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PROFIT NEWS
 inSiDe thiS iSSue                                                     Smarter spending tips for your fleet
 Psychology of procurement                                             Sean Bingham, reveals why now is the time to integrate
 critical procurement barriers are holding back                        effective procurement into strategic business planning.
 uK business growth, reveals white paper.
                                                                       What is your payment strategy?
 Will 4g streamline your business costs?                               the Payments team, consider whether competitive
 Brian holmes, discusses the latest mobile service                     advantage can be gained through alternative payment
 taking the uK market by storm.                                        solutions.




 “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



Critical procurement barriers are
holding back UK business growth
Short-term perspectives and lack of procurement discussions at board level are holding back businesses


B
       usinesses in the UK and Ireland are        Analysts (ERA). The research was carried out among      to business growth strategies. It suggests FDs and        – Ensure effective procurement becomes a part of
       fighting a host of psychological finance   100 Financial Directors (FDs) from companies with       CEOs are struggling to master the balance between         every organisation’s DNA - led from the board room,
       and procurement barriers, according to     revenues between £10 million and £500 million in the    cutting and managing costs to survive today, and          but extending all the way to the shop floor and the
       a recent survey by Expense Reduction       UK and Ireland, to uncover the psychological barriers   investing to grow tomorrow.                               supply chain

                                                                                                          Rob Allison, Managing Director at ERA, explained:         – Ensure that procurement is not an empty seat in the
                                                                                                          ‘Businesses and government have responded to the          board room
                                                                                                          economic downturn by implementing wide-ranging
                                                                                                          cost-cutting initiatives. Unfortunately, while cost       – Ensure all staff adopt a smarter spending
                                                                                                          cutting may work in the short term, it won’t enable       psychology - just because your staff are good at
                                                                                                          them to compete effectively in the long term. And         purchasing core products, it doesn’t mean they will be
                                                                                                          for that reason, we’ve tried to uncover the reasons       good at ‘indirect spend’
                                                                                                          why organisations aren’t approaching procurement
                                                                                                          strategically.’                                           – Ensure performance management is aligned to a
                                                                                                                                                                    smarter spending psychology
                                                                                                          Barriers to Effective Procurement
                                                                                                                                                                    – It’s essential that internal and external reporting
                                                                                                          The report has uncovered a series of barriers that        provides accurate measurements and detailed
                                                                                                          block FDs from implementing effective procurement         business intelligence to allow the FD to provide
                                                                                                          strategies:                                               strategic guidance for future procurement strategies
                                                                                                          • Short-term procurement strategies
                                                                                                          • A lack of procurement understanding at board level      – Conduct regular evaluations of your supply chain
                                                                                                          • Limited internal procurement skills                     and build closer relationships between your staff and
                                                                                                          • Resistance towards procurement from internal            suppliers
                                                                                                          departments
                                                                                                          • Inefficient supply chain partnerships                   Rob Allison concluded: ‘The survey results
                                                                                                                                                                    demonstrate a disconnect between the finance director
                                                                                                          A Smarter Spending Psychology                             and procurement. This illustrates a cultural issue which
                                                                                                                                                                    should be addressed - if nothing else, finance directors
                                                                                                          Rob Allison said: ‘Organisations must start thinking      must be equipped with procurement knowledge and
                                                                                                          long-term instead of short term. Cutting costs may keep   the appropriate skillset. Ultimately, finance should
                                                                                                          businesses afloat temporarily, but it won’t enable them   drive and influence procurement,
                                                                                                          to compete long-term. A smarter spending strategy,        enabling businesses to free up
                                                                                                          combining effective cost control and development for      cash, drive growth and deliver
                                                                                                          innovation and investment is the only way businesses      more sustainable and profitable
                                                                                                          will be able to successfully ride this storm.’            smarter spending habits.’

                                                                                                          Based on the findings of the research, Expense             To download your free
                                                                                                                                                                     copy of the white paper,
                                                                                                          Reduction Analysts has offered some smarter spending       please visit:
                                                                                                          tips, showing how companies can break down some of         www.smarter-spending.co.uk
                                                                                                          the barriers to business competitiveness and growth.
EXPERT NEWS - Payments Team                                 EXPERT NEWS - Ian Morrison

Gaining competitive
advantage through
                                                            ‘Smart’ energy management:
your payment                                                a hot topic for Financial Directors
systems
                                                            T
                                                                      he amount of energy that commercial               programme is to help building owners reduce operating                         of an effective energy management programme.
                                                                      buildings consume and the amount of               expenses.
                                                                      savings they could generate if they were          The four components of effective energy management:                           Unit Rate Savings
                                                                      managed more efficiently                                                                                                        One key aspect to remaining competitive on your
                                                                                                                        Behaviour                                                                     energy management is to ensure that your organisation
                                                            Much of the importance of this topic stems from the         Simple changes in behaviour can quickly lead to                               is currently paying competitive marketing rates for
                                                            global need to save energy – this global need affects       significant energy savings but such changes will                              your gas and electricity. Typically this can be a daunting
                                                            energy prices, emissions targets and legislation, all       only happen if the people are aware of the energy                             process, as it requires benchmarking, expertise and
                                                            of which lead to several compelling reasons why you         consumption that they have the power to control.                              industry contacts. Do you know if your gas and




