Printing, packaging and posting Savings to be made

6SDUNOLQJ�SUR¿WV�IRU�)�+LQGV Advice worth its weight in gold

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PROFIT NEWS

EXPENSE REDUCTION ANALYSTS SUCCESS STORY

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Par for the course

The TaylorMade brand was created 30 years ago with a single, innovative product: a 12-degree driver cast of stainless steel.

TaylorMade pioneered the metalwood, an alternative to persimmon that was so easy to hit that amateurs avidly embraced it and tour professionals couldn’t ignore it. Today, TaylorMade engineer golf FOXEV�WKDW�PHHW�WKH�VSHFL¿F�QHHGV�RI�DOO�W\SHV�RI�golfers, from tour-calibre players to skilled players to players who want every game-improvement technology available.

TaylorMade-Adidas Golf Company engaged the services of Expense Reduction Analysts in Spring, 2009. Tom Smith, then Finance Manager at TaylorMade explained “We were looking to reduce our costs but didn’t really have the personnel or the budget to review our non-core overheads. The Expense Reduction Analysts approach to Cost, Purchase and Supplier management, explored with us by Andrew Robertson, was really attractive and in particular with the fees being funded from savings, the risk-free element really suited us.

“Since then, Expense Reduction Analysts have undertaken a wide range of projects and it has really been a bit of an eye opener in some areas. The team, led by Tony Catling and comprising Paul Seddon, Sue Cooke, Richard Anson, Ian Morrison, Steve Clamp, Nadim Vanderman and Keith Copestake have brought to us the expected savings together ZLWK�EHQH¿WV�WKDW�ZHUH�ZHOO�DERYH�RXU�H[SHFWDWLRQV�

&RQWURO�DQG�ÀH[LELOLW\

“As their specialists are working in their respective categories on a continuous basis, they have been able to introduce to us new technology and best practice processes of which we were just not aware. They have implemented new and better suppliers and also been able to negotiate better prices and service levels with our incumbent suppliers. What has been particularly impressive is that they KDYH�DOZD\V�JLYHQ�XV�WKH�FRQWURO�DQG�ÀH[LELOLW\�of choosing which options are best suited to our particular circumstances and preferences.”

Dedicated specialists

The specialists worked alongside Tom Smith and his team to achieve savings and service improvements across multiple areas of expenditure, with a dedicated specialist for each category.

Tom added “It is fantastic to get an independent benchmark against our prices to see where we are in the market; but it is not just the introduction of new SULFLQJ�WKDW�KDV�EHHQ�EHQH¿FLDO�IRU�7D\ORU0DGH��Expense Reduction Analysts has managed the suppliers, their prices and ourselves as well to ensure the service levels do not drop and their prices still remain competitive throughout their engagement period.”

Tony worked alongside Tom to introduce a stronger ‘cost conscious culture’ within the company.

This concept is based on saving money whilst maintaining the quality of service being received and encourages employees to consider value for

money against the operational requirements of the items they purchase.

7DEOH�RI�6DYLQJV

Category Savings (%)

Contract Cleaning 22%(OHFWULFLW\� ��(QJLQHHULQJ�&RQVXPDEOHV� ���)DFLOLWLHV�0DLQWHQDQFH� ���*DV� ��0DUNHWLQJ�3ULQW��,QFO��)XO¿OPHQW�� ���3DFNDJLQJ���%R[HV�DQG�&DUWRQV� ���6HFXULW\� ��6WDWLRQHU\�DQG�%XVLQHVV�3ULQW� ���7UDYHO���7D[L�7UDQVIHUV� ��Total 23%

([SHQVH�5HGXFWLRQ�$QDO\VWV�DQG�7D\ORU0DGH�$GLGDV�*ROI�&RPSDQ\�H[SORUH� WHQ�GLIIHUHQW�FDWHJRULHV�WR�XQFRYHU�VLJQL¿FDQW�VDYLQJV

EXPERT NEWS - SIMON PERKINS

Top tips for Internet retailers on reducing courier costsEach 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 the

customer and making sure it is received on-time and in good condition can be frustrating, presenting a whole new set of challenges.

