Home Delivery Network Limited - The Interview
HDN Invests In Technology To Drive Growth
One of the big stories at this month's Express Delivery Conference is Home Delivery Network Limited's investment in new mobile computing technology to drive its growth, as part of a major restructuring. Born out of a merger between Business Express and Reality Group, Home Delivery Network Ltd is one of the UK logistics industry's success stories of the 21st century. It launched in October 2005, and after just 12 months was voted the ECMOD Delivery Service Supplier of the Year by ECMOD's customers. As an Express Delivery provider, HDN is now a mainstay of the Christmas season in the UK home shopping sector. The restructuring means that the 2007 Christmas season will be a stand-out success all round for HDN's customers. Walter Blackwood, Managing Director of Home Delivery Network Ltd, spoke to Warehouse & Logistics News.
 Warehouse & Logistics News - How big is the UK market for Home Delivery services?
The official figures are that 400 million parcels are moved annually in the UK in home shopping fulfilment, worth £100-£150 each, a total retail value of £4-6 billion. Anticipated growth for the total remote retail sector is 10% PA, accelerating over time.
WLN - What's driving the growth?
One driver is the development of Broadband and more effective retail propositions on the Internet, with growing acceptance that it is safe to shop online. The other is the major retailers' move into multi-channel retailing. Every retail chain is creating a multi-channel offering as part of its development plan.
WLN - What share of the Home Delivery market do you have?
We have some 25-30%. We're number one in parcels, but Royal Mail is still ahead in overall units.
WLN - How big is Home Delivery Network now?
We deliver over 110 million parcels annually. We have a £350m turnover, and employ 7,000 staff, of which half are drivers, in 62 locations. We have over 1450 trailers and tractor units and recently expanded into Northern Ireland where our business was subcontracted. Most importantly we have retained the staff here and their knowledge.
WLN - What home delivery services does HDNL currently offer? What proportion of your business does each service account for?
We have two specific services, 24-hour/next day and 48 hour delivery. We also have a Saturday delivery option and to enhance the nominated day, we offer either proof of delivery with a guaranteed signature or delivery to a nominated safe place.
Forty percent of our volume is next-day. There is a tariff difference, but the service price to particular retail customers is driven by the size of their parcel business with us, the quantity and type of products and where they are coming from and the proximity to our depots.
WLN - Is there a maximum value for the goods you will deliver?
There's no maximum as such. We move very few £3,000 dresses, but we handle a lot of laptops and other electronic items as part of valuable multiple orders. We carry all general retail goods.
WLN - How did you come to be voted ECMOD Delivery Service supplier of the year?
We were nominated for the award by our retail clients. This reinforces that we are the market leader following a very successful integration which has provided the foundations for future investment.
WLN - What would you say makes Home Delivery Network stand out among Express Delivery services?
Our size and density set us apart. We deliver to every postcode every day. We have our own network, and handle parcels in a consistent process. The quality of experience is better than anyone else's. Our other major USP is that we offer Track and Trace on all deliveries, through our depot onto the van and to the end customer's home, with Proof of Delivery so clients have full confidence in our services.
WLN - Does your Home Delivery service cover the whole UK?
We cover the whole of mainland UK and Northern Ireland
WLN - Which companies are your biggest customers?
We deliver for four out of five of the UK's largest home delivery retailers. (Verdict Research 2006)
WLN - Do you have any contract customers, for whom you run services under their branding?
Every delivery is in the client's packaging, but comes in an HDN vehicle with a HDN uniformed driver.
WLN - Who is your biggest customer?
Our biggest contract customer is Littlewoods, which accounts for one third of our total parcels volume. As a piece of business it has a nine figure value. We're still part of the same group as Littlewoods but financially and organisationally independent, and have to perform as competitively as any other supplier.
WLN - When are your peak times of year for home deliveries?
For parcels, the peak is the Christmas trading period, which was traditionally from the beginning of October to Christmas Eve. It now starts later each year as consumers have more confidence in 48-hour delivery, thanks to broadband and online shopping.
WLN - What proportion of parcels traffic is Christmas-related?
Some 25% of the UK's annual 400m parcels traffic is Christmas-related. We expect it to rise to 30% this year as Xmas on-line shopping increases.
WLN - What are the other peaks?
The other major peak is Mother's Day. This year we delivered 250,000 bunches of flowers in one weekend.
WLN - What other areas are significant for you?
Catalogues are another important area. We can distribute up to 1.5 million books per week. Business to business is a very small area for us. We don't have a specific B2B service as such: probably about 3-4% of our parcels traffic is consumer orders sent to work addresses for convenience.
WLN - Do you work with the Post Office to help them fulfil their Express Delivery commitments?
No, we have no specific agreement to subcontract to third parties, but would be happy to talk to clients directly. We compete with the Post Office and Parcelforce for business, and will continue to do so.
WLN - Why are you restructuring your service at this point?
There was no particular event or incident that led to it, it was a considered review. We decided to make a readjustment to our business after Christmas 2006. At the beginning of each year we make decisions about resources for the following Christmas. After Christmas the volume of traffic comes down anyway. Our level of resource at the start of this year was a result of the integration the previous year, which created a network bigger than it needed to be.
