profit news jan2013

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– Ensure effective procurement becomes a part of every organisation’s DNA - led from the board room, but extending all the way to the shop floor and the supply chain – Ensure that procurement is not an empty seat in the board room Ensure all staff adopt a smarter spending psychology - just because your staff are good at purchasing core products, it doesn’t mean they will be good at ‘indirect spend’ – Ensure performance management is aligned to a smarter spending psychology – It’s essential that internal and external reporting provides accurate measurements and detailed business intelligence to allow the FD to provide strategic guidance for future procurement strategies – Conduct regular evaluations of your supply chain and build closer relationships between your staff and suppliers Rob Allison concluded: ‘The survey results demonstrate a disconnect between the finance director and procurement. This illustrates a cultural issue which should be addressed - if nothing else, finance directors must be equipped with procurement knowledge and the appropriate skillset. Ultimately, finance should drive and influence procurement, enabling businesses to free up cash, drive growth and deliver more sustainable and profitable smarter spending habits.’ INSIDE THIS ISSUE Psychology of procurement Critical procurement barriers are holding back UK business growth, reveals white paper. Will 4G streamline your business costs? Brian Holmes, discusses the latest mobile service taking the UK market by storm. Critical procurement barriers are holding back UK business growth B usinesses in the UK and Ireland are fighting a host of psychological finance and procurement barriers, according to a recent survey by Expense Reduction Smarter spending tips for your fleet Sean Bingham, reveals why now is the time to integrate effective procurement into strategic business planning. What is your payment strategy? The Payments Team, consider whether competitive advantage can be gained through alternative payment solutions. PROFIT NEWS Analysts (ERA). The research was carried out among 100 Financial Directors (FDs) from companies with revenues between £10 million and £500 million in the UK and Ireland, to uncover the psychological barriers to business growth strategies. It suggests FDs and CEOs are struggling to master the balance between cutting and managing costs to survive today, and investing to grow tomorrow. Rob Allison, Managing Director at ERA, explained: ‘Businesses and government have responded to the economic downturn by implementing wide-ranging cost-cutting initiatives. Unfortunately, while cost cutting may work in the short term, it won’t enable them to compete effectively in the long term. And for that reason, we’ve tried to uncover the reasons why organisations aren’t approaching procurement strategically.’ Barriers to Effective Procurement The report has uncovered a series of barriers that block FDs from implementing effective procurement strategies: • Short-term procurement strategies A lack of procurement understanding at board level Limited internal procurement skills • Resistance towards procurement from internal departments Inefficient supply chain partnerships A Smarter Spending Psychology Rob Allison said: ‘Organisations must start thinking long-term instead of short term. Cutting costs may keep businesses afloat temporarily, but it won’t enable them to compete long-term. A smarter spending strategy, combining effective cost control and development for innovation and investment is the only way businesses will be able to successfully ride this storm.’ Based on the findings of the research, Expense Reduction Analysts has offered some smarter spending tips, showing how companies can break down some of the barriers to business competitiveness and growth. Short-term perspectives and lack of procurement discussions at board level are holding back businesses “Organisations must start thinking long-term instead of short term. Cutting costs may keep businesses afloat temporarily, but it won’t enable them to compete long-term. A smarter spending strategy, combining effective cost control and development for innovation and investment is the only way businesses will be able to successfully ride this storm.” Rob Allison, Managing Director at Expense Reduction Analysts SPECIAL FEATURE To download your free copy of the white paper, please visit: www.smarter-spending.co.uk

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An Expense Reduction Analysts publication. January 2013.

Transcript of profit news jan2013

Page 1: profit news jan2013

– Ensure effective procurement becomes a part of every organisation’s DNA - led from the board room, but extending all the way to the shop fl oor and the supply chain

– Ensure that procurement is not an empty seat in the board room

– Ensure all staff adopt a smarter spending psychology - just because your staff are good at purchasing core products, it doesn’t mean they will be good at ‘indirect spend’

– Ensure performance management is aligned to a smarter spending psychology

– It’s essential that internal and external reporting provides accurate measurements and detailed business intelligence to allow the FD to provide strategic guidance for future procurement strategies

– Conduct regular evaluations of your supply chain and build closer relationships between your staff and suppliers

Rob Allison concluded: ‘The survey results demonstrate a disconnect between the fi nance director and procurement. This illustrates a cultural issue which should be addressed - if nothing else, fi nance directors must be equipped with procurement knowledge and the appropriate skillset. Ultimately, fi nance should drive and infl uence procurement, enabling businesses to free up cash, drive growth and deliver more sustainable and profi table smarter spending habits.’

drive and infl uence procurement, enabling businesses to free up cash, drive growth and deliver more sustainable and profi table

inSiDe thiS iSSuePsychology of procurementcritical procurement barriers are holding back uK business growth, reveals white paper.

