Successful Partners
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Allan Menzies set up Chilli Express (Scotland) Ltd, a food distribution business, and the Scottish partner in Chillx.
Chilli Express is the driving force behind the network and the firm operates from Bellshill in Lanarkshire. Allan was formerly a Transport Manager for the predecessor of Diageo and he and a former colleague, Duncan Sellar, who was a former manager for Safeway, set up the business.
Chillx is a strategic venture whereby four regional distribution companies work together with Chilli Express to offer a national consolidated service of chilled, fresh and frozen deliveries. The network supplies a wide variety of customers and offers deliveries seven days a week. The companies can also store, pick, pack and distribute on a nationwide basis. The core business of the Chillx network is multi-drop deliveries to high streets, airports, rail stations, shopping centres, fuel stations, hotels, restaurants.
The team took the view that, to make business sense, the company would need to source partners in England who could pick up goods and deliver them to the north of the country where Chilli Express would pick them up for onward delivery to Scotland. The company would also pick up goods in Scotland and deliver them to partners in the North of England for onward distribution.
They took a direct approach to the task, sending out 2000 emails to the managing directors of a number of food transport businesses to establish the level of interest in the idea.
To start with there was a high turnover of partners in the network. They wanted to improve their access to business and their profitability. But, they found that they were giving the other companies access to lots of business and a good price for Scottish deliveries. But these companies were often not reciprocating, charging lower prices for deliveries into England and not putting as much volume of business their way. In the end, they went through seven partners before the current arrangement, which offers an improved degree of stability.
The creation of the strategic partnership has increased the turnover of the business twofold.
At around £2million, this has certainly been a beneficial arrangement for Chilli Express. Running costs have also reduced and another major benefit is a reduction of overall transport carbon emissions - achieved by cutting 'empty' journeys and unnecessary food miles.
Key points from this case study:
- collaboration can make commercial sense in some circumstances, without compromising competitiveness
- Finding the right partner might not happen right away - make sure you don't tie yourself into a relationship too early
- partnerships can be informal, as long as there is a clear understanding that benefits are shared fairly
- Improved customer service can be a real business benefit
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