating the supply chain, manufacturers can benefit from improved cash flow by pushing back the cost of storage to their suppliers and can also free up factory space for manufacturing. Manufacturing output and productivity can also benefit from outsourcing, thanks to the reduction in administration costs and the personnel needed for storage.
A Dependable Partner
At ACS&T, our business is based on three core values:
Stability
As a wholly owned subsidiary of Camellia plc since 1973, we have the backing of an international investment company which has a long-term outlook for each of its companies and a combined turnover of £160M.
Quality of Service
Operating to the highest codes of practice within our industry, we are certified to the rigorous quality and hygiene standards BRC, ISO 9001 and ISO 14001.
Customer focus
We are committed to helping companies reengineer their supply chains for maximum efficiency and cost effectiveness.
We believe that by incorporating these three values into all of our services, we can offer manufacturers reliable, leading-edge logistics solutions to help them through these turbulent times.
Production Support Roadshow
On a lighter note, due to increasing demand for our Production Support services, ACS&T will be conducting a series of roadshows designed to explain the benefits of our Production Support division to manufacturers, beginning in January 2009. If you are interested in attending one of these events, please click here and fill out the contact form, checking the Production Support Roadshow box.