Below are some simple tips on how to choose the right carrier for your online retail business model:

�� 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.

�� Watch out for carrier surcharges. Some carriers surcharge for home deliveries, some do not but recover additional costs by charging in full again for redelivery knowing that 40-50% of 1st attempt residential deliveries fail.

�� If your customer is not in to receive their delivery they may have received a delivery attempt note from the carrier. They are then often expected to collect from the local depot. Think about how far this may be and the inconvenience experienced. Some carriers offer pick up at \RXU�ORFDO�3RVW�RI¿FH�ZKLFK�FDQ�SURYH�PRUH�FRQYHQLHQW�RU�HYHQ�HYHQLQJ�delivery options.

�� Think beyond the price and more about how the carrier can add value to your business especially in technological solutions. For example, think about using a carrier that can offer integrated tracking from your website. Why divert them away to the carrier’s website?

�� Look at consolidated multi-carrier solutions. This way you can select a carrier from a number of different options based on the most appropriate for your customer’s requirements. You can also take advantage of rate FRQWUDFWV�EDVHG�RQ�WKH�ODUJHU�EX\LQJ�SUR¿OHV�RI�WKH�FRQVROLGDWHG�PXOWL�carrier solution providers.

�� 'DPDJHV�FDQ�RFFXU�HYHQ�ZKHQ�VXI¿FLHQW�SDFNDJLQJ�KDV�EHHQ�XVHG��Scrutinise the carrier’s compensation terms for these instances.

�� Internet sales attract customers worldwide. This has additional challenges that only a limited number of carriers can address cost effectively.

�� Ultimately, save time and money by speaking to the experts at Expense Reduction Analysts.

EXPENSE REDUCTION ANALYSTS SUCCESS STORY

6SDUNOLQJ�SUR¿WV for F Hinds

Paul Wheatley initially met with F Hinds’ Director Neil Hinds and as a result, Neil engaged

Expense Reduction Analysts to review the company’s expenditure on stationery where an average saving of 19% was achieved. Neil was very impressed and invited Paul to look at a further four cost areas: mobile communications, couriers, packaging and printing.

Due to the range of expenditures F Hinds wanted Expense Reduction Analysts to review, Paul invited a number of colleagues to form a project team to conduct the series of analyses, drawing upon Expense Reduction Analysts’ array of specialist knowledge.

The team turned their attention to a packaging review which resulted in SUR¿WV�RQ�ERWK�JHQHUDO�SDFNDJLQJ�DQG�VSHFL¿FDOO\�RQ�MHZHOOHU\�ER[HV��7KHLU�analysis of plastic bags revealed that F Hinds were already achieving best value in this area so he was able to give the good news to Group Accountant, Steve Cornwall. Steve, who manages F Hinds’ day-to-day relationship with Expense Reduction Analysts, was delighted and commented: “Obviously I am always pleased when Expense 5HGXFWLRQ�$QDO\VWV�UHSRUW�D�SUR¿W�

improvement, but it is also pleasing to UHFHLYH�H[WHUQDO�FRQ¿UPDWLRQ�RI�DQ\�DUHD�where we are already getting the best service at the best price.”

Meanwhile, Expense Reduction Analysts’ Steve Parrott focused upon F Hinds’ use of couriers. He explained: “We focused on one of the incumbent suppliers, providing longer distance national services, and by a combination of negotiating improved tariffs, selection of more appropriate services plus some simple administrative and operational changes; I was able to present a 30% SUR¿W�LPSURYHPHQW�´

Neil Hinds agreed: “Expense Reduction Analysts not only highlighted that a SUR¿W�LPSURYHPHQW�FRXOG�EH�PDGH�XVLQJ�our existing criteria, but also enabled IXUWKHU�SUR¿W�LPSURYHPHQWV�E\�FKDQJLQJ�the way in which we operated with our incumbent.”

