SCL eyes organic growth and acquisitions

By: Ruza Zivkusic-Aftasi


silk1 (L-R) John Sood, Brendan Boyd and George Lerias silk1
silk2 The trio is intent on establishing the right foundations to leave a legacy silk2
silk3 Brendan Boyd, John Sood and George Lerias are looking to grow revenue through continued organic growth and acquisitions silk3
silk4 SCL provides integrated warehousing, distribution and supply chain services with a presence in all major capital cities silk4
silk5 The company has become a national tier-two star with tier-one systems silk5

With its revenue up by 40 per cent, Silk Contract Logistics is doing better than expected since the management-led buyout two years ago

 

Organic growth is a key factor behind SCL’s strong performance, with its revenue up from $85 million to $120 million despite a challenging start.

SCL managing director Brendan Boyd and business development director John Sood, along with risk and governance director George Lerias, say the growth is underpinned by several new clients.

The trio, along with former Wharf Cartage director David Anderson and Gandel Invest, took over the company upon the sale of Silk Contract Logistics’ component formally known as Kagan Logistics and Hoffmann Transport in February 2014.

They now have new challenges ahead as their fourth partner Anderson has retired, buying his share in the business including fifth equity partner’s Tony Gandel’s shares, who initially helped them to acquire the business.

They are looking to the future with "excitement", Boyd says.

"Tony was pivotal to SCL’s success over the last two years however has decided it’s time for him to do something different so we have taken the opportunity to acquire his shareholding back into the business," Boyd says.

"I think it marks a particular milestone of the business; the fact that we’re in a positon to enable that to occur was a really positive aspect.

"On any journey, you’re going to come to forks in the road for individuals and for the business collectively and I think Tony would recognise this has been a positive investment for him in terms of the return he has made."

"He was a cornerstone investor when we originally acquired SCL; the positive is that the business is now in such a shape that we can move forward without the need of that cornerstone," he adds.

"If I sat here two years ago and said we’d be in a position to make those sort of decisions two years on, none of us would have believed that and the fact that we’re ahead of our aspiration suggests we’re doing something well."

Anderson, who has made a "handsome return" on his investment, says he’s left on happy terms and believes the company is well-equipped for future growth.

"I’ve left very happy which is a reflection of the good management that was put in place and the growth that came about," Anderson says.

"I think SCL is in a good position to continue the growth; they’ve got some very good systems. I think they’ll continue to prosper and grow on a national basis; the three work very well together and they’re still personal friends of mine so there’s no animosity there at all, it was a personal choice of mine to move on."

Last red

"Good luck gents" was the usual remark the crew would hear from fellow operators upon taking over SCL.

Many wondered how long the company would last but their nimble approach to business has seen the company offer a hands-on service, winning new customers along the way.

Sood says the company has become a national tier-two star with tier-one systems.

"When we started, we borrowed money, including some money personally, to establish the business.

"We each had to go into debt and we set up an overdraft facility for the business," he adds.

Two months after the takeover, the overdraft account was fully drawn in April 2014 and business got pretty tight.

"That June 2014 financial year was still a loss for the business – it was significant," Boyd explains.

"However, that was the last red ink we have seen in this business and we’re now trading very profitably – we are trading at a level that I think certainly puts us at a bench mark and that’s what has allowed us now to consider this next phase of how we grow the business and accelerate the strategy we had in place."

What they’ve learnt from such a challenging start is to get back to basics and watch every penny.

"What we did at the time was get ‘match fit’ and really set the business up for the success we now have been able to enjoy over the last 12 months particularly," Boyd says.

They’ve made savings by reviewing their warehouse environment and recruiting new executives such as a chief financial officer, a chief information officer and a general human resources manager.

"Then it was about really looking after your customers because the one thing we could not afford to do was to lose a customer," Boyd says.

SCL undertakes quarterly review meetings with all its major customers, evaluating key performance indicators (KPIs), operational processes and continuous improvement targets as standard agenda items.  Seventy per cent of its revenue base is contracted.

Its strategy now focuses on the growth of what they call the left and right of the warehouse operations; the left relating to predominantly inbound logistics such as wharf cartage operations for import and export customers, and the right being outbound logistics such as last-mile distribution.

SCL has recently built two new warehouses in Lytton, Queensland, totalling 30,000 square metres.

It uses RedPrairie’s warehouse management system across its warehouse operations – a key reason behind their decision to buy SCL, Sood explains.

"It was one of the key reasons we acquired the business; thee system is top quality tier-one warehouse management system – it’s significantly designed around the movement of product through our facilities and integrates seamlessly with our customers," he says.

Improved safety

When Boyd joined the Silk Group in late 2011, SCL’s lost-time injury frequency rate (LTIFR) sat at 27.73, against an industry standard of 14.30.

At the end of May 2016, the rate had dropped to an all-time low of 1.76.

"We’ve come a long way," Lerias says.

"We have now some sites that are over two years injury-free which is a great result. We’re constantly working on processes and procedures and quality systems that actually underpin the growth in the business; it’s a continuous improvement process."

The team has also invested in mobile printing and warehouse voice picking technology, saying it will continue such measures to ensure SCL remans competitive.

"The voice picking technology has been implemented into one of our customer-dedicated facilities and we are seeing the value across safety, accuracy, productivity and cost," Sood says.

They have also installed some 70 iPads on wharf cartage trucks in Melbourne and Brisbane.

"Bringing all that together, we are investing in a data warehouse so you can analyse data across each of our finance, transport, container cartage and warehouse management systems," he adds.

"This will allow a greater level of internal analysis across all of our operating systems whilst also improving KPI detail for our customers."

SCL has a robust IT department and employs 15 people to manage its systems.

In April, the team migrated SCL’s network over to a more cost-effective platform in partnership with Telstra, allowing the company to better monitor its network traffic and improve the ongoing performance of operational systems.

It has also recently launched a new website, which will change the way SCL markets its services.

SCL’s operations team has also completed a comprehensive training and development needs analysis for all levels of operations, focusing on compliance and skills development.

Legacy

"We’re coming" is the message the trio has for the industry, saying they’re serious about business.

"We’re very focused on what we’re trying to achieve and very disciplined in how we deliver that," Boyd says.

"It was a leap of faith for four 50-year old guys jumping in at that stage of their life and investing their own money and borrowing a bunch of money – there was an element of ‘Good luck gents’.

"We were confident each of us came from a large corporate logistics background of 25 plus years’ experience; we didn’t go into this lightly," Sood says.

"We did our homework and it took us over six months to acquire the business – we went into that level of detail and we’re going through the same phase now with a couple of shareholders exiting.

"We’re still confident; we could have walked away as two of our shareholders have and said we’ve had a wonderful couple of years," Boyd says.

"I think what drives George, John and I passionately is the fact that we want to leave a legacy; we want to leave something that lasts beyond the three of us in the business, so to do that you’ve got to establish all those foundations into place and make sure that what you’re building is really sustainable."

Read the full feature in this month's ATN

 

 

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