Will 4g streamline your business costs?Brian holmes, discusses the latest mobile service taking the uK market by storm.

Critical procurement barriers are holding back UK business growthBusinesses in the UK and Ireland are

fi ghting a host of psychological fi nance and procurement barriers, according to a recent survey by Expense Reduction

Smarter spending tips for your fl eetSean Bingham, reveals why now is the time to integrate effective procurement into strategic business planning.

What is your payment strategy?the Payments team, consider whether competitive advantage can be gained through alternative payment solutions.

PROFIT NEWS

Analysts (ERA). The research was carried out among 100 Financial Directors (FDs) from companies with revenues between £10 million and £500 million in the UK and Ireland, to uncover the psychological barriers

to business growth strategies. It suggests FDs and CEOs are struggling to master the balance between cutting and managing costs to survive today, and investing to grow tomorrow.

Rob Allison, Managing Director at ERA, explained: ‘Businesses and government have responded to the economic downturn by implementing wide-ranging cost-cutting initiatives. Unfortunately, while cost cutting may work in the short term, it won’t enable them to compete effectively in the long term. And for that reason, we’ve tried to uncover the reasons why organisations aren’t approaching procurement strategically.’

Barriers to Effective Procurement

The report has uncovered a series of barriers that block FDs from implementing effective procurement strategies: • Short-term procurement strategies• A lack of procurement understanding at board level• Limited internal procurement skills• Resistance towards procurement from internal departments• Ineffi cient supply chain partnerships

A Smarter Spending Psychology

Rob Allison said: ‘Organisations must start thinking long-term instead of short term. Cutting costs may keep businesses afl oat temporarily, but it won’t enable them to compete long-term. A smarter spending strategy, combining effective cost control and development for innovation and investment is the only way businesses will be able to successfully ride this storm.’

Based on the fi ndings of the research, Expense Reduction Analysts has offered some smarter spending tips, showing how companies can break down some of the barriers to business competitiveness and growth.

Short-term perspectives and lack of procurement discussions at board level are holding back businesses

“organisations must start thinking long-term instead of short term. cutting costs may keep businesses afl oat temporarily, but it won’t enable them to compete long-term. a smarter spending strategy, combining effective cost control and development for innovation and investment is the only way businesses will be able to successfully ride this storm.”rob allison, managing Director at expense reduction analysts

SPEciAl FEATuRE

To download your freecopy of the white paper, please visit:www.smarter-spending.co.uk

Category Annual Saving Offi ce Supplies 19%Janitorial Supplies 28%Food 19%

Upcoming projectsFixed communicationsutilitiesFacilities management

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EXPERT NEWS - PaymentS team

EXPERT NEWS - Ken rogerSEXPERT NEWS - Brian hoLmeS

Gaining competitive advantage through your payment systems

The cost of carbon compliance

Is it possible to reduce costs with 4G?

Over the next few years there are going to be considerable changes to the payments landscape last seen with the introduction of bank cards and electronic payments in the

late 1960s. These changes, will ultimately impact on the way that we make and receive payments – and for those looking to gain a march on their competitors, a prime opportunity to gain competitive advantage.

Anyone who has struggled to send funds overseas or pay for goods on the internet will appreciate the loyalty they feel to those who make the process easy. Look at the success of retailers like Amazon, payment schemes like Paypal, the growth in Faster Payments since it was launched. Businesses trading outside the UK need to consider the payment methods preferred in each market – e.g. Alipay in China and bank transfer in Germany as well as the impact of SEPA payments.

