insiDe tHis issue mailing surchargesBruce murray explains how to avoid extra costs

a Glowing report from celotexDetailed analysis result in significant savings

Big Bang for BucksGMK Ltd, formerly known as Gunmark,

is the UK’s leading shooting sports distributor and has been trading since 1971. GMK Ltd exclusively represents

many well known brands for shooting apparel and also provide guns and shooting equipment to the UK Law Enforcement and Ministry of Defence.

GMK Ltd engaged Expense Reduction Analysts in September, 2009. Consultant, Danny Rogers met with Paul Charleston, GMK Ltd’s Warehouse Manager to discuss areas of the company where procurement could be improved and savings could be achieved.

Danny enlisted the assistance of his colleague, Charles Reid, to analyse GMK Ltd’s expenditure on distribution. This category was not straightforward as firearms and ammunition are a specialist category; therefore there are a limited number of parcel carriers

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PROFIT NEWS

that are legally allowed to carry them. GMK Ltd had two suppliers in place, one which carried ammunition and another for the distribution of guns and other shooting paraphernalia.

Charles worked with the suppliers to streamline the dispatch process with one carrier to take all goods excluding ammunition, where the contract with the incumbent supplier was maintained. This uncovered a saving of 19.5% and a significant reduction of time in the warehouse, with much fewer invoices to process.

Significant savings

Speaking of this project, Charles said: “Initially, this was a tricky implementation due to the sensitive cargo, but with patience and bringing the correct contacts into play from the supplier, good service levels and a significant saving was achieved.”

EXPENSE REducTioN ANAlySTS success story

Merchant card fees

Consultant, Paul Davidson, was brought in to review GMK Ltd’s spends on merchant card fees. The company had numerous accounts provided by 2 different suppliers; Paul recommended simplifying this process by consolidating all of their accounts to a single supplier. This uncovered an annual saving of 21.4% and an improved service for GMK Ltd as it allowed them to manage only one bank for each of their different accounts. The chosen supplier also provides a dedicated Relationship Manager to handle GMK Ltd’s accounts, meaning they won’t have to call bothersome help lines if they incur an issue which is an additional improvement.

Lyn Emery, Purchase Ledger Administrator said: “I was initially nervous as I thought rearranging our

accounts would be complicated and time consuming, but Expense Reduction Analysts made sure it was a straightforward process. It was reassuring to have an expert there to assist and ensure it all ran smoothly. Expense Reduction Analysts were able to secure a significant saving in GMK Ltd’s spends on marketing print. GMK Ltd were pleased with the service they were receiving with the print supplier they had in place; whilst maintaining the relationship between GMK Ltd and the supplier, Danny was able to secure a saving of 20% by working with the incumbent supplier to renegotiate GMK Ltd’s contract at a lower price.

Danny appointed Brian Holmes, expert in telecoms, to review GMK Ltd’s spends on their fixed telecoms. Brian identified a new supplier that was able to offer a better service for less than GMK Ltd were paying. This resulted in a saving of 17.1% and an improved visibility of GMK Ltd’s international calls.

Speaking of this partnership, Danny said:“GMK Ltd is an unusual type of client for us. As theirproducts are of a sensitive nature, there were manychallenges with risk and legalities, especially in the areas where we implemented new suppliers, but overcoming these obstacles was rewarding. Our projects for GMK Ltd delivered fantastic results, not only were we able to uncover significant savings, but also add value to their procurement – resolving issues they were encountering and improving the servicethey were receiving.”

Significant savings and procurement improvements for GMK Ltd

Category Saving(%)

Distribution 19.5%

merchant card fees 21.4%

Print 20.0%

telecomms 17.1%

Table of Savings

“The analysts definitely proved their expert status across all of the categories they reviewed for us, their knowledge was invaluable and they required minimal input from us. they were conscientious in their approach when dealing with our stakeholders which was important to us and our reputable brand. aside from uncovering significant savings and improving our processes, each ofthe consultants was a pleasure to work with.”oskar Wakare, Financial Director of GmK

EXPERT NEWS - Bruce murray

Watch out for those mailing surcharges

Recently Royal Mail has outlined a series of proposals which it hopes will quell the print industry backlash over its sudden increase in

reversion charges.

The company had come under fire after doubling the number of staff in its revenue protection facilities and stepping up the policing of its specifications, which led to a dramatic rise in the number of mailing envelopes found to be faulty and printers and mailing houses facing surcharges of up to six figures.