EXPERT NEWS - BRIAN HOLMES

Near-Field CommunicationsUsing a credit card to make small value purchases (up to

£15) without needing to enter a PIN (often referred to as ‘tap-and-go’ or ‘wave-and-pay’) is gaining momentum

with a number of High Street retailers installing the new readers. Contactless technology has been creeping on to the High Street since 2007. There are now 23 million contactless credit and debit cards in circulation and almost 100,000 terminals, according to the Payments Council.

Similar technology called Near-Field Communications or ‘NFC’ is available in some new mobile phone handsets and it is predicted that 1 in 5 Smartphones will be NFC enabled by 2014.

New marketing opportunities

But unlike credit cards, NFC devices can receive information 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 coupons. These coupons could be extremely targeted, since the retailer will be able to keep account of what each customers buys and how often. This system is already in place with many loyalty card schemes, but the process could now be streamlined and more focused.

The obvious question about these kinds of payments is the security. There have been concerns that NFC would be

vulnerable to people wandering around with a reader device, making unwanted transactions for anyone who walks past, or that a stolen card wouldn’t even need a matching PIN for the thief to use it.

7KH�¿UVW�RI�WKHVH�VFHQDULRV�LV�FRPEDWHG�SDUWO\�E\�WKH�VKRUW�UDQJH�nature of NFC - you can’t simply scan a room as you could with Wi-Fi, the device is required to effectively touch against the reader to make payment. However, there are adequate methods designed to combat the second concern above, including a £15 transaction limit which prohibits a thief from emptying a bank 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 have acted with reasonable care.

A lower loss rate

According to the credit card industry, the loss rate is going to be much lower with NFC than credit cards. Currently, if a credit card is lost, the customer is not liable because of the business rules around it, but somebody could still make transactions either XQGHU�WKH�����OLPLW�RU�LQ�RIÀLQH�WHUPLQDOV�DQG�WKH�EDQN�KDV�WR�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 instantly, giving the customer double protection on a phone with a payment application on it.

Printed material

and POS

³([SHQVH�5HGXFWLRQ�$QDO\VWV¶�SURIHVVLRQDO�VHUYLFH�KDV�KHOSHG�VHFXUH�VLJQL¿FDQW�SUR¿WV�ZLWKLQ�RXU�EXVLQHVV�DQG�ZH�DUH�continuing to work with them to reveal IXUWKHU�DUHDV�ZKHUH�ZH�FDQ�LPSURYH�SUR¿W�´

)�+LQGV�3UR¿OH)�+LQGV�ZDV�HVWDEOLVKHG�����\HDUV�DJR�DQG�LV�QRZ�WKH�8.¶V�OHDGLQJ�LQGHSHQGHQW�MHZHOOHU��,W�LV�D�IDPLO\�RZQHG�DQG�UXQ�EXVLQHVV�ZKLFK�SURYLGHV�D�IULHQGO\�DQG�SURIHVVLRQDO�VHUYLFH�WR�LWV�FXVWRPHUV�WKURXJK�LWV������EUDQFKHV�DFURVV�(QJODQG�DQG�:DOHV�

7DEOH�RI�6DYLQJVCategory Saving (%)

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EXPERT NEWS - IAN BROUGHTON

Think about your packaging costsAny company that manufactures, packs or distributes products of any type

will use packaging in some form or other, regardless of their industry or activity.

The different areas of packaging include Primary and Secondary. Primary packaging is products which are customer-facing such as carrier bags, presentation boxes, wrappings and pouches. The other type, Secondary, is known as the transit/protective of products sector. Examples of this include corrugated cases, pallets, VWUHWFK�ZUDS��VKULQN�¿OP�DQG�EXEEOH�ZUDS��*HQHUDOO\�WKLV�W\SH�RI�SDFNDJLQJ�LV�QRW�customer-facing.

