Edinburgh, Scotland, Aug 21, 2017 -- Misco's new management team have now cut from its annual cost base, which CEO Alan Cantwell told our sister brand CRN has put an end to the "ugly phase" of his time in charge.
Part of those savings came from areas Cantwell said became apparent only part-way through the restructuring process, which included centralising Misco's Dutch call centre operations at the expense of outposts in the UK and Hungary.
"The entire group lost about £16m in 2016," he said. "You come across bits of information, or tasks and functions where there is duplication. We centralised our call centre into our Dutch business, because they have a third-party call centre that is 24/7 - so why would you have one in the UK, and in Hungary as well? Little things like that might save you £100,000 but soon add up. The problem with the business is you effectively had five countries that were acting independently; there wasn't a group mentality to the business.
"We are pretty much there in terms of the saving. We are moving into stabilisation, and business as usual. We are now going to focus on steadying the ship and trying to maintain stability with the team."
Shuttering a UK warehouse
Misco is also to close its UK warehouse in Greenock at the end of the year, saying the rise of drop-shipping has decimated its usage and made it too inefficient to keep running.
"[The warehouse closure] is part of the ongoing process to return Misco to its former glory. And the last two months have been very solid for the business. The first two months were a bit shock and horror for everyone, but things are settling in now."
In an initiative designed to save money annually, the reseller is outsourcing its warehouse functions to a third-party logistics provider.
All 65 warehouse staff at the 80,000 sq ft location will be made redundant, Misco CEO Alan Cantwell confirmed to CRN.
The 24 sales staff also based in Greenock will be kept on but will relocate to a new office nearby in Q1 of 2018, he said.
Cantwell led a management buy-in of Misco in March and the move is part of the new team's efforts to return it to break-even after group losses reached about £16m last year.
Some 105 UK staff have already left the business under a recent sales and marketing restructure, while headcount at Misco's Budapest shared service centre has also been shaved from 340 to 200.
Cantwell said that Misco was left with little choice but to close the Scottish warehouse.
"Like a lot of things in this business, this really should have been challenged and looked at a long time ago," he said.
"We've taken a really hard look at it. The logistics centre there was originally set up to ship 6,000 parcels a day, and at present we are shipping between 400 and 500 a day. Things have moved on. We are drop-shipping pretty much everything - the majority of parcels now go straight from logistics through to the clients, so we really don't need that facility. It's a very expensive facility for the number of units that are going through it, and our 400 parcels a day will only go one way.
"There are some very good third-party logistics firms out there who can do it better than we do and do it cheaper, because that's all they do."
Misco is in the throes of negotiating a contract with a third-party logistics provider which will take over the functions before Christmas. Its shortlist has been whittled down to two, with a decision set to be made in the next week.
The move will not only save money, but also improve the customer experience, Cantwell claimed.
"The thing about third-party logistics is it's completely flexible based on volumes, so the minimum saving we're expecting from this exercise is £1.5m a year," he said.
"We will save approximately 10 per cent on our shipping costs, which in turn can be passed on to our clients. Ultimately, even if we weren't ready to close the warehouse we would need to scale back the team there. And the problem for any business is that when you scale back the team, you lose your flexibility to deal with busy periods. We didn't want to scale back based on a budget and then find we get a surge in sales and it affects clients. Whereas if you look at the third-party logistics firms, such as NX or Yusen, their scalability is phenomenal, so if we suddenly found we needed to do 1,000 parcels tomorrow we could do it in a heartbeat."
Posted by Veronica Silva Cusi, news correspondent
Date Posted: Wednesday, August 23, 2017
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