When no news is bad news

The day after the worst storms in 17 years swept through Britain, people turned to their daily paper to read about the horrors of toppling trees and overturned lorries. But when violent weather turns the transport system to chaos, it is a challenge to make sure the papers arrive in time for breakfast.

For the country’s largest news and magazine delivery service, Smiths News, it was a warehouse in Borehamwood that gave it the biggest headache.

‘The wind was ripping the roof off the building threatening to let in the rain and turn that day’s delivery of newspapers and magazines into a ton and half of papier maché,’ says Richard Webb, information systems director.

Despite violent gusts of wind, the roof stayed attached, the papers dry and it was business as usual. But even if the worst had happened, Webb is confident that the burghers of Borehamwood would have still received their daily news fix.

‘We would have moved the operation to a nearby warehouse and diverted the lorries to that location,’ he says.

The guaranteed delivery of 50 million copies of papers and magazines every week to 22,000 retailers between 3am and 6am is so ingrained in the Smiths News mentality that both Webb and his colleague Robert Wilson say being stressed about days like 18 January is a waste of energy that diverts them from getting the job done.

Despite having been at the company for 17 years, Webb’s face still lights up when he talks of the nightly miracle of taking the papers from the publishers’ presses to the newsagents. He had no inkling, however, that this would be the job for him when he was a 16-year-old growing up near Kidderminster. ‘To be honest, I was too busy going out and partying to have any specific career ambitions back then,’ he says.

Webb studied business studies at Bradford University because he was not certain what career he wanted to pursue and knew it would give him ‘a good general grounding in business’.

He then applied for jobs in the graduate milkround. ‘In those days you filled out a standard application form and I worked my way through the companies starting with those beginning with the letter A. I had one form left by the time I got to W so I applied to WHSmith,’ he says.

He was offered a job in the news division at WHSmith and has been there ever since. In November last year, the news division – now Smiths News – was de-merged from the company’s retail business.

The split recognised that selling papers and delivering papers are two very different businesses. Webb is delighted that the company is now standing on its own two feet. ‘It is great to have the independence to make our own decisions,’ he says.

While Webb may have fallen into his role in news delivery, he was soon hooked: ‘News gets in your blood,’ he says. His enthusiasm for the business is admirable, given the rapid changes and challenges in the newspaper and magazine industry over the past two decades. ‘You only have to pick up a copy of The Sunday Times to see that it is no longer the traditional black-and-white, one-section paper it was 20 years ago, and there have been numerous launches and lots of closures of magazines,’ he says.

Webb is confident about the future for Smiths News, but has no illusions about the challenge that the internet poses for printed media. ‘There are huge changes facing the industry and nobody knows what the future holds,’ he says.

Continuing to run a low-margin, low-value business such as news distribution means that Webb must be ruthlessly efficient and unsentimental to ensure that any profit is made. ‘To make any returns for shareholders at all, we have to strip out all unnecessary costs at every single point in the business while ensuring we enhance the service given to our customers,’ he says. ‘Technology has really helped us to achieve that over the past few decades.’

Operational effectiveness
Twenty years ago each warehouse offered a full service. This meant that there were managers at each one planning for the expected demand, buying products, managing cash flow, clearing invoices and manning the phones for their clients.

Technology has allowed almost all of those activities to be centralised, creating significant economies of scale and allowing the company to survive, despite increasing competition and a steady decrease in the fall of the number of newspapers sold each day. Although magazine sales have held up better than those of papers, the explosion of titles has made it more difficult for Smiths News to streamline operations.

With technology taking more and more of the strain of running the business and ensuring that no matter what the weather, each and every delivery is made every day, more responsibility has landed in the laps of Webb and Wilson.

‘We have to ensure that all the systems are available all of the time and all are running at the right speed,’ says Webb. ‘If there is a problem we have to fix it as quickly as possible because our warehouses can not stop. If a newspaper is not delivered first thing in the morning then it’s too late.’

The job of taking shipments of magazines and newsprint and breaking down those pallets into deliveries for each shop has also been streamlined by technology. ‘As much as we can, we use conveyor belts to carry boxes of newspapers and magazines in the warehouse,’ says Webb.

‘Staff stand with bar-coded boxes coming towards them on rollers, an LCD display tells them the correct number of each magazine and newspaper to put into each box.’

But Webb acknowledges that technology can only help the company streamline processes up to a point. ‘It remains a manually intensive business,’ he says. The company strives to ensure every warehouse is as productive as possible and everything is measured on performance metrics and is league-tabled everyday.

And whereas the automotive industry has replaced human labour with robots, Webb says there is little likelihood that a similar development will happen with Smith News. ‘Although we would like to make our business as efficient as possible, we are constrained by the low-value aspect of the product. The very low margins mean it would not make sense to invest in a technology that could never be re-paid,’ he says.

Webb feels there is little more that could be done to improve the efficiency of the warehouses. The company is, however, looking into investing in new satellite navigation software that could help cut the number of delivery vans and drivers.

The real area where technology can make a difference is in improving customer service. For example, in the past, if a retailer needed 500 copies of Radio Times every week, those copies would be delivered the day they came from the printer. ‘The retailer then has to cope with all of those copies, finding somewhere to store those that do not fit on the shelf,’ says Webb.

Customer service
Smiths News is working to help its customers – for example, delivering 100 copies on different days coupled with the technology to allow them to order extra copies if necessary. ‘Supermarket employees have scanning guns to check the quantities of products and to place orders when the shelves are empty,’ he says. ‘But they cannot do that with magazines and newspapers because the product is too complex. We hope to change that in the future.’

The low-margin nature of the business means that Webb has to walk a tightrope between investing to improve the company’s customer service and ensuring that his investment is repaid.

‘Our technology has to be just enough to the do the job and our partners have to live and breathe our business to understand our needs,’ he says. ‘But it is a false economy to buy cheap solutions.’ He highlights a data storage system provided by EMC as a good example of a supplier that has worked well with the company.

The dual discipline of ensuring deliveries are made every day and making the most of cost-effective technology investments has given Webb and his team skills that other companies are keen to seek out. And Webb hopes that the company’s newfound independence means that it can expand its skills into other areas.

Unlike that callow graduate who applied for a job with WHSmith just because the company’s name began with W, Webb now has much loftier ambitions. ‘I hope that rather than being the technology officer for just one company, I can become a technology officer for a portfolio of companies from A to Z,’ he says.

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