ERA work with clients to add value to their packaging procurement processes in several different ways, for example:

1. Reduction of unit price via the traditional tender process. We can work with your incumbent supplier to increase the level of value you are receiving, or source an alternative supplier that can provide an equivalent or increased level of service at a lower cost.

2. Assessment of purchasing habits.�:H�RIWHQ�¿QG�WKDW�PDQ\�FRPSDQLHV�ZLOO�KDYH�RYHU�VSHFL¿HG�SURGXFWV�DQG�DUH�WKHUHIRUH�EX\LQJ�PRUH�SURGXFWV�IRU�WKHLU�requirements than they actually need.

3. Change in method of packing. Does the product really need to be shrink-wrapped and transported in a corrugated case? This is an often unnecessary cost.

4. New technology. For example, replacing wooden pallets with plastic pallets has SURYHQ�WR�EHQH¿W�FOLHQWV�ZKHUH�VWRUDJH�VSDFH�LV�DQ�LVVXH�

5. ,QFUHDVH�LQ�HI¿FLHQF\� For example, the use of polypropylene tapes rather than PVC as release is much quicker.

ERA commonly achieve an average saving of 15% on packaging projects for their clients. Examples of results achieved include a corrugated packaging project for a manufacturer in the motor industry resulted in savings of 55.1% and a label project for a large company in the food industry generated savings of 44.6%.

Comments from a recent project where the ERA packaging team managed to uncover annual savings of 39% on packaging has been not only well received but completely surpassed the client’s expectations. The client was delighted with the process improvements implemented and the supplier management in place.

“Having been with the same supplier for 25 years, and receiving assurances that ZH�ZHUH�JHWWLQJ�JUHDW�SULFHV��,�UHDOO\�GLG�QRW�WKLQN�(5$�ZRXOG�¿QG�DQ\WKLQJ�IRU�us or if they did, it would be marginal. The result of 39% is amazing and really demonstrates the value that ERA brings.” Managing Director.

“I was extremely impressed with the level of detail that was provided through the process. Some of the suggestions that the consultants made which we have adopted, we would not have found ourselves.” Director Operations.

“I was apprehensive about the move to the new supplier and the impact on our operations. ERA Packaging Expert, Ian Broughton, worked with

us and the supplier to ensure that there was no disruption, and the reporting and account management

structure in place is such an improvement on what we did before. We should have done this years ago.”

Plant Manager.

EXPENSE REDUCTION ANALYSTS SUCCESS STORY

When David Langston, Expense Reduction Analysts consultant, originally went

to see Julian Chiverton, a Director at Doughty Engineering Limited, there was some scepticism that David ZRXOG�¿QG�DQ\�VDYLQJV��+RZHYHU��with Expense Reduction Analysts’ no-win no-fee guarantee, Julian felt he didn’t have anything to lose. In order to compete with overseas markets, Julian had already looked internally at cost reduction but Expense Reduction $QDO\VWV�VXUSULVHG�KLP�E\�¿QGLQJ�savings, even in those areas.

“The company’s performance is continually growing and therefore additional savings to reinvest into the company’s production facility will help in the continual improvements.” Julian comments.

'DYLG�¿UVWO\�LQWURGXFHG�&KDUOHV�5HLG�WR�Doughty Engineering to review Freight and Courier costs. With Charles’s analysis he found 23% average savings. Julian was delighted with this and wanted Insurance reviewed, for which David brought in Chris Coomber, part of Expense Reduction Analysts’ Insurance Cost Management team who specialize in this category.

Healthy respect for safety

An extensive review of the insurance market was undertaken on behalf of Doughty Engineering. One of the attractive features of Doughty’s risk was their strong adherence to health DQG�VDIHW\��7KLV�ZDV�UHÀHFWHG�LQ�WKH�premiums achieved in the market and whilst Expense Reduction Analysts Insurance Cost Management were not able to present a saving, they were able to demonstrate Doughty’s programme was correctly positioned in the market and subsequently there was no charge for the service.