Following the subsequent furore, Royal Mail introduced a three-month grace period on sealing issues in June and pledged to refund 90% of surcharges dating from March 2012 following intervention from the DMA and the Strategic Mailing Partnership.

Royal Mail’s proposals, which it presented at a DMA summit in July, include publishing on its website a league table of the most common faults together with advice on how they can be avoided.

It also proposes to introduce a system of proportionality whereby surcharges will be based on low volumes, medium volumes or high volumes of mail that have failed to meet the relevant product specification. It believes that this will ensure customers see a surcharge more comparable with the scale and impact of not meeting the specification.

Sealing surcharges

Royal Mail plans to adopt a phased approach to the reimplementation of sealing surcharges after the grace period ends on the 15th September, which will start at an additional 20% surcharge on the mail and increase to 50% by November. From January all mail that fails to meet the new sealing specification will be surcharged.

Finally, the company pledged to review its bulk mail specifications to ensure they remain appropriate and to introduce minor changes to its envelope sealing

requirements for DL and above sizes that are presented in trays to allow for 35mm of unsealed flap at either end, up from 25mm.

In response to the Royal Mail tightening up their checks of machinable mail against the specification, a number of mailing houses have revised their envelope specification to meet Royal Mail guidelines more explicitly and to help avoid costly mail reversions.

When supplying outer envelopes, or artwork for envelopes for machinable mail, please use the following specification for flap shape and glue areas as a guide.

Where outer envelopes are received outside of this specification, we ask you to confirm with your print/mail partner if these will attract a surcharge or alternatively contact the ERA Print Team for further advise.

royal mail offers three months grace period to get it right.

envelope style: Wallet

minimum envelope size: c6

maximum envelope size: c4

other envelopes: any size that falls between c6 and c4

side to side clearance: 15mm minimum for all envelope sizes

Paper stock: minimum 80gsm, maximum 115gsm

envelope Flap Depth: minimum 40mm

Preferred envelope Design: straight Flap

Envelope Specification

EXPENSE REducTioN ANAlySTS success story

ERA find the right supply solution for Prima Systems

Prima Systems is a family-run business that manufactures, supplies and fits windows for the construction industry and local authorities. They were becoming

increasingly dissatisfied with their energy supplier, so employed the services of specialist procurement advisors, ERA, to orchestrate a reduction in cost, and manage suppliers.

This change resulted in a massive 43% savings - equating to £8,319 - in the first year.

Prima Systems had a general awareness that they were paying too much for their current energy alongside specific grievances including:

• The original supplier did not notify the company of a price increase

• They were hit with a £4000 ‘catch-up’ bill out of the blue

• The supplier failed to notify them of their contact renewal date, automatically binding them to an expensive contract

• Attempts to resolve these grievances were met with an unwillingness to negotiate - although they eventually offered a 40% discount on the catch-up fee, the ‘damage had been done’.

Prima’s Financial Director, Sue Halfpenny, was fed up with her relationship with her incumbent provider but struggled to find the time and resources to embark on the lengthy process of negotiating and transferring supplier.

Calling in the experts

So she called on the services of ERA. Paul Gannon, Client Relationship Manager and Nadim Vanderman, Energy Project Specialist, seamlessly managed Prima System’s move from one electricity provider to another.

Massive savings

Nadim negotiated with the incumbent supplier a contract termination fee of just £1500, and then sourced an alternative provider. The move has resulted in a 43% annual saving of £8,319 after the payment of the termination charge.

Notably, the energy contract has subsequently been reviewed each year by ERA with the objective of keeping costs as low as possible.

EXPERT NEWS - jason aDDerley

Cash flow crunchfor law firms

In its latest quarterly survey, the Law Society’s Law Management Section (LMS) reported a deterioration in law firms cash flow positions. A quarter of firms reported operating within 25%

of their overdraft limit, whilst a sixth of firms were operating within 10% of their overdraft limit on a regular basis.

Some explanation for this can be found in Crowe Clark Whitehill’s Solicitors Benchmarking Survey 2012, which found that the average number of lock-up days has not improved significantly over the past year – with 41% of firms experiencing lock-up in excess of 150 days.

Non-salary overhead costs

Earlier in the year the LMS reported that non-salary overhead costs per fee earner had grown 2.6% year on year, bucking the downward trend seen in the last few years. This may, in part, be explained by the additional COFA and COLP regulatory roles (largely adopted by Finance Partners) diverting resources and attention from the management of costs and suppliers.

