Is your business costing you?
ﬁnd extra proﬁt
A guide to reducing non-core operating costs
in the economic downturn
Issue 3: Back Office Supplies
Although not up there with the major strategic business expenditure
categories such as marketing, R&D or headcount, nevertheless the
systems and supplies that keep your office running day by day can
have a signiﬁcant impact on efficiency and proﬁtability.
Whether it’s the cost of equipment itself or It includes tips and advice on the
the way your employees use it, a contract following areas:
that doesn’t truly reflect your requirements
or a culture of waste in the organisation • Photocopiers – are you deriving maximum
– all of these can be adding unnecessarily value and efficiency from this workhorse
to your expenditure and reducing your of the modern office?
ability to streamline the business.
• Telecommunications – the array of tariffs,
This guide - the third in our series looking at and new technology, products and services
different areas of cost reduction - aims to on offer demand a strategic and
provide a range of practical advice and well-informed approach
examples from experts in the field to help
ensure your business is managing its costs • Postage – even in the electronic age,
effectively and efficiently. most businesses have a postal
requirement but the deregulated
market needs careful navigation
Photocopiers are one of the most heavily-used pieces of office
equipment, often performing a vital role across a range of
business functions both internal and external. Marketing,
ﬁnance and general administration departments will all
have occasion to call on the copier and so it’s an area of
expenditure worth getting right, says expert Brian Pinner.
1 Fit for purpose 3 Instil a careful copying culture
It goes without saying that all office A number of very simple changes in copying
equipment should be carefully selected culture amongst your team can deliver
to make sure it performs the functions significant savings:
you need it to. However, in the
photocopier market, it’s particularly • Encourage as much use as possible of the
easy to over-specify. ‘duplex’ (double-sided) facility to cut
down on paper use. A machine printing
Conduct an analysis of your actual usage 30,000 pages per month would use 360
over the past six months (rather than fewer reams of paper a year if all pages
guessing what you think you need or would were double sided
like!) and ensure that the machine you • Ensure that the default setting on your
choose is not too big – meaning you won’t copier is set to mono, with colour only
derive its full value – nor too small, leading being used if specifically selected. On
to compromised quality and efficiency output. average, mono pages are 90 per cent
cheaper than colour
2 Review lease and service • Use the print function on a photocopier
agreements (most have them these days) rather than
Most companies lease their photocopying a desktop printer for large print jobs. The
equipment so make sure you fully under- page costs for a photocopier will be up to
stand the terms of the lease – in particular 70 per cent less than a desktop printer
how long you’re signing up for – and ensure • Check waste paper bins next to copiers and
that any service agreement for the machine printers at the end of each day to identify
does not last longer than the lease. and curb wasteful or unnecessary printing
Telecommunications in various forms have now become an essential
part of every organisation, says Brian Holmes. However, since the
privatisation of BT and the explosion in the mobile market, the
constantly changing dynamics of the market present an ongoing
challenge to businesses, which they can’t afford to ignore.
1 Analyse your traffic But without knowing the call
Fixed line, voice, data, mobile…your business durations, you have no way of
will be communicating in a range of different checking that you’re being charged
modes and each may be charged in a at the right rate.”
different way or at a different rate.
2 Understand your requirements
It’s impossible to be sure you’re getting the Not only is there a bewildering array of tariffs
best deal unless you have a detailed analysis available but also an increasing number of
of all your usage broken down by category. modes of transferring voice and data to the
Crucially, this breakdown should not just be outside world. All of this choice means that
telling you the volume of calls within each a simple comparison of rates is no longer
category but also the duration per category. sufficient to ensure the best deal.
But this may be further complicated by set-
up charges, minimum charges and capping. Do you want call capping, bundles or a fixed
monthly spend? Will it be via a good old
Only by scrutinising this level of data and analogue line, or Broadband ADSL,
checking for consistency across different Voice-over-IP (VOIP) or 3G?
bills against the known tariffs will you be
able to check you’re paying the correct Know what you want in terms of
rate in each case. functionality – not just cost - and
understand the options available to
“Knowing that you made 12,507 calls ensure you select the right one for
last month and the cost was £467.32 your business needs.
allows you to calculate the average
cost of a call at £0.037.
