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Profit News July 2012


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Profit News July 2012

  1. 1. PROFIT NEWS Printing, packaging and posting Adapt to survive Savings to be made Advice worth its weight in goldEXPENSE REDUCTION ANALYSTS SUCCESS STORYPar for the courseT he TaylorMade brand was created 30 years “Since then, Expense Reduction Analysts have money against the operational requirements of the Dedicated specialists ago with a single, innovative product: a undertaken a wide range of projects and it has really items they purchase. 12-degree driver cast of stainless steel. been a bit of an eye opener in some areas. The team,TaylorMade pioneered the metalwood, an led by Tony Catling and comprising Paul Seddon, The specialists worked alongside Tom Smithalternative to persimmon that was so easy to hit that Sue Cooke, Richard Anson, Ian Morrison, Steve and his team to achieve savings and serviceamateurs avidly embraced it and tour professionals Clamp, Nadim Vanderman and Keith Copestake improvements across multiple areas of expenditure,couldn’t ignore it. Today, TaylorMade engineer golf have brought to us the expected savings together with a dedicated specialist for each category. Category Savings (%)golfers, from tour-calibre players to skilled players Tom added “It is fantastic to get an independent Contract Cleaning 22%to players who want every game-improvement benchmark against our prices to see where we are intechnology available. the market; but it is not just the introduction of newTaylorMade-Adidas Golf Company engaged “As their specialists are working in their respective Expense Reduction Analysts has managed thethe services of Expense Reduction Analysts in categories on a continuous basis, they have been suppliers, their prices and ourselves as well toSpring, 2009. Tom Smith, then Finance Manager at able to introduce to us new technology and best ensure the service levels do not drop and theirTaylorMade explained “We were looking to reduce practice processes of which we were just not aware. prices still remain competitive throughout theirour costs but didn’t really have the personnel or They have implemented new and better suppliers engagement period.”the budget to review our non-core overheads. The and also been able to negotiate better prices and Tony worked alongside Tom to introduce a strongerExpense Reduction Analysts approach to Cost, service levels with our incumbent suppliers. ‘cost conscious culture’ within the company.Purchase and Supplier management, explored with What has been particularly impressive is that theyus by Andrew Robertson, was really attractive This concept is based on saving money whilstand in particular with the fees being funded from of choosing which options are best suited to our maintaining the quality of service being received Total 23%savings, the risk-free element really suited us. particular circumstances and preferences.” and encourages employees to consider value for
  2. 2. EXPERT NEWS - SIMON PERKINS EXPENSE REDUCTION ANALYSTS SUCCESS STORYTop tips for Internetretailers on reducingcourier costs for F HindsE ach year online purchases continue to rapidly grow, with current UK online expenditure topping £40bn in the last 12 months, up from £30bn in 2006. Great news for online retailers, but shipping the product to thecustomer and making sure it is received on-time and in good condition can befrustrating, presenting a whole new set of challenges.Below are some simple tips on how to choose the right carrier for your onlineretail business model: continuing to work with them to reveal Some carriers have adapted to accommodate the challenges of residential delivery, especially when coping with ‘not ins’, others have not. Therefore, carefully research the carrier’s processes for re- attempting delivery or utilise alternative delivery addresses. Encourage customers to use their work address for delivery. P aul Wheatley initially met with Watch out for carrier surcharges. Some carriers surcharge for home F Hinds’ Director Neil Hinds deliveries, some do not but recover additional costs by charging in full and as a result, Neil engaged again for redelivery knowing that 40-50% of 1st attempt residential Expense Reduction Analysts to review deliveries fail. the company’s expenditure on stationery where an average saving of 19% was If your customer is not in to receive their delivery they may have achieved. Neil was very impressed and received a delivery attempt note from the carrier. They are then often invited Paul to look at a further four cost expected to collect from the local depot. Think about how far this may areas: mobile communications, couriers, be and the inconvenience experienced. Some