In our most successful clients we see payment strategy being developed jointly by IT, Finance and Marketing Directors. This will determine how organisations will receive and process payments. What would the impact be if you decided not to accept payments from Paypal?ERA’s Payments Team believes that now is the perfect opportunity to gain competitive advantage through developing a payment strategy, is this something you can afford to miss?

The summer of 2012 saw the introduction of significant new costs for up to 7,500* UK organisations. Internal accounts are now having to feature a new line entitled

“CRC Allowances”. Whichever way it is dressed up, the CRC Allowance scheme is a significant extra cost on larger electricity and gas users, and the summer of 2012 was the first time that signatures had to be put on some hefty cheques. It is just the latest of the Government’s initiatives to “encourage” business to reduce its carbon footprint. If writing that cheque to DEFRA hurt this summer, brace yourself, because as further “encouragement”, the Chancellor quietly announced in the budget that the cost per CRC Allowance unit is to go up by a third.

Some businesses have previously been motivated to reduce their carbon footprint from a sense of Corporate Social Responsibility (CSR). Some significant corporations have gone further in publically declaring an aim of achieving a net zero carbon footprint, and are now requiring similar performance from their key suppliers. Now, however, if your organisation “qualifies” (see below), you will have to pay for every unit of carbon generated by your consumption of gas and electricity (curiously, fuel-oils were removed from the scheme in the budget !), at the rate of £12 per tonne, rising to £16 per tonne. You may believe that your organisation falls below the threshold, but if it is a subsidiary or associated company, it is the total group consumption figure that counts.

*DEFRA’s website lists over 2,500 companies and organisations that qualify for compulsory participation in the CRC Allowances scheme. The last available figures show approximately a further 5,000 who are required to report, although they are not currently subject to CRC Allowance trading. Reporting is required by all organisations with at least one half-hourly electricity meter. Participation is required by all organisations consuming more than 6,000Mwh of electricity p.a., but Allowances are calculated on both electricity and gas.

Whilst carbon reduction initiatives such as Offsetting projects reduce net footprints to satisfy CSR and supply-chain customer requirements, they provide no relief from the CRC Allowance scheme.

The introduction and rapid inflation of CRC Allowance costs provide a further incentive for organisations to become much more proactive in energy management. Expense Reduction Analysts can currently offer you assistance with the following Carbon Reduction initiatives:Smart Energy ManagementEnergy ReductionSourcing and Financing Alternative Low Carbon FuelsCarbon Auditing ServiceCarbon Offsetting Procurement

EE’s 4G network offers faster mobile internet access, and is now available on a host of the latest smartphones, including the Apple iPhone 5.

Japan, Germany and the United States are already benefiting from 4G which has been introduced, saying that the technology has helped to increase innovation, boost productivity and cut costs.

In the meantime, UK businesses should assess whether the reliability and cost of 4G is sufficient to justify a move from fixed-line broadband, as nationwide coverage is anticipated to take at least two years.

The advantages and disadvantages of 4GPros– With speeds up to five times faster than 3G, data can be sent and received quicker.– 4G is more efficient in the way it uses radio waves, meaning that more users can benefit from 4G simultaneously.– In terms of economies of scale, as more users gain access to 4G, prices could fall to lower than the cost of 3G.– 4G is more suitable for video or streaming services.Cons– 4G is currently more expensive, and will be for at least the next 12 months.– Unless you have a new mobile device, 4G will not work, potentially forcing employers to upgrade their company handsets.– Coverage outside major cities in the UK is still poor.– As it is quicker to download data, sharing large work files will be easier but this may have financial implications and may put an additional strain on the company network.

UK businesses will be able to save time and cut travel expenses through video conferences and share corporate data quicker as mobile 4G services continue to

hit the market.

EXPERT NEWS - ian morriSon

‘Smart’ energy management: a hot topic for Financial DirectorsThe amount of energy that commercial

buildings consume and the amount of savings they could generate if they were managed more efficiently

Much of the importance of this topic stems from the global need to save energy – this global need affects energy prices, emissions targets and legislation, all of which lead to several compelling reasons why you should save energy at your organisation.

Energy management is the process of monitoring, controlling and conserving energy in a building or organisation.