WLN - So what adjustment did you make?
We reduced the base resource by ten per cent and adjusted the number of routes by the same amount for greater efficiency. We've taken out about 500 positions, including temporary or agency staff, and avoided making compulsory redundancies.
WLN - When did all this happen?
The restructuring began in February and is now complete. The clients saw very little disruption. It was done to maintain the best operational levels.
WLN - What has changed in how you've organised the service?
We now have drivers assigned to set routes, for consistency of deliveries, making the service more efficient, effective and more personal. It's a local delivery solution on a national scale: it looks and feels local, but is organised across the UK.
We understand what good service looks like: what we have now is a combination of the two networks, Business Express and Reality Group, offering the best of, Home Delivery Network.
WLN - What's your (Walter) personal role been in the reorganisation?
As Chief Executive of both Business Express and Reality I led the integration. I brought together the two management teams as one project group. The integration was born out of the Competition Commission enquiry in January 2004. It took a year to plan and six months to implement, starting last year.
WLN - What have you learnt as a result of your review process about the UK market for home delivery and the UK's changing home shopping habits?
Quite rightly, consumer expectations have increased dramatically. 28 day delivery and "it's on its way" have gone forever. Consumers want to know what's happening, and expect excellence.
As Home Shopping habits become more established, people expect goods to arrive when they've been told, and retailers to keep their word. The greatest challenge is uncertainty.
WLN - As part of the reorganisation you're investing in mobile technology to enable the service to grow. How much are you investing? Who is the supplier?
We're investing several million pounds in one hit. Intermec are supplying handheld terminals and various software houses, led by Jade, are providing the software.
WLN - Can you tell us about the new technology?
It's an upgrade of our existing technology base to a new level. We're setting the benchmark for the Express Delivery industry: nobody else will have this level of functionality.
WLN - Has this technology been tested in any other country?
Yes, it has. The technology is leading edge, but it's not new in itself. The new and unique part is that we're using it in the home delivery field, to benefit the consumer.
WLN - How many devices are you taking on - who will have them and how will they use them?
We're deploying 4,500 devices, issuing them to all our drivers and depot staff. It will enable us to track parcels from the retail client, through our depot to the consumer. There will be elements of the technology throughout the chain.
WLN - When will it go live?
We're rolling it out from July to September, in phases, supported by staff training. There won't be a single Big Bang.
WLN - How different is the technology to before?
Our old hand-held terminals were recording devices downloaded at the end of each day. The new devices are GPRS-enabled, communicating in real time.
The big change is that we can now communicate with the devices and their operators remotely. The next phase, in 2008, will be to explore how we can use the devices to enable our drivers to communicate with the end consumer. The devices also have a SATNAV capability, to enable new or agency drivers to plan their routes.
The immediate plan is to get set up to carry out the Track and Trace function effectively, then look at using the other features.
WLN - Is this technology exclusive to Home Delivery Network?
The technology isn't exclusive to us, but the bespoke software and our use of it are unique.
WLN - How will the new Real Time Tracking change the way Express Delivery works?
Once the B2B carriers bring this technology to bear in their market, it will become a requirement that they keep their customers advised as a matter of course.
On the consumer delivery side we have to determine how much, and how often, we and our retail customers tell the end consumer. The information will be on the web for the retail customer to see. We'll be updating it within minutes of activity by our drivers: we have been liaising with our clients as to how this information will be best accessed by them.
WLN - Will your services cost the retail customer any more as a result?
There will be no extra charge to customers for the technology.
WLN - With the new technology, will the end customer still face the hassle of staying in all day on a set day and waiting, or will goods be delivered within a set time delivery window?
Consumers don't have to wait all day for HDN anyway, and we'd prefer customers not to feel they had to! The new technology means increased predictability all round, and as the information stabilises we will be able to guarantee more certain arrival times.
If you're delivering washing machines you have to offer four-hour windows, but for standard products the customer should be asked where they want the item left and what delivery arrangement suits them.
As home delivery specialists we don't believe a person should have to be there to receive the goods: the new technology enables us to carry out instructions more effectively, prove we've done so and make the process more convenient. If that's not the case, we've failed!
As an example, we deliver a lot of wine. We say it will be delivered in two or three days. If the customer gives us appropriate instructions, we can get it there. Generally speaking, if we insist a person has to be at home to receive an item, we must use the technology to tell them the delivery time more accurately.
WLN - What factors do you see affecting the overall UK home delivery business?
The most critical element is the arrival of home delivery as the normal retail experience, and multi-channel retailing as part of everyday life.
The other factor is the growing penetration of broadband and the developing communications process, enabling consumers to press buttons on their mobile, their TV or computer and have goods delivered.
WLN - Finally, where do you see the Home Delivery Network going from here?
These developments in the market and the recent changes within our business can only mean growth for HDN as the market leader in home delivery service provision. We need to continue investing in technology and customer service, and will do so. We hope to grow in line with the market's forecast 10% growth, and preferably outperform it.
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For further information about this company's activities in the warehouse and logistics industry please contact:
Home Delivery Network Ltd
Tel: 08450 706030
www.hdnl.co.uk |
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