Fortec fleshes out fulfilment proposition

One of the later arrivals in the world of pallet networks, Fortec has found its feet, and reckons it has some special benefits to offer. Peter Rowlands finds out more

Question: what do pallet networks have to do with fulfilment? Answer: a great deal. You can appreciate this best if you recognise that parcels delivery companies are fundamental to fulfilment, whether it's business-to-business or business-to-consumer. Pallet networks are really just part of that equation, coming into play at the upper end of the parcels companies' weight range. You could consider them part of an unbroken continuum that starts with document delivery and extends to full loads of freight.

Once you see the connection, you can understand why there's been so much growth in the pallet networks in the past couple of years – and why it adds a new dimension to the armoury of fulfilment options. Both parcels carriers and hauliers have seen an opportunity beckoning.

Alan Cramley, who joined the Fortec pallet network this year as development director, sums it up: "Parcels market growth at the moment is in low single figures, whereas pallet market growth is well over twenty per cent." As a result, he says, even carriers who never previously paid any attention to pallet networks are now recognising their significance.

In some ways Fortec runs a classic pallet network, following the standard form that has evolved over the past ten to fifteen years. Independent carriers from all over Britain trunk pallet-quantity traffic every night to a central hub, where it is sorted by regional destination and reloaded on the returning trunk vehicles. Finally the goods are delivered by the companies in their own locality. The carriers operate trunk vehicles and local vehicles, while Fortec runs the hub.

Part of a major group

However, in various ways the Fortec structure differs from the norm. Perhaps the most striking is that Fortec is part of a major international transport and logistics group, French-based Geodis. It was set up by Geodis subsidiary Cavewood of High Wycombe in 1996. The other networks, by contrast, are mostly owned either by their members or by entrepreneurial third parties.

"It's a real benefit having Geodis as a parent," Alan Cramley says. "They're very supportive, and in fact helped fund a major recent IT roll-out."

Geodis also feeds significant volumes of traffic into the Fortec network, and in its early days some observers felt that the whole operation was really geared mainly to Geodis activity. However, Cramley quickly puts paid to that notion. "Less than twenty per cent of our work is now for Geodis," he says. "In fact our members generate some Geodis-type traffic of their own."

He also points out that of the 50-odd bases in the Fortec network, only four are operated by Geodis itself. The rest are run by the independent licensees who handle the bulk of the business. The companies range from large multi-depot regional carriers to relatively small companies with just one base.

The fact that the members are licensees rather than co-owners doesn't seem to have any adverse effect on their commitment to the network. On the contrary, Cramley claims that he's already been approached by several members of rival networks who would prefer to work with Fortec. And the membership "churn" is under a respectable 5 per cent, indicating that once in, companies tend to stay.

Why should this be? Cramley firmly believes it is because Fortec has developed what he calls "an ethos of quality", fostered by the attitude of director Rod Abrahams, whose focus on quality was nurtured during a number of years spent with TNT. As Cramley puts it: "We only want high-quality customers. The traffic we carry has to represent an attractive fit with the existing network."

Licensees certainly get benefits, including exclusivity of Fortec operations within their allocated area. Not that they are tied to Fortec business, of course. "Many do other kinds of transport, for instance, and simply use Fortec to handle their smalls traffic."

Interestingly, Cramley doesn't think Fortec licensees should necessarily be limited to belonging to just one pallet network. Historically, this is a condition that the major pallet networks have tended to impose on member-carriers, "but I don't see why the smaller networks shouldn't do co-trunking and so on."

This liberal approach could come into its own as the networks continue to evolve. "It's becoming harder and harder to find good-quality carriers to join the network," Cramley admits, "especially in places like London."

Here Fortec has been developing an interesting solution, which is to appoint several smaller companies – "even couriers" – who operate in the same approximate area, and can consolidate their traffic locally for co-trunking to and from the hub. It has already rolled out the concept at Enfield and Edmonton in north London. "We've been looking at doing something similar in south London, and could apply the concept to other major cities as well."

The division of responsibilities between regions and central hub varies from one pallet network to another, and Alan Cramley says that Fortec takes a relatively devolved approach. There is no central accounts function, for instance. "We do talk to potential clients from a corporate perspective when very complex operations are being planned, but generally we prefer our licensees to talk to customers at local level."

In any case, he says the company tends not to pitch for major corporate accounts, where capacity issues might be raised. He emphasises that Fortec does want to grow, but talks about "controlled expansion" rather than the kind of step change that can come with very big business wins.

The same philosophy would be applied if a client wanted a pick and pack operation, Cramley says. Often one of the member-companies could take on this type of work, and the network would certainly look at it if it could be accommodated within the existing framework.

Fivefold increase
So where does this strategy position Fortec relation to other pallet networks? When we talked, the company was handling around 2,500 pallets a night, which represented a remarkable fivefold increase on the volumes of two to three years before. The figure was still only a fifth to a quarter of the volumes believed to be handled currently by market leaders such as Palletways and Pall-Ex, but it is respectable enough.

Moreover, when we spoke, the company had just been given corporate approval to spend £100,000 on expanding the central hub at Rugby to 24 bays, and adding a separate self-contained barcode scanning bay, which will speed movements into and out of the premises. So things are certainly not standing still.

Currently fairly high on the agenda is expansion into continental Europe – and here, as Alan Cramley points out, "we're very fortunate to have Geodis as our parent." Trunking would be probably by done either by Geodis itself or by a designated partner – a departure from UK practice. As for local deliveries, Cramley points out that some countries already have mature pallet networks of their own, although Geodis itself doesn't have its own networks in other countries to mirror Fortec.

Meanwhile, his task is to continue finding ways of attracting both member-companies and customers. "Why not open a web shop?" he suggests. "It could be very effective if it helped lock people into the advantages. We have to find ways of making people stay with the network."

If the company can keep up its current growth rate, yet still maintain its accent on quality, that objective seems eminently achievable.

Fortec's IT system – the best of existing technology

Fortec "came late to the IT party," says director Alan Cramley, but he reckons this worked to the company's advantage. "We were able to pick the best bits of existing technology."

Until last year it was using a Geodis computer system based on the IBM AS/400 mid-range platform. Then it introduced a brand new software suite of its own from a company called Deltion, which has been covered previously in Fulfilment & e.logistics. Fortec is now one of Deltion's biggest customers, and is effectively a reference user for the company.

The product is a web-based collaborative transport management suite, and has been rolled out over the whole Fortec network. "It's very very simple to use," says Cramley, "and very logical. It works just the way you would yourself, and doesn't allow you to proceed until you've supplied all the relevant information."

Because it's web-based, there's no high set-up cost, he points out. "If you're web-enabled, you're Fortec-enabled."

Members can also set up their customers to use the system, taking advantage of a simplified set of functions, and over thirty have signed up to it already. They can input job details and print labels, "and it helps to lock them into the licensee."

One of Fortec's boasts is that all freight passing through its system is barcode-scanned at some point – a claim few other networks could have made until recently. This helps provide visibility, as well as and highlighting discrepancies.

Scanning will be extended progressively to include despatch points, depots and delivery points. "It's all achievable," says Cramley. "It's just a question of finding the right balance between cost and practicality."

Meanwhile, further functionality is now being added to the Deltion suite – for instance, monitoring key performance indicators and evaluating the implications of adding depots. "Eventually we'll be able to offer full track and trace capability," Cramley says. "At the moment, some of the bigger corporates virtually insist on it from contractors, although smaller companies are not quite so demanding. But we accept that we'll still need to offer it."