Bassey Duke, Group Logistics Manager at IMI - Cost Saving Levers

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Bassey Duke, Group Logistics Manager at IMI spoke at the SCL Event UK 2013

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Bassey Duke, Group Logistics Manager at IMI - Cost Saving Levers

  1. 1. Cost Savings Levers Bassey Duke Group Logistics Manager IMI Plc
  2. 2. Introduction• IMI (www.imiplc.com) is a global engineering group focused on the precise control and movement of fluids in critical applications. We work with leading international companies in over 50 countries to deliver innovative engineering solutions to address global trends such as clean energy, energy efficiency, healthcare and increasing automation.
  3. 3. Introduction
  4. 4. Agenda• Scenario – 5 mins• IMI Plc case study – 15 mins• Group discussion – 6 mins• Summary (key nuggets) – 2 mins• Questions – 2 mins
  5. 5. Scenario• Crude oil price volatility• Rising freight rates (inflation)• Cost savings pressures• Tougher supplier negotiations• Freight supplier base reduction (M&A)• Competitiveness of incumbent (price)
  6. 6. IMI Plc case study
  7. 7. • Different • Periodic test routes to of the market market Cost Savings/ Benchmarking Avoidance Supplier Freight Bill Relationship Invoicing Management• Continuous • Invoice relationship matching management with rates
  8. 8. Cost Savings/Avoidance• Typical routes to market include RFQ/RFP, E- auction, negotiations etc.Route Typical Results CommentsBenchmarking 0 – 5% Existing supplierNegotiations 5 – 10% Existing supplier/New SupplierRFQ/RFP 10 – 20% New supplierE-auctions 30+% New supplier
  9. 9. Cost Savings/Avoidance E-auction Results£60,000 Current Spend£55,000 Supplier A Commodity Typical IMIs Supplier B£50,000 Supplier C Results Results Supplier C£45,000 Supplier E Metal Parts 18.4% N/A£40,000 Packaging 21.2% 25%£35,000 Freight/ 21.8% 30%£30,000 Cargo£25,000 Stationary 59.7% N/A£20,000 Pre-bid Phase Eauction - Bid 1 Eauction - Bid 2 Eauction - Bid 3 Eauction - Bid 4 Eauction - Bid 5 Eauction - Bid 6 Eauction - Bid 7 Eauction - Bid 8 Eauction - Bid 9 Eauction - Bid 10 Eauction - Bid 11 Eauction - Bid 12 Eauction - Bid 13 Eauction - Bid 14 Eauction - Bid 15
  10. 10. Benchmarking Scenario Action• US International • Supplier Air and Ocean collaboration to freight tender agree• Target to save at mechanism to least 10% ensure rates are always competitive
  11. 11. Benchmarking• The SCFI is produced weekly by the Shanghai Shipping Exchange.• The SCFI panel is made up of 15 steam shipping lines and 15 NVOCC.• Panellists submit freight rate assessments covering general cargo, all in, spot rates ex shanghai to a number of global base ports.
  12. 12. Benchmarking
  13. 13. Benchmarking Scenario Action Results• US International • Supplier • Monthly Air and Ocean collaboration to benchmarks freight tender agree and reviewed• Target to save at mechanism to quarterly least 10% ensure rates are • Saved over 20% always (year 1 only). competitive
  14. 14. Group Discussion
  15. 15. Group Discussion• Any experience within the group on e- auctions?• What are the results achieved from e- auctions?• What platforms would you recommend to use for e-auctions?• Examples of e-auction projects
  16. 16. Group Discussion• What comes to mind when you think of benchmarking?• How many people benchmark?• What categories do you benchmark?• How often do you benchmark?
  17. 17. Group Discussion• How do you benchmark?• What tools do you use to benchmark?• What results have you achieved from benchmarking?• Benchmarking best practises?• Example of benchmarking project?
  18. 18. Summary (Nuggets)• E-auction is an under utilized route to market, which can provide significant savings, without sacrificing the quality of service.• Irrespective of your route to market, supplier relationship is very key and important.• 1 in every 4 invoice received has incorrect values entered.
  19. 19. Summary (Nuggets)• After going to market, benchmarking/supplier negotiations, ensure that negotiated rates remain competitive throughout the life of the supplier contract.
  20. 20. Thank You
  21. 21. QuestionsContact – bassey.duke@imiplc.com
  22. 22. Additional Slides
  23. 23. Packaging - Euwid• EUWID Packaging Markets provides regular research on market developments for the relevant packaging materials and applications. The main focus is on Europes largest packaging market: Germany. In addition, regular market research is conducted for the neighbouring countries France, Great Britain and Poland.
  24. 24. $ per tonne 1000.0 1500.0 2000.0 2500.0 3000.0 3500.0 0.0 500.0 Jan 06 03/06 05/06 07/06 09/06 WTK Kraft Test 3 Test 2 11/06 Jan 07 S/C Fluting W/B Fluting 03/07 05/07 07/07 09/07 11/07 Jan 08 03/08 05/08 07/08 09/08 11/08Date Jan 09 03/09 05/09 07/09 09/09 EUWID - Corrugate Packaging 11/09 Jan 10 03/10 05/10 07/10 09/10 11/10 Jan 11 03/11 05/11 Packaging - Euwid 07/11 09/11
  25. 25. Scrap Metal- Metals Bulletin 6,000 LME vs Metal Bulletin Prices - Scrap Metals LME COPPER LME ALUMINIUM LME ALI ALLOY 5,000 MB st st solids MB st st swarf Brass Strip 304 Stainless steel solids 304 Stainless steel turnings 4,000 Copper $ per tonne 3,000 2,000 1,000 0 24/05/2002 10/12/2002 28/06/2003 14/01/2004 01/08/2004 17/02/2005 05/09/2005 24/03/2006 10/10/2006 Date

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