In recent years, the global recession has driven building owners to cut costs where possible. One of the main reasons for implementing an energy management

programme is to help building owners reduce operating expenses.The four components of effective energy management:

BehaviourSimple changes in behaviour can quickly lead to significant energy savings but such changes will only happen if the people are aware of the energy consumption that they have the power to control. Most people will only be motivated when you can demonstrate just how much energy they are wasting and just how much potential there is for them to improve.

Smart TechnologyWhether this involves investing in simple high efficiency energy saving lighting, installing active lighting, or implementing the use of building energy management systems, using smart technology is just one component

of an effective energy management programme.

Unit Rate SavingsOne key aspect to remaining competitive on your energy management is to ensure that your organisation is currently paying competitive marketing rates for your gas and electricity. Typically this can be a daunting process, as it requires benchmarking, expertise and industry contacts. Do you know if your gas and electricity rates are in line with current market trends?

Sustainable Energy SourcesSolar thermal water heating, photovoltaic electricity generators and wind turbines are no longer science fiction. They are proven sustainable energy solutions which can deliver actual benefits and a return on investment.

But, no matter which approach you decide best meets your requirements, it is crucial that you have an effective means of monitoring consumption to assist you in choosing the right strategies and then measuring the impact of the changes. Only then can you be certain that your actions are delivering results.

Making Sense of the UK’s CRC Energy Efficiency Scheme

The Carbon Reduction Commitment Energy Efficiency Scheme is a government-managed carbon-trading scheme that aims to reduce the energy consumption of larger UK businesses and public-sector organisations.

The CRC scheme can seem complicated but our energy management specialists can cut through the jargon, explain what the scheme means for your organisation and outline your response options.

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EXPERT NEWS - Bruce murray

Go paperless in 2013Whilst we have been talking about the

paperless office for many, many years now, we seem to producing more printed products than ever before. In

January, the mighty Google launched its support of the Go Paperless in 2013 campaign – a strategy that the team at Expense Reduction Analysts wholeheartedly endorses.

Whilst there is some cynicism in what Google is actually looking to achieve by supporting this campaign, as behind everything they do there is a large dollar sign in return, in more ways than one the principles of a paperless office make sense. Going paperless, or at least part of the way, can help an organisation towards its financial and environmental goals as well as improving workflow, information management and potentially cash flow.

Now, to completely eradicate paper from your organisation in one rapid sweep may never happen, but to start with why not make it a New Year’s resolution to review your organisation’s complete document workflow and cycle from start to finish. These are not just the documents and paper consuming items that you create during the normal working operation, but also the paper items you receive from suppliers, customers and supporting functions.

Simple steps

There are many simple smaller steps that you can take to reduce environmental impact, improve workflow and best of all reduce cost. Steps such as sending out your invoices electronically, adopting cloud-based collaboration systems for projects, shared documents and data, the introduction of electronic signatures on legal documents or the introduction of on-line proofing and ordering systems for marketing and promotional collateral.

When it comes to paper based items coming into your organisation, then the adoption of electronic document scanning of purchase invoices not only frees up valuable real estate for revenue generating income and operations, but also speeds up the access to information and the speed of resolution of queries.

Strategic review

However, like everything else, to sit down and produce a review takes time, dedicated personnel and quite frankly you may find that you have far more important operational and sales issues to concentrate on in these challenging times.

That’s just where the team of specialist consultants at Expense Reduction Analysts comes in: we are ideally placed to provide essential support your organisation across multiple disciplines and activities such as IT, Finance, Marketing, Managed Print Solutions and Document Archiving.

With over 150 UK based consultants, many with over 20 years’ experience within their specific industry, Expense Reduction Analysts can work alongside your key stakeholders to profile, analyse and map your existing document lifecycle. Utilising their extensive industry knowledge, the team can then present a range of options and solutions that capture the latest processes, technology and standards that maximise savings in workflow and the resulting cost benefits.

With the average cost of an organisation’s print alone calculated at 1-3% of turnover, it makes perfect sense to ensure one of your New Year’s resolutions is to go paperless in 2013 and reap the financial and environmental benefits that come with it.

EXPERT NEWS - JaSon aDDerLey

Sustainable savings a must for UK Law Firms

The latest Law Firms Survey by PwC has once again highlighted the fact that Law Firms are failing to develop sustainable procurement

programmes within their organisations, despite reiterating that this is high on the agenda.

