YPO celebrates 40 years in business, returning £100m for taxpayer

Staff at YPO celebrate 40 years in business
Staff at YPO celebrate 40 years in business
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YPO, a Wakefield-based company formerly known as Yorkshire Purchasing Organisation, has just passed its 40th birthday.

And the UK’s largest publicly-owned buying firm has a lot to celebrate.

The Yorkshire business, which employs around 500 people, unveiled its annual results earlier this month, showcasing the success of a three year growth plan.

Headline figures include an increase in sales of £1m in new areas, a record £8.2m dividend payment to shareholders, 20 per cent growth in turnover over two years, and sales totalling £122m in 2013. And the company has big plans for the future.

“We were very a paper-based manual operation back in 1974,” says Simon Hill, managing director of YPO. “But we have become a much slicker commercial organisation.”

Mr Hill is part of a new team brought in three years ago to implement a new strategy and boost the fortunes of the firm. A raft of changes to the business and innovative decisions has done just that – and exceeded expectations.

“We’ve had record turnover and profits in the last two years,” says Mr Hill, a former executive director at Yorkshire Forward. “When we came in, we recognised that we were the point when there was a huge squeeze on public sector spending.

“We recognised that if we did nothing then our traditional customers would have less money to spend and our turnover would go down.”

And so the YPO management team launched its first national marketing campaign. It has also embraced new technologies, rebranded itself, streamlined core business processes and, according to Mr Hill, the biggest change was “taking us outside of the traditional footprint in terms of sales territories”.

Historically, YPO’s core customer base has been along the M62 corridor. In essence, the company is a buying consortium which works on behalf of local authorities.

Some 13 local authorities are shareholders and a further 40 are associate members – a new model introduced recently which expands YPO’s client list while offering them lower dividends than the core shareholders.

Associate members include local authorities in Birmingham, London, Northumberland and Cumbria.

Despite being a public sector-owned operation, YPO trades purely as a commercial entity and receives no direct funds from the public purse.

Around 80 per cent of its business comes from education, largely from primary schools which need equipment such as exercise books, pencils, PVA adhesive, ring binders, punched pockets, food and drink.

But Mr Hill knows that the demands of schools are changing and YPO has to change with them.

“One of the other big things we have done is launch a brand new website at the beginning of the year. It’s an Amazon-type model for online shopping.

“It’s the kind of shopping experience that everyone is used to in their personal life, we’re trying to bring that to our business customers.

“We are already seeing improved efficiencies. For example, when I joined the company, 60 per cent of our orders came from fax machines. Now still more than 40 per cent is by fax.

“But changing customer behaviour takes quite a long time. Most of our customers have been with us for a good part of our 40 years. You throw away that loyalty at your peril.”

Looking ahead, Mr Hill wants to build on the firm’s recent success. In just three years, annual sales have risen from £105 million to £122 million. Over the past four decades, YPO has returned more than £100m to the public purse.

He says: “In the future we want to increase our delivery frequency. We’ve also joined the Institute of Customer Service.

“We’ve taken market share from our competitors and they are fighting back. But we’ve taken the view that we don’t want to get involved in a price war.

“The weapon we will use is the importance of customer service. We know we’ve got to invest a huge amount in customer service.”