These trends represent a challenge for Finance Partners and practice management staff, particularly where modest profits and a poor working capital position can bring pressure from the bank.

Naturally, firms can make efforts to improve their position in a number of ways. It makes sense to deal with foreseeable cash outflows such as bonuses, taxation, VAT and quarterly rental payments by converting work in progress to debtors and then collecting debts promptly.

Cash flow

Proactive cash flow management ought to be a strategic objective for firms, and should have a bearing on the type and mix of work undertaken.

Needless to say, some of the most effective contributions to proactive cash flow management can be derived from reviewing costs and processes to ensure sustained best value, and exploring outsourcing opportunities.

EXPENSE REducTioN ANAlySTS success story

Delivering savings and improvements in Logistics for CelotexCelotex is the UK brand leader of PIR

thermal insulation solutions for the building and construction market. With a history of continual product innovation,

technical progression and an unrivalled product and service package spanning over 85 years, Celotex remain the insulation specialist of choice.

As the fastest growing insulation category within the UK, PIR insulation provides the ideal solution for meeting both current and future building regulations and other carbon reduction programmes. PIR insulation delivers high thermal performance allowinghomes and buildings to achieve premium levels of energy efficiency and with some of the thinnest possible solutions.

Thorough review

In 2009, Celotex engaged Steve Rhodes of Expense Reduction Analysts to assist them in reducing costs and improving their procurement systems. Steve Rhodes enlisted the help of his colleague, Ken Rogers of Expense Reduction Analysts’ specialist Logistics Team who conducted a thorough review of Celotex’s expenditure on Logistics. Celotex pride themselves onthe service they provide to their clients such as wholesalers and construction sites;

with products of high demand, the company typically distributes around 60 lorry loads of insulation boards each day. Ken undertook a detailed assessment of Celotex’s UK Road Distribution and identified that the company would benefit from a more innovative pricing structure than they currently had in place. Using his extensive market knowledge, Ken workedwith the incumbent supplier to restructure the pricing scheme, making it both flexible and more cost effective for Celotex. When addressing Celotex’s operational requirements, Ken negotiated with thesupplier to provide additional loading facilities at no extra cost. These solutions were implemented smoothly by Celotex, resulting in a category saving of 11% and an improved process.

For more information on how Expense Reduction Analysts can assist you in uncovering savings and improving procurement, visit our specialist Logistics website: www.reduce-logistics-costs.co.uk

“We were incredibly impressed with the work of the consultants, who definitely proved their expert status. although the project required an investment of our time, it was certainly worth the results. Having previously made internal efforts to improve our procurement, we found that the category knowledge and extensive buying power of expense reduction analysts was of great assistance in delivering savings. as well as achieving a significant saving in our logistic spends, we now have an easier and consolidated supply chain which is of real value to our organisation.”

Mark Goddard Financial Director of celotexspeaking of the work Ken carried out in this category said:

EXPERT NEWS - laurence Knott

EXPERT NEWS - Paul Giness

“For what it’s worth - the importance of valuations”

Property News, an online magazine providing property news, features and comment across the South, South West & Wales and the Midlands requested ERA’s senior consultant

and lead property expert, Paul Giness to share his advice for businesses on the importance of property valuations.

Background

Paul is a chartered surveyor with 20 years’ experience in the property industry, he began his career with a national firm of chartered surveyors, specialising in business rates - an area that has developed into his core expertise.

Paul’s feature offered readers an insight into the challenges of the current system of rating valuations, government proposed solutions including the small

business rates relief and Enterprise Zones, future factors that will affect a property’s value such as energy efficiency and the green credentials of a building.

“Future factors may be a little speculative at this point; but it demonstrates a very tangible point: a financial director can really benefit from keeping a close eye on factors that will dictate property value in the future and getting wise to incentives, which could help them work around an inflexible ratings system.

“In many ways rental values and the business rates they dictate can actually be a great yardstick for organisations. Attitudes towards valuations are constantly evolving and, if approached wisely, they can offer businesses useful insights into when and how to invest in property – it just takes some forward thinking.”

oThER PublicATioNS tHat recently FeatureDexPense reDuction analysts exPerts...

Simon Phippen contributed to Direct Commerce magazine’s feature on packaging, entitled “Boxing Clever: is your packaging working for you and your customers?”

The article demonstrated ‘key steps to success’ including factors such as environmental, material costs, protection of goods, security, shipping costs, fulfilment and returns.

