HOW CAN SUSTAINABLE GROWTH HAPPEN SO QUICKLY?

FAST TRACK WITH THE UK’S FASTEST-GROWING FIRM, OCI

In each edition of Business Leader Magazine, we profile one UK company that is experiencing exponential growth in a feature called Fast Track. For our most recent edition, we spoke to OCI, the commercial process outsourcer that redesigns supply chains for organisations to drive their growth.

Speaking of growth, OCI’s has been virtually unmatched in recent times. Along with bagging the Overall Scale-Up Business Award at the 2022 Scale-Up Awards, the company is ranked first in the list of the UK’s fastest-growing companies on the FT 1000, where its also listed as the third fastest-growing company in Europe. In their latest financial year, they more than doubled their revenue, taking it from £212.9m in 2020 to £508.6m in 2021. Their operating profit also grew 142% during this time and their staff count by 129%.

Easing The Pain Of Disrupted Supply Chains

Although OCI was founded in 2010, most of its exceptional growth has been in the last few years. These years have been marred by well-documented supply chain issues, with causes including Covid, Brexit and the war in Ukraine. Whilst this disruption has been problematic for many companies, OCI’s intuitive business model and astuteness for successfully helping companies deal with supply problems has meant it’s been able to thrive during this period.

Oliver Chapman, OCI’s founder and CEO, explains: “What tends to happen is that one small piece of the supply chain gets disrupted, and the whole thing falls down. So, what OCI do is try to think of creative ways of managing that supply chain, so our clients can get their goods when they need them or where they need them.

“Supply chain disruption has softened a little bit, but now we’re seeing global recessions and other economic challenges, so I think the supply chain is now disrupted, and it may take quite a while for it to return to normal. At the same time, the shipping lines and logistics suppliers have capitalised on the disruption, so now logistics is much more expensive than it used to be. This can mean that it’s no longer viable for a company to buy from the partner they’ve worked with for 20 years, and businesses are now looking for another supplier.”

Carving Out A Niche

With more businesses looking to optimise their supply chains due to a difficult trading environment, OCI’s services have been in high demand. However, to enjoy their recent levels of success - which are virtually unrivalled across Europe - there must be factors that set them apart from the competition. And there is…

Chapman explains: “We’ve carved out a niche with what OCI is doing, and I don’t believe there’s another company tackling the problems in the same way globally. A couple of other businesses do similar things, but they tend to be financial institutions providing credit facilities for corporates, and that’s not the full solution. For example, a corporate would appreciate some financial support from an institution, but a bank can’t renegotiate a contract with a supplier in Asia, and that’s where OCI’s negotiation team will come in and manage that.

“We do deals where we save clients’ money on what they were paying before with OCI’s profits included. Take a hospital group in the USA – and hospital groups are renowned for being cumbersome and not very dynamic in some ways - and we’ve renegotiated the products we’re supplying and getting them a 10% discount. That’s huge savings when buying $500m worth of products a year.” because the cost of funds has increased past their profit margin. However, that doesn’t impact OCI’s business model.”

Although OCI is completely product-agnostic and doesn’t do much in commodities, they perform well and have considerable interest in pharmaceuticals, technology, electronics, digital media products and digital impressions. Incredibly, all their growth has been organic too.

Chapman even admits that in some ways, OCI may have even benefitted from these economic challenges because they create pressure on businesses to reduce inefficiencies within their group, an area where OCI excels, as exemplified by stories of taking businesses from £50m to £350m in yearly turnover.

However, with corporation tax set to rise from 19% to 25% in April, OCI, like many other businesses, is set to lose a higher proportion of its revenue to HMRC. Their CEO is more than happy to pay off OCI’s fair share and thinks every corporate needs to contribute towards the huge debt built up during the Covid pandemic. OCI didn’t take much advantage of furlough and the Covid loan schemes that were available during this period but did experience hyper-growth.

“Our phones were off the hook,” says Chapman. “And what was interesting about it was that you had corporate hospital groups from the USA buying all their products from China, which is not the smartest way to do it.

Operating In The Sweet Spot

According to the company’s founder, OCI has “hit a sweet spot where corporates want to work with us.” This is just as well considering the current economic climate is marred by an incoming recession, high inflation and rising interest rates. Interestingly, OCI has avoided major impacts from this difficult trading environment.

“We work with a lot of banks, and the cost of funds and price of borrowing money is going up, but it doesn’t impact us too much,” continues Chapman. “It’s an international problem, so it’s the same for us as it is for every corporate worldwide. Some businesses may then struggle to buy their goods

“OCI is a big advocate of country risk hedging so that we would structure your supply chain, so you’re not only buying from China, which is currently in lockdown, but you’re also buying from Vietnam and maybe Malaysia. If you’re based in the USA, you might even buy products from Mexico. Some say they’re not doing this because it’s more expensive but buying goods from Asia means longer shipping times and complications with supply chains, meaning by the time you’ve invested money in China and maybe got your goods four months later, you could get them from Mexico in a week. So, consider the financial cost if cash is tied up for four months.”

There’s a lot of education we have to do as an organisation, and we’re quite proud of that when I think of hedging country risk.”

Chapman says some corporates are bound by regulation and resist doing things in the OCI way, but the company’s flexibility has meant they tend to be able to work around these challenges too.

Back To The Old School

Contrary to their outstanding growth, Chapman says OCI is trying not to grow too quickly and is putting solid foundations in place so they can continue to excel in the years ahead. Such a mindset might be considered more traditional compared to some of the fast-growing companies that we see nowadays, but OCI’s founder, who started importing and exporting pallets from China whilst at school, says business is “more like a hobby” and freely admits that they want to do business in the old form and not sell products for a loss to show sales and growth. And considering OCI’s almost unprecedented growth, you’d be very brave to suggest an alternative mentality is required for OCI to continue growing. But despite aiming for continued growth, there is no plan to exit the business in the future.

Chapman elaborates: “Let’s keep an organic, straight-up business model that makes good profits, and then when we open it up to investors in the future, it will probably be