Think global - act local
April 1st 2006 With a new transatlantic partnership, plus a Scandinavian alliance completing the INPACS pan-European network (exhibiting at stand 03.323 at Interclean), Nationwide Hygiene is now a bit of a misnomer. But according to chief executive David Scholes, retaining the service ethos of a small local company - and the ability to work closely with the customer - is as important as heavyweight buying power and global reach. Brendan Coyne reports
We now have operations in 21 European countries via the INPACS network (a group of large independents collaborating to provide a uniform service across Europe) and a strategic alliance with Network Services in the USA - which operates exactly like us but with an $8bn turnover," says Scholes. "It's basically taking our original way of working but just a bigger factor and dimension.
Because one of the great advantages we have over a PLC is that we have entrepreneurship at the sharp end," he continues. "In other words the guy who runs the branch is an owner manager: service is what he lives or dies by; keeping his customers content is why he is in business.
And it's given us considerable edge in terms of customer relations and good service. If you take that and apply it nationally, that's good. But if you take that and apply it six fold across Europe..."
And it's not all talk. Nationwide has grown 20 per cent year on year since Scholes arrived in 2000 - and is on track to at least match that yardstick this year. It now has 51 national accounts and five European accounts (LIDL, ALDI, Siemens, Mann and Meridian Hotels). It is also looking at Starbucks on behalf of its American partner. But it's the 60,000 local accounts that make up the lions' share of its fast growing turnover, which in the UK is currently £95m. "Although it's changing so fast it's almost old news as soon as I mention it," says a resigned Scholes.
However, while he sees national business growing to over 20 per cent of its turnover, Scholes says its a question of getting the balance right. "We don't want everything that the competition's got - there are certain things I'd rather they kept: it's about being intelligently selective about what we pick up. If the margins are too tight, it can be detrimental to our health. So no isn't always a bad word: It's about getting the balancing act right - not accepting everything is part of that equation."
As in many industries, Scholes says price wars and sustained low inflation have influenced customer expectation to a point where traditional manufacturers and suppliers cannot meet the cross spectrum of demand . "All tenders have slightly different peculiarities but they all share one common theme: they are all trying to drive down value. To underpin the type of business we are vying for we have to be the most competitive in the market - which is where our group buying power helps," he says. "But what we don't want to do is 'buy' the market at low margins - and that is something that did happen in this country for quite a while. A lot of of business was bought at silly margins and now people are paying the price."
"We've had probably the longest period of low inflation that anyone can remember in this country resulting in ever-decreasing prices - on a real world basis net factory gate prices have actually gone down steadily for the last ten years. That can't continue because the manufacturer is surrendering the margin, we are surrendering the margin and the customer still wants lower prices," says Scholes. "So, to satisfy that side of the market, we are now importing own brand products - one of our European partners has a company established in China. That's probably the next dynamic - it's just about getting the product right."Nationwide own brand products include gloves, paper towels, laundry powder, window cleaner and multi surface cleaning solutions.
The other longstanding problem the industry must address, says Scholes, is mis-specification - particularly with e-auctions. "If you are not the incumbent, you take at face value the specification that is given to you - and in some cases you have 750 lines and descriptions that have been in place since Adam was a boy. These are not always still applicable, so you have to make assumptions and place your bid. If those assumptions are wrong and you win the business, the client may well turn round to you and say 'tough - you have to make it work'. So that's one massive pickle." On the other hand being the incumbent on a tight account can also be an eye opener.
"In one case we knew exactly what was going in because it was our account. But the descriptions coming out of the market to bid against us were wrong - or had errors or assumptions - so the competition was bidding with the wrong products," explains Scholes. "So we refused to bid - just watched the price plummet. So we have nothing but bad experiences with e-auctions. That's the only given - for a variety of reasons: mis-specification; the agenda is all wrong; and quite often the aspirations are all wrong."
The solution, says Scholes, is for the customer to be pro-active: "I can see how customers can end up not getting what they expected. As a rule, we don't cut corners: if that's what the customer asks for, that's what he gets - unless he agrees he wants cost savings. And that's fine, we'll pass on the next recommendation and work with the customer to manage the business for the future. Because there is nothing worse than an uncoordinated product approach: if you want to try alternative products, we can organise a trial, let the customer make up their own minds as to whether they will make cost in use savings - and if they want it we will change it over. Essentially, if the client drives it, they will get full value.
Those companies which are interested in getting full value for money would be well advised to visit the INPACS stand at Interclean in Hall 3. You'll be meeting a group of independents with huge buying power, global reach and pooled common knowledge. From Nationwide Hygiene's perspective, it goes to show what can be achieved by applying local philosophy on an International scale. More articles from Nationwide Hygiene Supplies Ltd: | 