Whilst the survey is restricted to gauging performance amongst the Top 100 firms in the UK, many of the themes and trends identified are applicable across the profession.

Some of the headline figures bring the problems of the last four years into sharp focus. Amongst the Top 10 firms, profit per equity partner (PEP) fell 24% despite a reduction of 6% in equity partner numbers. This trend was even more pronounced amongst the 11th to 25th largest firms, where PEP declined by 31% despite a reduction of 20% in equity partner headcount. As a key component to protecting margins, cost reduction remains high on the agenda with 53% of firms having completed a cost reduction programme in the past 24 months.

However, the majority of firms reported savings of only 5% or less, and not one of the Top 25 firms reported cost savings in excess of 10%.

This disappointing figure reflects our own observations.

We are often engaged by firms where, prior to our appointment, cost reduction and process improvement may have been short term and tactical, rather than a sustained strategic process with buy-in at executive level.

The evidence from the work we have carried out indicates that opportunities exist to codify and simplify processes, and explore the judicious use of automation and outsourcing.

Just a few of the many areas where savings can be made include:PostageWith the myriad of postal tariffs available, the advent of Online Business Accounts (OBA), downstream access providers, VAT issues and the potential flotation of Royal Mail, is postage a cost you can afford to ignore?InsuranceGreater competition, aided by new entrants to the market, has led to a small reduction in PII premiums. When did you last review your Insurance Schedule in its entirety?Email EncryptionA City Council was recently fined £120,000 after an in-house solicitor sent unencrypted sensitive emails to the wrong address. Do you have a policy on encryption? Is it followed?

EXPENSE REducTioN ANAlySTS SucceSS Story

Strategic purchasing advice for CB Imports in a volatile marketInspirational and innovative, CB Imports are the

leading importer of floral sundries, giftware, glassware, silk flowers, pottery, homewares, andChristmas and seasonal products. The company

prides itself on providing the latest trends, designs and ideas to volume buyers through extensive collections and literally thousands of product lines. Furthermore, their ranges of artificial flowers, pottery and glassware are the UK’s largest.

Expense Reduction Analysts’ Client Manager Neil Cullen first started working with CB Imports in 2006. Neil brought in Expense Reduction Analysts’ International Freight expert John Shaw, saving the company £123,451 on Import Freight in the first 18-month period of engagement. With the Import Freight industry being highly volatile, Steve Wood, Managing Director of CB Imports, asked John Shaw of Expense Reduction Analysts to continue to work with them on this area. Expense Reduction Analysts have now been providing this service to CB Imports for over four years.

“The whole seafreight industry has been more volatile in the last four years than I have seen it in the previous thirty”

John Shaw explains the background to his comment: “For the last four years or so, contrasting commercial elements have been in force. The shipping lines have increased capacity by bringing larger and larger vessels into service – these are ships that they ordered some years ago – but at the same time world trade has slumped and international freight volumes have gone through the floor.

“With such an imbalance between supply and demand the whole industry has become chaotic, as lines attempt to balance volume and traffic. The lines try to force rates up with varying degrees of success but market forces prevail, usually with one of the lines giving way, others following and the rates starting to dive again. For a company like CB Imports, this means that there are large amounts of money to be gained or lost, depending

on whether the correct freight buying decisions can be made. Having a strategic view of what is happening in the short, medium and long term is vital to their bottom line.”

Steve Wood is therefore only too glad of John’s freight expertise: “John keeps an eye on our freight rates and compares them to those he sees in the market, just to confirm that we are getting best value for money. This is not as straightforward as it sounds, because ancillary charges can make all the difference. It is the end-to-end cost that is important, not the headline rate that we are paying for the seafreight element of the journey.

“The difference between buying well and buying poorly can easily run into six figures”

“In addition, from time to time, we receive unsolicited offers on freight that appear to offer market-beating rates. I always ask John to take a forensic look at these. I have to say, nine times out of ten, they are too good to be true. A vital service element may be missing; there may be currency or payment terms issues. We trust John to give us the bottom line.”

However, the ongoing Expense Reduction Analysts service that CB Imports value most is their strategic view of the market, an analysis of what will happen in the future which enables CB Imports to plan their Import Freight buying with intelligence and confidence.