carriers offer pick up at packaging and printing. improvement, but it is also pleasing to delivery options. Due to the range of expenditures F Hinds where we are already getting the best wanted Expense Reduction Analysts service at the best price.” Category Saving (%) Think beyond the price and more about how the carrier can add value to review, Paul invited a number of to your business especially in technological solutions. For example, colleagues to form a project team to Meanwhile, Expense Reduction think about using a carrier that can offer integrated tracking from your conduct the series of analyses, drawing Analysts’ Steve Parrott focused upon website. Why divert them away to the carrier’s website? upon Expense Reduction Analysts’ array F Hinds’ use of couriers. He explained: of specialist knowledge. “We focused on one of the incumbent Look at consolidated multi-carrier solutions. This way you can select a suppliers, providing longer distance The team turned their attention to a national services, and by a combination carrier from a number of different options based on the most appropriate packaging review which resulted in of negotiating improved tariffs, selection for your customer’s requirements. You can also take advantage of rate of more appropriate services plus some carrier solution providers. simple administrative and operational analysis of plastic bags revealed that changes; I was able to present a 30% F Hinds were already achieving best Scrutinise the carrier’s compensation terms for these instances. value in this area so he was able to give the good news to Group Accountant, Neil Hinds agreed: “Expense Reduction Internet sales attract customers worldwide. This has additional Steve Cornwall. Steve, who manages Analysts not only highlighted that a challenges that only a limited number of carriers can address cost F Hinds’ day-to-day relationship with Revisited effectively. Expense Reduction Analysts, was our existing criteria, but also enabled delighted and commented: “Obviously Ultimately, save time and money by speaking to the experts at Expense I am always pleased when Expense the way in which we operated with our Reduction Analysts. incumbent.”EXPERT NEWS - BRIAN HOLMESNear-Field Communications U sing a credit card to make small value purchases (up to vulnerable to people wandering around with a reader device, £15) without needing to enter a PIN (often referred to as making unwanted transactions for anyone who walks past, or ‘tap-and-go’ or ‘wave-and-pay’) is gaining momentum that a stolen card wouldn’t even need a matching PIN for the with a number of High Street retailers installing the new readers. thief to use it. Contactless technology has been creeping on to the High Street since 2007. There are now 23 million contactless credit nature of NFC - you can’t simply scan a room as you could with and debit cards in circulation and almost 100,000 terminals, Wi-Fi, the device is required to effectively touch against the according to the Payments Council. reader to make payment. However, there are adequate methods Similar technology called Near-Field Communications or designed to combat the second concern above, including a £15 ‘NFC’ is available in some new mobile phone handsets and it is transaction limit which prohibits a thief from emptying a bank predicted that 1 in 5 Smartphones will be NFC enabled by 2014. account in one go. The usual fraud cover that’s offered by other payment systems is also in place, meaning that the customer won’t be liable for any fraudulent transaction provided they New marketing opportunities have acted with reasonable care. But unlike credit cards, NFC devices can receive information A lower loss rate which opens a whole new world of marketing opportunities. For example, when a customer makes a payment with a phone, they also be topping up loyalty points or receiving special offer According to the credit card industry, the loss rate is going to coupons. These coupons could be extremely targeted, since the be much lower with NFC than credit cards. Currently, if a credit retailer will be able to keep account of what each customers card is lost, the customer is not liable because of the business buys and how often. This system is already in place with many rules around it, but somebody could still make transactions either loyalty card schemes, but the process could now be streamlined and more focused. accept that fraud. But if a phone is lost, not only should it have password protection on it, but also the operator can turn it off The obvious question about these kinds of payments is instantly, giving the customer double protection on a phone with the security. There have been concerns that NFC would be a payment application on it.
