New warehouse to boost Starco’s wholesale activities
Danish firm Starco wears several hats. The company was once best known for specialising in tyres for wheelbarrows and hand-powered vehicles, and during its 50 years in the business it has also gained a reputation as a manufacturer – initially of steel wheels and small tyres, and very recently as an industrial tyre maker – the company’s Solid tyre factory in Sri Lanka is now in operation. And another, very important hat Starco wears is that of wholesaler.
The centre of Starco’s wholesaling operation for Western European markets is located some 400 kilometres south of the company’s Århus, Denmark headquarters in northern Germany – a site chosen for its motorway connections and proximity’s to the firm’s most lucrative markets. In 2009 Starco established its Central Warehouse in the town of Lüneburg; now in order to accommodate the growth of its main wholesaling operation, the company is erecting a new, larger bespoke warehouse on a nearby greenfield site.
“We’re planning to move into the new warehouse in May,” Starco Germany managing director Axel Werner informed Tyres & Accessories during an interview at the firm’s soon to be obsolete Lüneburg site. News that the move to the brand new warehouse was impending came as a surprise; groundbreaking at the greenfield site only took place in December 2011. Werner is nevertheless confident the facility will open on schedule, and when the Central Warehouse team move into their home they will encounter much more space than they are accustomed to.
“In May 2009 we had 5,000 square metres of warehouse space at the current site,” the managing director shares. “If you look at the space set up of the new warehouse, it is nearly four times more. The floorspace is 11,000 square metres but it utilises vertical space better. In our current location we have space for about 4,000 euro pallets; the new warehouse will hold some 20,000 euro pallets.” The new site also has room for further growth and is already approved for an extra 5,000 square metres any time Starco decides to further expand.
The need for more space has been driven both by the introduction of new product lines into the Starco range and an increased market for existing lines, Werner shares. By the end of 2012 across the board turnover in the German aftermarket, for example, will have doubled within the space of three years. The size of the German market, incidentally, played a role in the decision to locate the Central Warehouse there in the first place; along with extra space, cost is a key reason for erecting the new building: “Margins are tighter than they were years ago and we’re building a new logistics centre so we can move things faster and more efficiently. You always have to look at costs these days.”
Planning and logistics
Starco’s aftermarket goal is to offer 24 hour deliveries across Europe from Portugal to Russia, servicing customers from the Central Warehouse in Germany and another in Riga, Latvia along with smaller warehouses containing local stocks in each of the 27 markets where Starco is present. Werner shares that logistics in Russia mean this goal hasn’t been reached in the most easterly markets, however Western Europe now enjoy 24 hour deliveries.
Supplying a customer with the items they need within a day is no easy task when you have a range containing around 12,000 individual items. Even rarely ordered items need to be available when required, and therefore for a wholesaler, looking after a broad product portfolio involves planning ahead: “We have good communication with our suppliers and in general there are no capacity issues. We are dealing with very good stock levels locally at our various sites and we have very good planning with our suppliers, with whom we mostly forecast what we need up to twelve months in advance – something that is very good for their production planning and also ensures supply is normally not an issue.”
Does this mean that the areas in which Starco is most active – agricultural and industrial – were spared the supply difficulties recently faced by car and truck tyre wholesalers? Not at all, the Starco Germany managing director states. “I don’t think you can say there’s been no supply problem in the sectors we deal with in general as we’ve heard a lot of suppliers and wholesalers say in the last years that they’ve had supply problems, but these haven’t applied to us. Most of our supplier relationships go back 30 years and how we deal with them helps. There are a lot of ways to plan capacity. With the volumes we take in – last year we took in over 6,000 containers – you can’t go to a supplier and simply say ‘by the way as of tomorrow I want to double the quantity I take of a certain item’. Often before they can make such an increase they have to invest in machinery or production capacity or raw materials.”
Reach and the label
Regulatory issues are an ever-increasing issue in Europe and it can be said that responsibility for a tyre’s conformity ultimately lies with whoever brings the product into Europe, be it the manufacturer or a wholesaler. The introduction of Reach in 2010 created headaches for a few wholesalers and this year’s labelling legislation will most likely have some reaching for the aspirin yet again. Yet, as Axel Werner reflects, clever wholesalers need not be at the mercy of whatever arrives in their containers. “If you are a passenger car wholesaler whose purchase strategy involves buying a container here and buying one there, wherever it’s cheapest, you will not get very far with manufacturers in discussing European legal requirements. But if you have strategic suppliers you can work with, it is also better for them; we keep our suppliers informed about what’s included in the EU regulations.
Starco’s engineering team in the UK began planning for the introduction of Reach some two to three years in advance and Werner shares the company was therefore the first wholesaler to implement it correctly: “This is the same now with the European label – we need to do this for our trailer tyres and we began the process of discussing this with our suppliers early. This is already done now, it’s been checked off and dealt with.” The extra cost involved in compliance with European regulations has been minor and accepted by the vast majority of customer, the managing director adds.
The coming years
During the course of any interview one particular question inevitably arises: What does the future hold? In this instance, the question was posed a trifle early. Yes, Starco will be announcing significant new plans during 2012, but at this stage it’s too early to disclose any details. “We have been long known for tubes and small tyres but this has dramatically changed in the last years and will change even more in the next years. Specialised products are needed for new machinery,” says Werner as a teaser. “We will be making a major announcement regarding Starco’s entire European operations at the Reifen 2012 show.” When pressed for further details, the Starco Germany managing director would only say that the announcement involves Starco’s activities in the agricultural sector: “This will be an increased focus in future as we aim towards being a leading supplier of products, services and logistics.”
As mentioned right at the beginning, Starco is a company that wears more than one hat. While much attention has been given to the manufacturing side of the business of late, Axel Werner sums up that wholesaling is, and will remain, a key component of Starco’s overall operations. “While in the original equipment sector Starco always tries to supply its own-branded products that have been designed by us, in the aftermarket we are a classic wholesaler and are committed to also supplying other brands. For the aftermarket I believe you have to focus on being a wholesaler rather than a manufacturer.”
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