“John is quite simply our expert on international freight. this is a crucial area of expenditure for our business – the difference between buying well and buying poorly can easily run into six figures – and we do not take a major decision on our international freight without consulting or referring to John’s knowledge.”

Steve Wood summarises the value of this service:

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EXPERT NEWS - Sean Bingham

Smarter spending tips for your FleetWith the next 12 months predicted to

be as tough or tougher than the last, now is the time to integrate effective procurement into strategic business

planning, to aid your chances of success or survival.

There are a whole host of challenges to deal with, including HMRC business mileage audits, duty of care and rising fuel costs challenges. In addition, we will have to cope with the upcoming CO2 legislation, which adds another level of pressure and complexity.

Expense Reduction Analysts’ top tips for Fleet aim to provide business fleets with a basis for tackling key procurement challenges over the following months:

Smarter Spending top tips

• CO2 emissions legislation – this comes into force in April 2013 for writing down allowances and lease restrictions. Every company car over 130g/km CO2 emissions will face a restriction on the amount that can be written down for tax purposes. Regardless of whether you buy or lease your company cars, this will affect their overall cost. In addition, the financial element of contract hire leases will have a restriction on how much can be offset against corporation tax.Top tip – ensure you amend your car choice policy and set a maximum CO2 emission of 130g/km.

• Business mileage – HMRC has been auditing business mileage claims procedures to ensure they are robust and not open to inflated claims. HMRC is actively looking at business organisations and, if the private/business mileage split recorded by your drivers is more than 40/60, then you are at risk of an audit by HMRC.Top tip – ensure that your mileage recording procedures are robust and accurately audited.

• Fuel costs – fuel prices have increased by approximately 38% since January 2010 and this trend

is set to continue. Unit costs per litre are heavily influenced by duty tax and VAT so concentrating on behaviour management of your drivers will have the biggest impact on cost.Top tip – ensure refuelling at supermarkets and ban the purchasing of high octane fuels.

• Duty of care – it is believed that as many as one in three road fatalities/serious injuries each year involve business mileage journeys. While there is no legislative requirement for business to report at work driving incidents, it is believed that responsible employers should adopt vigorous procedures to record such incidents as ‘RIDDOR’.Top tip – consider adopting a post-incident reporting mechanism including a one-to-one interview with the driver.

Over the last 12 months, Expense Reduction Analysts’ team of business fleet consultants has found that the majority of the businesses they have dealt with had implemented cost-cutting measures in response to rising costs across their supply chain.

Business fleets have just faced one of the toughest

periods in recent memory, but what concerns us is that many organisations are not fully prepared for the following 12 months. For many reasons, relying on traditional cost-cutting measures is just not sufficient, so everyone from the CEO to the fleet manager must recognise the key roles that they and smarter spending strategies can play.

ERA announce “Core Fleet” Offering

ERA Fleet Cost Management are delighted to announce a further development in their overall Fleet offering. Until now ERA FCM has conducted bespoke projects on fleets with a minimum number of 50 vehicles (cars and van up to 3.5t) with an ever increasing number of clients delighted with the savings and benefits achieved . This new “Core Fleet” solution, which is the result of demand for a similar solution for sub 50 fleets clients, is compelling in that it provides a “Corporate Styled” fleet solution for non Corporate sized fleets, and covers the key areas of acquisition, operation and policy – ultimately adding value to your fleet operation irrespective of fleet size.

For more information please visit: www.erafcm.net

EXPERT NEWS - ian Broughton

EXPENSE REducTioN ANAlySTS SucceSS Story

Why packaging costs maybe hurting your bottom line

Improved processes and reduced costs for The John Townsend Trust

For many companies, the thought of reviewing their packaging costs, whether primary or secondary, can seem a daunting process because of the amount of expertise and

knowledge needed to generate a return. However, by ignoring this area of the business, many are failing to capitalise on the significant savings available.

It is very easy to see why: a simple search for ‘cardboard boxes’ reveals choices including single wall boxes, double wall boxes, export boxes, BDCM, Korrvu, Euro Modular, Eco, Palletised Containers and more. This is before even considering sizes, protective padding and so on. Given the vast range of products, sourcing and selecting the correct supplier can have a positive impact on your business.