Further categories were also to be reviewed so David contacted other Expense Reduction Analysts’ experts to VKDUH�WKHLU�H[SHUWLVH�LQ�YDU\LQJ�¿HOGV��Sue Cooke undertook a review of Packaging, whilst Engineering Supplies were scrutinised by Ian Morrison.

A daunting prospect

Initially, Julian did not want to change any of the incumbent suppliers. Having to change supplier and re-introduce the company and their level of quality service to a new supplier was considered a daunting prospect as well as the time wasted by ensuring the long term service quality.

However on one project another supplier tendered substantially more savings than the incumbent supplier and in the knowledge that Expense Reduction Analysts ensure a smooth change over, with audits throughout the contract period for service quality, Julian decided to make a switch.

Julian continues, “Initially, with one project there were some concerns with the service level, but these were addressed by Expense Reduction Analysts and now the savings justify the initial and short-lived pain.”

“Overall the experience of Expense Reduction Analysts has helped in many ways. We have learnt not to become complacent about supplier relations, as well as keeping the employees ‘on their toes’ and ‘more aware’ of costs. We have also had an improvement in

communication with our service providers.” Julian says.

³/RRNLQJ�WR�WKH�IXWXUH�ZH�ZLOO�GH¿QLWHO\�involve the services of Expense Reduction Analysts. Working in partnership with Expense Reduction Analysts over the last twenty months has saved us an average of 20% on the categories they have reviewed. Currently they are reviewing our Aluminium and Stainless Steel and Electricity costs.” Julian concludes.

EXPERT NEWS - HARTLEY JENKINSON

Printed material

and POS

While many retailers are actively pursuing their online strategy - impacting all functions and their communication requirements - the printed message remains an important tool when communicating with both staff

and customers.Printed material will be used across various departments:�� Human Resources may want to display a new Health & Safety notice in all

stores�� Operations may want to change the information printed on the till rolls�� IT may want to display the new IT security policy in all staff areas�� Marketing may want to promote the new product range in store�� Sales may want to publicise the new promotional offers to customersIt’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 are written and suppliers are selected consistently? It is possible that print is sourced from many suppliers, meaning that the expenditure is not managed effectively. 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:

� Get the right printer for the job. Just because the printer accepts an order, it doesn’t mean they have the best equipment to produce the material.

� Choose a supplier who can offer advice to allow you to reach your objectives in a cost effective manner.

� Ask the printer to hold stocks on your behalf and call them off only when you need them.

� &RQVLGHU�WKH�HI¿FLHQF\�RI�UDWH�JDLQV�RQ�ORQJHU�SULQW�UXQV�YV��WKH�FRVWV�RI�VWRULQJ�higher stock levels.

� Review your range of printed material. Can you streamline the range, generating YROXPH�HI¿FLHQFLHV�ZKLOVW�LPSURYLQJ�FRPSOLDQFH�DQG�EUDQG�IRFXV"

� Use templates; don’t create new artwork for every job.

� Avoid content that will date the publication so that it can be used for longer, avoiding additional artwork for replacement material.

� Review internal processes to plan print projects more strategically. &RQVLGHU�VWUDWHJLF�FKDQJHV�VXFK�DV�RI¿FH�DGGUHVV�FKDQJHV�RU�UHEUDQGLQJ�ZKHQ�ordering print.

Impressive savings for Doughty Engineering

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Category Saving (%)

Couriers ��,QWHUQDWLRQDO� �����'RPHVWLF� ���'LVWULEXWLRQ���,QWHUQDWLRQDO�)UHLJKW� ����+DXODJH� ���(QJLQHHULQJ�6XSSOLHV���&RPSRQHQWV��)L[LQJV�� �����&RQVXPDEOHV� ��Packaging ��&DUWRQV�&RQVXPDEOHV� ���8WLOLWLHV���*DV� ���

Total Average Savings 20%

³,�ZDV�YHU\�SOHDVHG�ZLWK�WKH�VDYLQJV�([SHQVH�5HGXFWLRQ�$QDO\VWV�KDYH�EHHQ�able to achieve, without compromising on TXDOLW\�RU�VHUYLFH�WR�RXU�VXSSO\��,�ZRXOG�QRW�KHVLWDWH�WR�UHFRPPHQG�RU�XVH�WKHP�IRU�IXWXUH�FRVW�VDYLQJ�SURMHFWV´�

Julian Chiverton, Director, Doughty Engineering

'RXJKW\�(QJLQHHULQJ�/WG�EHJDQ�WKH�PDQXIDFWXUH�RI�SURGXFWV�IRU�WKH�OHLVXUH�LQGXVWU\�LQ�������DQG�DUH�QRZ�RQH�RI�WKH�ZRUOG¶V�OHDGLQJ�PDQXIDFWXUHUV�RI�ULJJLQJ��VXVSHQVLRQ�DQG�OLIWLQJ�HTXLSPHQW�IRU�¿OP�79��WKHDWUH�DQG�FRQFHUW�KDOOV�

EXPERT NEWS - MICHAEL HULLY

Reducing the cost of IT hardwareThe cost of IT equipment (such as

laptops, desktops and tablets) to RUJDQLVDWLRQV�FDQ�EH�D�VLJQL¿FDQW�

part of the IT budget, but there are effective approaches that can reduce this.

The challenge for the business is to satisfy the needs and aspirations of users whilst minimising the cost of these devices. Keeping everyone happy is a challenge; with technologies changing rapidly and people becoming more technically aware, nearly everyone will have a view on what they should have.

Setting a policy

Firstly it is important to have a clear ,7�SROLF\�WKDW�FOHDUO\�GH¿QHV�LI�WKH�workstation is a workplace tool, for ZKLFK�WKH�VSHFL¿FDWLRQ�LV�GHWHUPLQHG�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 needs to service the individual in both a work and personal context.

If the policy is that a workstation is purely a workplace tool then there is an opportunity for standardisation and with standardisation comes the opportunity to drive down total cost of ownership: both the initial procurement cost and the on-going support and management costs.

Procure effectively

Workstations are low-margin, high-volume products that are constantly changing. Each day brings a new cut price deal, typically equipment where one or more components are about to be superseded.

Very large businesses are able to use economies of scale to negotiate discounts on new equipment and implement standard makes and models. Without this bargaining power, many companies often choose to grab the best deal or latest VSHFL¿FDWLRQ�DW�D�SDUWLFXODU�SRLQW�LQ�WLPH��This results in a range of workstation VSHFL¿FDWLRQV�ZLWKLQ�WKH�EXVLQHVV�

The downside of this is that greater complexity in the IT environment correlates with higher maintenance and management costs. In addition, a complex PC population can impede the IT department’s ability to deliver routine but critical software testing and deployment services. This can result in a VLJQL¿FDQWO\�JUHDWHU�VHFXULW\�ULVN�

Such organisations now have another choice and that is to leverage the Hardware Procurement Service offered by ERA IT Solutions and Services (ITSS). This service enables clients to get the lower prices, standardisation and lower Total Cost of Ownership achieved by large organisations.

Get the right refresh cycle

Overworking an IT workstation asset is often a false economy. Support costs IRU�GHVNWRS��RI¿FH�DQG�URDG�3&V�DOO�increase directly with the length of intervals. While the primary cost drivers are software failures and help desk calls, the rate of increase varies according to both platform and user types. Previous research shows that for most workplace-based machines, the optimum refresh interval is three years whilst for laptops that are mobile 80% of the time, the optimum refresh interval is two years.

Support costs jump by up to 37% and minor software deployment costs increase by up to 38% as the equipment ages from 3 to 4 years. Help desk calls also become more frequent, consume more time and increase costs. By year 5, the cost of minor software deployments on laptops whose users are on the go 80% of the time increases to over 61% of the total cost.

Committing to a refresh cycle can also help further reduce the initial cost of IT procurement as negotiations can be on a bulk basis. ERA clients who take advantage of the ITSS Hardware Procurement service and commit to the ERA ITSS workstation refresh programme can achieve enhanced savings.

EXPERT NEWS - SUE CARBIN

Secure cash handlingThe supplier base for secure cash handling

in the UK has undergone several changes in recent years. Established players

are growing their business internationally. All suppliers are expanding the range of services offered, with specialists and regional operators now able to offer national coverage.

As the range of services broadens, so does its potential impact on your retail business. For example, using the provider to manage cash processing will reduce workload and the security risk for staff in the stores, as well as producing an independent audit of takings.

Here are some points to consider to ensure you maximise value for money:

�� For coin deliveries, order what you actually need in a particular store, rather than having a standard amount delivered on a regular basis

�� Review the frequency of cash collections for each store – consider having less collections to reduce the weekly cost

�� Offer cashbacks to customers paying by debit card to reduce the amount of cash that is banked

�� Make sure that the contract with your cash in transit provider is appropriate for your needs, both now and going forward, since it is likely to be in place for the next 2 to 3 years

�� Consider using the provider for more than the traditional cash in transit service

The frequency of collections, and the size of the retail network, means that even small differences in collection cost per store will result in potentially VLJQL¿FDQW�RYHUDOO�VDYLQJV�RYHU�D���WR���\HDU�FRQWUDFW�SHULRG�

EXPERT NEWS - ROBERT ALLISON

The current recession is regularly described as one of the worst ¿QDQFLDO�FULVHV�IRU����\HDUV��

)LJXUHV�UHOHDVHG�UHFHQWO\�E\�WKH�2I¿FH�for National Statistics showed that a staggering 4,482 businesses went bust LQ�WKH�¿UVW�TXDUWHU�RI�������WKDW¶V�DURXQG�����D�ZHHN�DQG�WKH�ZRUVW�¿JXUH�VLQFH��������ULJKW�LQ�WKH�PLGVW�RI�WKH�¿QDQFLDO�collapse.

The cost-cutting hype

7KURXJKRXW�WKLV�¿QDQFLDO�FULVLV��WKH�media and governments across Europe have pushed the cost-cutting agenda as the only way out of the current crisis. During that period, I’ve met with many Managing Directors and Financial Directors who felt the only way forward was to cut costs across their business. In most cases they felt that ‘slimming down’ was their only response to the rising costs of logistics, telecommunications, utilities and insurance - all key to the successful day-to-day running of any business.

Fortunately, many of those MDs and FDs hadn’t been completely taken in by the cost-cutting hype, and have understood that simply reducing a few expenses doesn’t guarantee long term survival. The companies now poised to take advantage of the upturn are those that have balanced cost management with a longer-term view of the relationship with their suppliers.

Nowadays every business operates within complex procurement and supply chain ecosystems which are becoming more complex as new initiatives, products, services and supply chains are integrated into the day-to-day running of the enterprise.

While many of these new initiatives add value to the end product, they can add costs into the business. But the complexities of this ecosystem are one of the biggest reasons why the cost-cutting agenda could never work in the long term. This ecosystem needs a strategic approach where businesses can balance many factors (such as reliability of supply, long-term pricing, delivery. etc.) against purely the cost of supply.

In addition, few businesses have people working in their procurement teams that can boast years of procurement and supply chain experience in each and every sector. This lack of experience has meant that regular reviews of costs within the procurement and supply chain processes haven’t been up to the required standard - if they’ve been done at all. This has led to continued rises in supplier costs and ineffective procurement practices.

A change of attitudes

All British business must recognise that one of the keys to long-term success is effective procurement and supply chain management. To ensure a healthy future for British businesses and guarantee more positive statistics in years to come, attitudes towards cost management need to change. Regardless of how innovative our industries may be, it’s a cultural change in the area of cost management that is needed, and it needs to happen now.

British businesses need a cultural change to survive beyond the current recession