Through a lack of resource, a multi-site charity based in the UK
was losing potential revenue by not answering all incoming calls.
We assisted by quantifying call volumes and patterns and then
tendering to appropriate call centre operations to provide the
client with a range of impartial options to improve efficiency.
3 Stay ahead of the game 4 Know the market
As technologies and services continue to Network operators and suppliers are
merge, the certainty and cost control once constantly updating their products and
offered by a long-term contract is no longer services to take account of the changing
as valuable and, in fact, has the potential market. Keeping up to date with these
to lock companies into inflexible or costly developments is a full time job but a crucial
arrangements which preclude them from one if you are to be sure of the best deal.
taking advantage of the newest
developments. It is not unusual for contracts Make sure you have the best market
to have automatic rollover clauses and so intelligence at all times.
even though you only signed up for 12
months, unless you cancel in time you could A manufacturing company in
be committed to another 12 months. Devon was locked into a cable
service provider infrastructure
It is now essential that businesses prepare and believed that its rates couldn’t
well in advance of contract renewal dates be improved. Expense Reduction
by reviewing communications requirements Analysts negotiated with the
regularly and planning strategies which incumbent supplier and realised
avoid incurring unnecessary costs. a 24 per cent saving.
Don’t reduce your options by leaving reviews
and supplier negotiations too late.
Every company incurs cost on postage. Whilst it’s true that many
organisations are making increasing use of email, mail expert
Nadim Vanderman says post remains an essential way of sending
a whole host of material such as invoices, statements, brochures
and marketing material. Here are his tips for making the most of
your postal budget.
1 Develop your post proﬁle 2 Pricing In Proportion
In 2006, the postal market became With the introduction of Pricing In Proportion,
deregulated and the Royal Mail’s monopoly mail is now charged on the basis of weight
ended. Whilst Royal Mail is still the and size. Make sure that you don’t send single
dominant player, the deregulated market sheets of paper in C4 envelopes. These will be
offers a wide range of different products, charged at large letter rate, when they could
services and pricing structures from various be sent as letters, costing you 38 per cent
different suppliers. more than necessary.
With so much choice, the key to managing 3 Be ‘frank’ about your needs
your postage cost is to evaluate your situa- Many organisations send their mail using
tion and develop an accurate profile of your franking machines. Whilst this is undoubtedly
postal usage. You need to ask: how much a flexible way of sending mail, beware of
mail is being sent as letter, large letter and hidden costs such as topping-up charges,
packet format? How much mail is being sent tariff rate chips and ink cartridges which
overseas? How much mail is being sent may detract from their value. Indeed, you
Special Delivery? may want to ask the question, do I need
a franking machine at all?
Armed with this level of information on your
usage, you can then assess whether you are
using the optimum service for your needs.
Expense Reduction Analysts Expense Reduction Analysts is the world’s
conducted an extensive largest cost management consultancy and
review of postage costs for focuses on reducing non-core operating
a major public sector costs for private, not-for-profit and public
organisation with about half a sector organisations.
million members. Nearly a year
after implementation, audits Handling an annual supplier spend of
have shown a saving of 18 per millions of pounds on behalf of clients
cent including, at the last audit, in all sectors, the consultants at Expense
the identiﬁcation of a major Reduction Analysts use their significant
invoicing error by the Royal purchasing influence to achieve optimum
Mail which resulted in a ﬁve value from suppliers, often successfully
ﬁgure credit note being issued. retaining incumbents and using expert
analysis and market intelligence to
combat ‘contract fatigue’.
4 Get to know new providers
With the ending of the Royal Mail monopoly, Expense Reduction Analysts has 150+
there are many new providers in the market- consultants across the UK, specialising
place. But be careful, as they don’t all carry in more than 100 non-core business
the full range of services provided by the expenditure categories.
Royal Mail and they have minimum
collections quantities. Other topics covered in our series
of cost reduction guides include:
The most significant difference is that they
charge VAT (postage through Royal Mail is an Issue 1 – Property and Premises
exempt supply), which may adversely affect Issue 2 – Banking and Finance
financial service companies, charities and
other organisations unable to recover VAT. For more information contact
Expense Reduction Analysts
on: 02380 829 737
or visit our website at:
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