Packaging can represent a significant proportion of a product’s selling price. For example, it is estimated

The John Townsend Trust charity was founded in London in 1792. Since 1863, the trust has been based in Kent and today incorporates The Royal School for Deaf Children Margate and Westgate College for Deaf People. The trust provides education, therapy, medical support and independence training for young deaf people with additional needs.

After an initial meeting with Robert Stearn, Business Development Manager and the introduction of David Keating as Client Relationship Manager, John Fearon, Finance Director engaged Expense Reduction Analysts (ERA) to assist The John Townsend Trust in achieving effective procurement by increasing the level of value they receive from their suppliers.

“Initially, we were a little sceptical at ERA’s claims as we didn’t realise there was quite the volume of savings available, but we took the view point that we couldn’t lose and it’d be a worthwhile exercise. We are extremely pleased with the results uncovered by the experts.” John Fearon, Finance Director, The John Townsend Trust.

Expert in Food supplies, Andy MacDonald was enlisted to conduct a review of the trust’s arrangements for food at The Royal School for Deaf Children. As the school has boarding facilities for many of the students, Andy recognised that the site required a variety of foods to provide a balanced diet for the children. Andy conducted a review of the school’s purchasing and found it was sourcing its food from a number of different suppliers. One of the main suppliers was only able to make deliveries a few times a week, which was not ideal as preparing food that is fresh and nutritious is of great importance to the school.

The client is so impressed with Andy’s success in the school’s food procurement that he has been asked to visit the school’s agricultural site, Monkshill Farm to assess the procurement of animal feed. The farm allows the students to gain valuable work experience in producing high quality, organic produce. In addition, Andy is so confident in the farm’s ability that it could potentially become a proposed supplier to other local clients.

Expert in Office Supplies, Nigel Richards was appointed to review the trust’s expenditure in this category. Nigel collaborated with the existing supplier to correct the trust’s cost levels and achieved a significant saving. Nigel’s aim was not to simply source the cheapest option but work with the trust and the supplier to ensure that the client’s needs for quality and service were absolutely met.

Nigel also carried out an assessment of the trust’s procurement of Janitorial supplies and found that the client had a number of different suppliers, and that different members of staff were managing the purchasing of different items.

Nigel and the client worked together to create a core list of products and quickly identified that one of the incumbent suppliers that was only fulfilling a small percentage of the trust’s supplies, was able to provide all of the required janitorial requirements at a price that was more cost effective than ordering an assortment of products from many different suppliers.

that in some industries, the packaging cost of some products can be as high as 40% of a product’s selling price. Smart packaging decisions can lead to a healthier bottom line.

There are significant savings that can be made, and below are just a couple of examples how:

TechnologyTechnology has played a considerable part in the innovation of packaging solutions, whether that is in environmentally friendly pallets, in the increase in recycled materials being used within the packaging products themselves or in protective packaging options available instead of bubble wrap.

In one scenario, Expense Reduction Analysts identified that there were high levels of purchased products being returned as they were damaged in delivery.

A new innovative solution was sourced, tested and implemented with the client’s approval, and the level of returns has dropped to almost zero. In addition to the money that the client saved through reduced warranty claims, there has been a vast improvement in client satisfaction as a result of the reduced number of products being damaged in delivery.

AuditingIn many scenarios, effective auditing can generate significant savings. This can include ensuring that the right packaging products are being purchased for the job they are intended to do, checking that the correct products have been delivered through the use of specialist machinery, and then following up with the supplier over any discrepancies.

A typical example may be where shrink wrap has been purchased from a supplier, which may be over specified for its intended use, checking the shrink wrap itself to ensure that what has been delivered is what is on the invoice and what has been paid for.

These are just two areas where Expense Reduction Analysts has helped our clients with smarter spending of packaging products, thereby adding value to the bottom line whilst streamlining processes without the need to employ additional internal resources.

Primary Packagingcustomer Facing Packaging, carrier Bags, Presentation Boxes

Secondary Packagingcardboard/corrugated Boxes, Labels, Bubble/Shrink Wrap, Polythene ProductsStrapping, Pallets, airbags, adhesive tapes, Bottles, Drums and many more.

Packaging Examples:

Category Annual Saving Office Supplies 19%Janitorial Supplies 28%Food 19%

Upcoming projectsFixed communicationsutilitiesFacilities management

Table of Savings: