RMC brings logistics back in-house

9 June 2004
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10 June 2004 | Eloise Seddon

RMC UK cement division, part of one of the world's largest building materials and concrete suppliers, will bring its multi-million pound logistics operation in-house from November.

It will ditch logistics provider TNT, which has run RMC UK's 190 vehicles and 380 staff since 2000, moving 3.5 million tonnes of goods a year.

Clive Oakley, RMC cement division's supply chain director, said all of the staff will transfer to RMC. Around 290 of them are drivers.

Oakley told SM: "Going in-house will enable us to achieve better control, react more quickly and effectively in the marketplace and make cost savings."

He refused to comment on the price of the contract with TNT and what savings would be made as a result of the move in-house, only that it was "worth in the region of tens of millions of pounds annually when introduced in 2000".

Reports when the contract started estimated the deal to be worth around £20 million a year to TNT.

The contract includes managing customer processing, vehicle route planning, and collection and delivery of about 80 per cent of RMC UK's raw materials.

Oakley did not see any problems with bringing the contract back in-house.

"We don't anticipate any significant challenges or risks by going in-house as staff will all be doing exactly the same thing as they are doing now. We hope the biggest change for the staff will be the change of logo on their pay cheques."

In 2000, RMC was at the centre of a huge controversy in Coventry for terminating the contracts of 106 independent hauliers on New Year's Eve following the announcement that it was taking on TNT.

Tim Mills, an analyst at Datamonitor, said that RMC's decision to bring its logistics back in-house bucks the industry trend and is because RMC wants more direct control of operations.

"It is not common for companies to take major logistics operations back in-house, although there are some examples, such as Asda's recent move to take back logistics for its own-brand clothing George line in early 2003," he said.

"The main reason for doing so is to have more direct control to reduce overall costs."

However, Mills predicted the general trend towards outsourcing would continue.



News focus: A concrete reason to return in-house



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