Brian Holmes, communications expert with over 25 years of industry experience, provided his insights into in-store retail technology as part of MyCustomer.com’s article, “Are in-store technologies revolutionising customer experience?” on retail customer’s increasing use of smart-phone apps, near

field communications, augmented reality, image recognition and interactive TV. The article explores how retailers are implementing these technologies to deliver a seamless shopping experience to customers.

Paul Seddon, specialist on Higher Education procurement was asked to provide his expert insight on UNI: University News and Insight’s article on the benefits and pitfalls of Higher Education procurement consortiums. Collaborative procurement has been largely successful in the public sector with participation rates in the UK high in terms of both membership of the consortia themselves and the use of the framework agreements which are put in place.

Marketing your business in a recession

You’ve probably heard it many times, ‘the best time to market your business is during a recession’ but how do you actually achieve that when your business isn’t

performing the way it should, which in turn is forcing you to consider reducing your marketing budget due to cash flow constraints? Your competitors are likely to be in the same boat and are probably reducing their marketing spends, so how can you take advantage of the situation? This is a question on the mind of many business owners and marketing professionals right now.

The good news is that much can be done without spending money that you don’t have. There are ways of promoting your business and winning new clients without increasing marketing spend. Many of the tips below are completely free and can be adopted straight away. One of the biggest barriers to success is businesses who do not change their behaviours. We live in times of great economic uncertainty and those businesses that make changes and try new routes to market will see positive outcomes versus those businesses that do not. Try them for yourselves and monitor the results.

Ask for referrals

Referrals are one of the top ways of growing your business. You probably know that you can increase the number of referrals you get, radically increasing your client base, by doing one simple thing – asking for referrals; but are you doing it?

Ask for a testimonial

It’s what clients say about your business that really matters and what you want your future clients to read.

If you have delighted clients that have not committed their delight to print, make sure you interview them for that all important testimonial. Once you have it, ensure your future clients get to read it, so use your web site, social media as well as print to communicate the story.

Survey your clients

As the economy changes, so do the needs of your clients and prospects. This means that even if you surveyed your potential clients in the past and found out what they need, that information is likely to be old news. You may find that your clients now require different services and different information at different price points. Therefore, you may want to survey your target clients to find out what their needs are and how their needs are changing.

Be more creative!

How effective is your current marketing? Do you rely on just one or two routes to market? It’s harder to find clients these days, so now is the time to review your current marketing campaigns and the channels that you use to communicate your messages. Research alternative marketing methods and test them. Are you utilising online social networking for instance? There are some excellent and free tools to get your message across. Do your homework, find out what others are doing and what works for them, then test and review. Use many different routes in order to bring in more buyers to your products and services.

Get personal

How much of your messages are tailored to your prospects? Your future clients are likely to get bombarded by other businesses vying for a slice of the action, so your campaigns really need to stand out. Review your prospect, what’s happening to their business right now, how is their market sector performing? Tailor your communications to their business first; what do they need right now and how can your business help? Do you have clients in the same sector or in their locality? Make sure they are aware. You need to understand your prospect before they understand you.

Laurence Knott - Head of Commercial and Marketing Strategy, UK and IrelandExpense Reduction Analysts

EXPERT NEWS - Brian Holmes

Apple vs SamsungIn a landmark ruling in a U.S. Court, Apple

was awarded $1.05 billion from Samsung over alleged patent infringement on the Galaxy device maker’s part. The jury also found that

Apple did not infringe any patents Samsung brought before the court. It was a major victory for Apple. For its part, Samsung is expected to appeal the case and try to prove that it didn’t do anything wrong. In addition, the company will attempt to keep selling devices that might face a ban on Dec. 6 when the U.S. District Court judge holds a hearing on the matter. Apple is requesting at least eight Samsung devices be banned from sale in the U.S. and inevitably this and future rulings will have a major impact on Samsung globally.

The fallout from this ruling extends far into the technology space and Microsoft is one of the companies most affected by it. The software giant is trying desperately to catch up to Google and Android. With Google’s chief vendor partner getting hit hard by the court ruling, this might be Microsoft’s chance to finally win one.

Good news for Microsoft

According to a recent report from the Korea Times,

Samsung is currently considering increasing its reliance upon Windows Phone after its difficult legal loss to Apple. If that happens, it’s only good news for Microsoft. Granted, Samsung already offers Windows Phone devices, but if the company leaves Android in favour of Microsoft’s operating system, it’s a win-win for the software giant and a major blow to Google.

