A tale of two Cities
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Credited with one of the most successful turnaround stories in the industry's history, City Link's MD tells CM how he tackled such a challenge
Words: Dominic Perry
AH. CITY LINK. A firm that in recent times has served as an example to the parcels industry of how not to integrate a business you have acquired (take note. Yodel), unless your aim at the outset is to lose absolutely eye-watering sums of money and customers in equal measure. Since, at one stage, facing annual losses in the order of £73m and successfully wiping around El hn off its parent company's stock market value, City Link has made a Lazarus-like recovery and should be back in profit by the end of the fourth quarter this year.
The man credited with the firm's salvation, if that's not too strong a word, is its current MD Stuart Godman. Although he initially came to City Link when it bought Target Express in 2006, he lasted only four months before tendering his resignation.
"I could see it was going to be a disaster." he says, "It's very difficult to sit back and see a fantastic business like this being destroyed."
Nonetheless, when the architects of the original flawed integration plan were asked to leave. Godman was drafted back in to turn the business around. Which is exactly what he did: City Link's finances, although still technically in the red, are markedly improved (see box. right) from the dark days of early 2008 and it is lining up 2011 as a year for growth.
That's not to say that Godman has simply walked in and waved a magic wand; it has been a hard-fought campaign to return the company to profit. As he notes: "City Link was a great company that was stitched together poorly. We had to unstitch it and then start again by doing what should have been done in 2007:' The first step was to call a halt to the previous integration plan, before the unstitching could commence. Once that was completed, the firm invested serious money in infrastructure to ensure that the network was lit for purpose when it was glued back together again.
Investing in IT
More than £30m has been spent on the business since 2008, with £9m of that alone going on IT. This was a vital investment in order to ensure the two parts of the business were actually operating under one system, making it easier for them to come together. Part of the problem previously was the fact that post-acquisition, the two operations had separate systems that couldn't talk to one another, leading to high levels of customer and staff dissatisfaction.
Now, Godman notes: "The fact is that we are going into 2011 as one company, with one network and one system for the first time since the acquisition in late 2006."
City Link's fleet has also undergone extensive change, with 350 box-bodied trailers taken out and replaced by 260 curtainsiders. Its depot network too has undergone substantial change, with the number slowly being whittled down to a target of around 60 as overlapping sites consolidate. However. Godman explains that it's not as simple as closing one former Target depot and retaining the City Link site. In many cases both are shut and the operation moved to new, larger premises allowing room for growth and ensuring compliance with its operating procedures. He also points out that it gives local staff a much nicer environment to work in.
If that were not enough, there has also been substantial spending on remodelling its huh network. It recently centralised its national hub operation in Coventry having closed its former site in Wednesbury, West Midlands, and migrating the operation across, "I'm extremely proud of the team at Wedneshury — they performed at a high level right until the last day," says Godman.
"It was the biggest operational change we had to make in the business, and the transition [between hubs] was nearly seamless."
Godman says that City Link has taken a strategic decision to expand from Coventry as its main base of UK operations. As a sign of its commitment (apart from the three sites it has there), it has also sponsored Coventry City FC in order to put "something back into the city".
As well as the national hub, two regional hubs have been added to the network in .Peterborough. Cambs and Warrington. Cheshire, which operate alongside similar sites in Heathrow. Bristol and Glasgow.
Godman says he likes the structure, not least that it offers simplicity: "If you try to over-complicate something. then that's when things go wrong," he explains. "Keep it simple — it tends to work."
The structure also allows depots to offer far later collection times to their customers for intra-regional freight. Delivery trunks from the regional hubs too return to the depot far earlier in the morning allowing much more certainty for pre-9am deliveries.
Making use of regional hubs
Lastly, it means that if something does go wrong with the Coventry site (as happened recently with a bomb scare), the firm can switch volumes through the regional hubs. In the above instance it achieved a delivery performance of 98.5% despite the Coventry hub being shut for eight hours.
Of course, City Link's transformation has not been entirely due to physical changes — its customer care system has been entirely overhauled, which culminated in it winning the Customer Care category at the Motor Transport Awards in July this year. Godman says that aspect of the business is straightforward:
"Keep talking to your customers and A City Link MD asking them what they want. We know Stuart Godman
they want peace of mind and they want that parcel delivered on time and in full.
"And because no-one's perfect, when things go wrong, they want us to talk to them and they want to hear a human voice."
With everything in place. Godman is looking forward to 2011 where the firm will be "even more aggressive" and will "push the growth". His target is [or "sustamable profit", he adds.
And watch out, City Link may even dip its toe into the marketplace again:
"We will look for organic growth and for new business opportunities. There may even be the appetite next year for a bit of acquisition activity."
You have been warned. •