  3. 3. EXPERT NEWS - IAN BROUGHTON EXPENSE REDUCTION ANALYSTS SUCCESS STORYThink about your Impressive savings forpackaging costs Doughty EngineeringA ny company that manufactures, packs or distributes products of any type will use packaging in some form or other, regardless of their industry or W activity. hen David Langston,The different areas of packaging include Primary and Secondary. Primary packaging Expense Reduction Analystsis products which are customer-facing such as carrier bags, presentation boxes, consultant, originally wentwrappings and pouches. The other type, Secondary, is known as the transit/ to see Julian Chiverton, a Directorprotective of products sector. Examples of this include corrugated cases, pallets, at Doughty Engineering Limited, there was some scepticism that David able to achieve, without compromising oncustomer-facing. with Expense Reduction Analysts’ERA work with clients to add value to their packaging procurement processes in no-win no-fee guarantee, Julian felt heseveral different ways, for example: didn’t have anything to lose. In order1. Reduction of unit price via the traditional tender process. We can work with to compete with overseas markets, your incumbent supplier to increase the level of value you are receiving, or Julian had already looked internally at source an alternative supplier that can provide an equivalent or increased level of cost reduction but Expense Reduction service at a lower cost. savings, even in those areas.2. Assessment of purchasing habits. Julian Chiverton, Director, Doughty Engineering “The company’s performance is requirements than they actually need. continually growing and therefore additional savings to reinvest into the3. Change in method of packing. Does the product really need to be shrink- company’s production facility will help wrapped and transported in a corrugated case? This is an often unnecessary cost. in the continual improvements.” Julian4. New technology. For example, replacing wooden pallets with plastic pallets has comments.5. For example, the use of polypropylene tapes rather than Doughty Engineering to review Freight communication with our service and Courier costs. With Charles’s A daunting prospect providers.” Julian says. PVC as release is much quicker. analysis he found 23% average savings.ERA commonly achieve an average saving of 15% on packaging projects for their Julian was delighted with this and Initially, Julian did not want to change involve the services of Expenseclients. Examples of results achieved include a corrugated packaging project for a wanted Insurance reviewed, for which any of the incumbent suppliers. Having Reduction Analysts. Working inmanufacturer in the motor industry resulted in savings of 55.1% and a label project David brought in Chris Coomber, part of to change supplier and re-introduce partnership with Expense Reductionfor a large company in the food industry generated savings of 44.6%. Expense Reduction Analysts’ Insurance the company and their level of quality Analysts over the last twenty months Cost Management team who specializeComments from a recent project where the ERA packaging team managed to service to a new supplier was considered has saved us an average of 20% on the in this category.uncover annual savings of 39% on packaging has been not only well received but a daunting prospect as well as the time categories they have reviewed. Currentlycompletely surpassed the client’s expectations. The client was delighted with the wasted by ensuring the long term service they are reviewing our Aluminium andprocess improvements implemented and the supplier management in place. Healthy respect for safety quality. Stainless Steel and Electricity costs.” Julian concludes.“Having been with the same supplier for 25 years, and receiving assurances that However on one project another supplier An extensive review of the insurance tendered substantially more savingsus or if they did, it would be marginal. The result of 39% is amazing and really market was undertaken on behalf of than the incumbent supplier and in thedemonstrates the value that ERA brings.” Managing Director. Doughty Engineering. One of the knowledge that Expense Reduction attractive features of Doughty’s risk Analysts ensure a smooth change over,“I was extremely impressed with the level of detail that was provided through the was their strong adherence to health with audits throughout the contract Category Saving (%)process. Some of the suggestions that the consultants made which we have adopted, period for service quality, Julian decided premiums achieved in the market and to make a switch. Courierswe would not have found ourselves.” Director Operations. whilst Expense Reduction Analysts Insurance Cost Management were not Julian continues, “Initially, with one “I was apprehensive about the move to the new able to present a saving, they were able project there were some concerns supplier and the impact on our operations. ERA to demonstrate Doughty’s programme with the service level, but these were Packaging Expert, Ian Broughton, worked with was correctly