Now that Apple has won the ruling, there’s a good chance it’ll attack other Android vendors, and those vendors know it. So it wouldn’t be all that surprising if they run to Windows Phone to protect themselves.

Perception

From the consumer standpoint, Apple can be viewed as a bully and Android vendors might appear to be copycats. Microsoft, meanwhile, is sitting on the sidelines and out of the headlines.

So far, Apple hasn’t gone after Microsoft or Windows Phone. That’s likely to be because Microsoft has such a deep patent portfolio that targeting the company wouldn’t make much sense. As long as that continues, Microsoft can do what it wants and watch Google worry.

EXPENSE REducTioN ANAlySTS neWs

Mobile Site LaunchedERA has launched a mobile version of their

website aimed at providing all of the latest procurement news whilst on the move.

“We have used the latest technology and development techniques, which has meant that anyone can view the website regardless of what device they are using.” comments Chris Aston, Marketing Director, ERA.

“Our mobile friendly website still features all of the latest news, comments and delighted clients that everyone has come to trust of us as specialist procurement advisors, but with the functionality that is required of mobile devices.” Chris continued.

To view the mobile site for yourself, point your phone to www.expense-reduction.co.uk

EXPERT NEWS - manoj PaBari

Update on the industrialgases market

Manoj Pabari, ERA associate and expert chemistry and pharmaceuticals advises that there is a lot of overpricing in this market, not because customers are not

keeping an eye on this cost area, but because this cost area by it’s nature is a very difficult area to keep on top of. Furthermore, customers are often in a difficult position of not being able to directly negotiate with suppliers as they are very frequently committed to supplier agreements.

Manoj’s work not only enables clients to lower costs without affecting the service levels or product quality, but also to ensure that their indirect costs are minimised, as most clients are often unaware that various service enhancements are available to them.

1. The industrial gases marketplace periodically experiences gas shortages thus the prices for various

gases can increase considerably for customers year on year. Under these circumstances, it is normally difficult for individual companies to know what the correct price to pay is. A significant example of a current worldwide shortage is helium. Not only has the price increased for helium, but suppliers are having to ration their existing customers, often prioritising them by industry such as manufacturing, research, recreational uses.

When there is significant shortage of a given gas type, suppliers are reluctant to take on new customers, which has recently been the case for helium gas due to the shutdown of key market producers in countries such as the USA and Australia.

It is not expected that this shortage will last forever, but suppliers remain cautious about the immediate availability.

EXPENSE REducTioN ANAlySTS success story

ERA–Leading the way to economic recovery in Ireland

You can’t fail to read the gloom and doom that surrounds the Irish economy which remains deep in crisis, with no sign of an immediate turnaround as the European

Union enters recession. Cash constrained business owners continue to look for ways of injecting profit back into their books as every possible area of fat has already been trimmed to the bone, or has it?

More businesses turn to ERA Ireland

Expense Reduction Analysts Ireland was formed in 2009, adopting the tried and tested cost management solutions that ERA UK has been using to reduce the cost of doing business for over 20 years. In just a short period of time, ERA Ireland has many well-known and not so well known businesses on their books and currently has over 25 million Euros of client spend under review. Moreover, a year-on-year growth figure of 46% is set to rise, as more and more businesses turn to ERA Ireland for help, as their effective self-funding cost management successes are talked about.

Neil Copland, Director of ERA Ireland commented; “We are committed to reduce financial waste of medium to large businesses in Ireland. We are proud of our successes to date; however, there is still much

work to do. Many businesses are simply not aware of what ERA Ireland can achieve and our experiences show that our clients are delighted with the results. We handle everything for our clients so they can continue to focus on their core business activities. Adding value and profit back into the bottom line is only part of the story, it’s how we manage our client’s on-going business costs. It’s all about savings today, tomorrow and into the future.”

Experts at achieving savings

Current client Whale Pumps, who manufactures valves, pumps and plumbing systems for use in mobile and low voltage environments, have been in existence for over 200 years, engaged ERA Ireland back in 2009. Wesley Hanson, Finance Director, Whale Pumps stated; “ERA Ireland have been excellent to work with; they are experts at achieving savings whilst keeping a close eye on what else is important to the business. They have found economies that we could not have discovered on our own, and they have always been sensitive to our long-established supplier relationships and I look forward to working with them in the long term”.Visit ERA Ireland’s website:www.expense-reduction.ie