Rentokil has established a seven point plan to resolve the troubled integration of its City Link parcel business, and IT is at the heart of the turnaround.
Alan Brown, the group’s new chief executive who last week threw his weight behind efforts to speed up the City Link integration, admitted that Rentokil had so far “struggled to implement major change programmes which has affected our ability to turn top line growth into profit”.
“We have outlined our plan to restore City Link to operational and financial health but returning the business to its former levels of profitability is likely to take some time,” he added. “The group agenda is now to focus on operational excellence and efficiency, with improvements in customer service being the primary indicator of success in the short-term.”
Rentokil said the new management team at City Link had begun to address the division’s operational problems, and had started to improve service levels as well as re-establish relationships with customers.
Predicting a “significant” full year loss at City Link, Rentokil said its turnaround plan included improving information sharing across the business. A key point was “establishing operating systems that enable information to be shared across the combined network, reliably and securely”, it said.
Another was putting in place new control systems and processes that enable transparency of information, as well as central control of costs rather than separate cost management in each of its 94 depots.
Aside from this, Rentokil said it would reduce City Link's cost base, improve customer service and account handling, and review the size and number of its delivery centres.
The company first said in February that its IT integration programme had been overambitious, and resulting problems had held up the merger of the businesses.
It has since admitted that “the business’s foundation for integration was not solid enough to cope with the degree of changes being put through the combined networks”. It emphasised that the move from a local to a centralised account management system had “unsettled customers”.
City Link made a £16.9 million operating loss in the first quarter of 2008, compared to a £10.2 million profit in the same period a year before.