positioned in the market addressed by Expense Reduction us and the supplier to ensure that there was no disruption, and the and subsequently there was no charge Analysts and now the savings justify the reporting and account management for the service. initial and short-lived pain.” structure in place is such an Further categories were also to be “Overall the experience of Expense improvement on what we did Packaging reviewed so David contacted other Reduction Analysts has helped in many before. We should have done Expense Reduction Analysts’ experts to ways. We have learnt not to become this years ago.” complacent about supplier relations, Plant Manager. Sue Cooke undertook a review of as well as keeping the employees ‘on Packaging, whilst Engineering Supplies their toes’ and ‘more aware’ of costs. Total Average Savings 20% were scrutinised by Ian Morrison. We have also had an improvement in EXPERT NEWS - W hile many retailers are actively pursuing their online strategy - Get the right printer for the job. Just because the printer accepts an order, it impacting all functions and their communication requirements - the printed HARTLEY JENKINSON doesn’t mean they have the best equipment to produce the material. message remains an important tool when communicating with both staff Choose a supplier who can offer advice to allow you to reach your objectives in and customers. a cost effective manner. Printed Printed material will be used across various departments: Ask the printer to hold stocks on your behalf and call them off only when you Human Resources may want to display a new Health & Safety notice in all need them. stores Operations may want to change the information printed on the till rolls material higher stock levels. IT may want to display the new IT security policy in all staff areas Review your range of printed material. Can you streamline the range, generating Marketing may want to promote the new product range in store Sales may want to publicise the new promotional offers to customers Use templates; don’t create new artwork for every job. and POS It’s likely that projects will be managed and funded by individual departments. So how do you know how much you have spent on print in total? How do you know if briefs Avoid content that will date the publication so that it can be used for longer, are written and suppliers are selected consistently? It is possible that print is sourced avoiding additional artwork for replacement material. from many suppliers, meaning that the expenditure is not managed effectively. Review internal processes to plan print projects more strategically. In the face of disparate budgets and upward pressure on prices, it remains vital that print is managed effectively. Here are some things you can do to help control costs: ordering print.
  4. 4. EXPERT NEWS - SUE CARBIN EXPERT NEWS - MICHAEL HULLYSecure cash handlingT he supplier base for secure cash handling For coin deliveries, order what you actually need in a particular store, in the UK has undergone several changes rather than having a standard amount delivered on a regular basis in recent years. Established players Review the frequency of cash collections for each store – considerare growing their business internationally. All having less collections to reduce the weekly costsuppliers are expanding the range of servicesoffered, with specialists and regional operators Offer cashbacks to customers paying by debit card to reduce the amountnow able to offer national coverage. of cash that is bankedAs the range of services broadens, so does Make sure that the contract with your cash in transit provider isits potential impact on your retail business. appropriate for your needs, both now and going forward, since it is likelyFor example, using the provider to manage to be in place for the next 2 to 3 yearscash processing will reduce workload and the Consider using the provider for more than the traditional cash in transitsecurity risk for staff in the stores, as well as serviceproducing an independent audit of takings. The frequency of collections, and the size of the retail network, means thatHere are some points to consider to ensure you even small differences in collection cost per store will result in potentiallymaximise value for money: Reducing the cost of IT hardware T he cost of IT equipment (such as The downside of this is that greater laptops, desktops and tablets) to complexity in the IT environment correlates with higher maintenance part of the IT budget, but there are and management costs. In addition, a effective approaches that can reduce this. complex PC population can impede the IT department’s ability to deliver The challenge for the business is to routine but critical software testing and satisfy the needs and aspirations of users deployment services. This can result in a whilst minimising the cost of these devices. Keeping everyone happy is a challenge; with technologies changing Such organisations now have anotherEXPERT NEWS - ROBERT ALLISON rapidly and people becoming more choice and that is to leverage the technically aware, nearly everyone will Hardware Procurement Service offered have a view on what they should have. by ERA IT Solutions and ServicesBritish businesses need a Setting a policy (ITSS). This service enables clients to get the lower prices, standardisation and lower Total Cost of Ownership achieved by large organisations.cultural change to survive Firstly it is important to have a clear workstation is a workplace tool, for Get the right refresh cyclebeyond the current recession by the status or operational role of the user. Alternatively it may be decided that the lines between work and personal life have become blurred and the device Overworking an IT workstation asset is often a false economy. Support costs increase directly with the length ofT needs to service the individual in both a intervals. While the primary cost drivers he current recession is regularly Fortunately, many of those MDs and In addition, few businesses have people work and personal context. described as one of the worst FDs hadn’t been completely taken in working in their procurement teams are software failures and help desk calls, by the cost-cutting hype, and have that can boast years of procurement and If the policy is that a workstation is the rate of increase varies according to understood that simply reducing a few supply chain experience in each and purely a workplace tool then there is an both platform and user types. Previousfor National Statistics showed that a expenses doesn’t guarantee long term every sector. This lack of experience opportunity for standardisation and with research shows that for most workplace-staggering 4,482 businesses went bust survival. The companies now poised to has meant that regular reviews of costs standardisation comes the opportunity to based machines, the optimum refresh take advantage of the upturn are those within the procurement and supply drive down total cost of ownership: both interval is three years whilst for laptops that have balanced cost management chain processes haven’t been up to the initial procurement cost and the on- that are mobile 80% of the time, the with a longer-term view of the the required standard - if they’ve been going support and management costs. optimum refresh interval is two years.collapse. relationship with their suppliers. done at all. This has led to continued Support costs jump by up to 37% rises in supplier costs and ineffective and minor software deployment costs Nowadays every business operates procurement practices. Procure effectively within complex procurement and supply increase by up to 38% as the equipment The cost-cutting hype chain ecosystems which are becoming ages from 3 to 4 years. Help desk calls more complex as new initiatives, Workstations are low-margin, high- also become more frequent, consume products, services and supply chains are A change of attitudes volume products that are constantly more time and increase costs. By year 5,media and governments across Europe integrated into the day-to-day running changing. Each day brings a new cut the cost of minor software deploymentshave pushed the cost-cutting agenda of the enterprise. price deal, typically equipment where on laptops whose users are on the go All British business must recognise thatas the only way out of the current one or more components are about to be 80% of the time increases to over 61% of While many of these new initiatives one of the keys to long-term success iscrisis. During that period, I’ve met superseded. the total cost. add value to the end product, they can effective procurement and supply chainwith many Managing Directors and add costs into the business. But the management. To ensure a healthy future Very large businesses are able to use Committing to a refresh cycle can alsoFinancial Directors who felt the only complexities of this ecosystem are for British businesses and guarantee economies of scale to negotiate discounts help further reduce the initial cost ofway forward was to cut costs across one of the biggest reasons why the more positive statistics in years to come, on new equipment and implement IT procurement as negotiations cantheir business. In most cases they felt cost-cutting agenda could never work in attitudes towards cost management standard makes and models. Without this be on a bulk basis. ERA clients whothat ‘slimming down’ was their only the long term. This ecosystem needs a need to change. Regardless of how bargaining power, many companies often take advantage of the ITSS Hardwareresponse to the rising costs of logistics, strategic approach where businesses can innovative our industries may be, it’s choose to grab the best deal or latest Procurement service and commit totelecommunications, utilities and balance many factors (such as reliability a cultural change in the area of cost the ERA ITSS workstation refreshinsurance - all key to the successful day- of supply, long-term pricing, delivery. management that is needed, and it needs This results in a range of workstation programme can achieve enhancedto-day running of any business. etc.) against purely the cost of supply. to happen now. savings.