O
                                                            should save energy at your organisation.                    Most people will only be motivated when you can                               electricity rates are in line with current market trends?
            ver the next few years there are going to                                                                   demonstrate just how much energy they are wasting and
            be considerable changes to the payments         Energy management is the process of monitoring,             just how much potential there is for them to improve.                         Sustainable Energy Sources
            landscape last seen with the introduction of    controlling and conserving energy in a building or                                                                                        Solar thermal water heating, photovoltaic electricity
            bank cards and electronic payments in the       organisation.                                               Smart Technology                                                              generators and wind turbines are no longer science
late 1960s. These changes, will ultimately impact on                                                                    Whether this involves investing in simple high efficiency                     fiction. They are proven sustainable energy solutions
the way that we make and receive payments – and for         In recent years, the global recession has driven building   energy saving lighting, installing active lighting, or                        which can deliver actual benefits and a return on
those looking to gain a march on their competitors, a       owners to cut costs where possible. One of the main         implementing the use of building energy management                            investment.
prime opportunity to gain competitive advantage.            reasons for implementing an energy management               systems, using smart technology is just one component
                                                                                                                                                                                                      But, no matter which approach you decide best meets
Anyone who has struggled to send funds overseas or                                                                                                                                                    your requirements, it is crucial that you have an
pay for goods on the internet will appreciate the loyalty                                                                                                                                             effective means of monitoring consumption to assist
they feel to those who make the process easy. Look at                                                                                                                                                 you in choosing the right strategies and then measuring
the success of retailers like Amazon, payment schemes                                                                                                                                                 the impact of the changes. Only then can you be certain
like Paypal, the growth in Faster Payments since it was                                                                                                                                               that your actions are delivering results.
launched. Businesses trading outside the UK need to
consider the payment methods preferred in each market                                                                                                                                                   Making Sense of the UK’s CRC Energy
– e.g. Alipay in China and bank transfer in Germany as                                                                                                                                                           Efficiency Scheme
well as the impact of SEPA payments.
                                                                                                                                                                                                      The Carbon Reduction Commitment Energy Efficiency
In our most successful clients we see payment strategy                                                                                                                                                Scheme is a government-managed carbon-trading
being developed jointly by IT, Finance and Marketing                                                                                                                                                  scheme that aims to reduce the energy consumption of
Directors. This will determine how organisations will                                                                                                                                                 larger UK businesses and public-sector organisations.
receive and process payments. What would the impact
be if you decided not to accept payments from Paypal?                                                                                                                                                 The CRC scheme can seem complicated but our
ERA’s Payments Team believes that now is the perfect                                                                                                                                                  energy management specialists can cut through the
opportunity to gain competitive advantage through                                                                                                                                                     jargon, explain what the scheme means for your
developing a payment strategy, is this something you                                                                                                                                                  organisation and outline your response options.
can afford to miss?




EXPERT NEWS - Brian Holmes                                                                                              EXPERT NEWS - Ken Rogers


Is it possible to reduce                                                                                                The cost of carbon
costs with 4G?                                                                                                          compliance
U                                                                                                                       T
            K businesses will be able to save time          EE’s 4G network offers faster mobile internet access,
            and cut travel expenses through video           and is now available on a host of the latest smartphones,             he summer of 2012 saw the introduction
            conferences and share corporate data            including the Apple iPhone 5.                                         of significant new costs for up to 7,500*
            quicker as mobile 4G services continue to                                                                             UK organisations. Internal accounts are
hit the market.                                             Japan, Germany and the United States are already                      now having to feature a new line entitled
                                                            benefiting from 4G which has been introduced, saying        “CRC Allowances”. Whichever way it is dressed up,
                                                            that the technology has helped to increase innovation,      the CRC Allowance scheme is a significant extra cost
                                                            boost productivity and cut costs.                           on larger electricity and gas users, and the summer
                                                                                                                        of 2012 was the first time that signatures had to be
                                                            In the meantime, UK businesses should assess whether        put on some hefty cheques. It is just the latest of the
                                                            the reliability and cost of 4G is sufficient to justify     Government’s initiatives to “encourage” business to
                                                            a move from fixed-line broadband, as nationwide             reduce its carbon footprint. If writing that cheque to
                                                            coverage is anticipated to take at least two years.         DEFRA hurt this summer, brace yourself, because
                                                                                                                        as further “encouragement”, the Chancellor quietly
                                                            The advantages and disadvantages of 4G                      announced in the budget that the cost per CRC
                                                            Pros                                                        Allowance unit is to go up by a third.
                                                            –	 With speeds up to five times faster than 3G, data can                                                                                   Whilst carbon reduction initiatives such as Offsetting
                                                            be sent and received quicker.                               Some businesses have previously been motivated to                              projects reduce net footprints to satisfy CSR and
                                                            –	 4G is more efficient in the way it uses radio            reduce their carbon footprint from a sense of Corporate                        supply-chain customer requirements, they provide no
                                                            waves, meaning that more users can benefit from 4G          Social Responsibility (CSR). Some significant                                  relief from the CRC Allowance scheme.
                                                            simultaneously.                                             corporations have gone further in publically declaring
                                                            –	 In terms of economies of scale, as more users gain       an aim of achieving a net zero carbon footprint, and                           The introduction and rapid inflation of CRC Allowance
                                                            access to 4G, prices could fall to lower than the cost of   are now requiring similar performance from their                               costs provide a further incentive for organisations to
                                                            3G.                                                         key suppliers. Now, however, if your organisation                              become much more proactive in energy management.
                                                            –	 4G is more suitable for video or streaming services.     “qualifies” (see below), you will have to pay for                              Expense Reduction Analysts can currently offer you
                                                            Cons                                                        every unit of carbon generated by your consumption of                          assistance with the following Carbon Reduction
                                                            –	 4G is currently more expensive, and will be for at       gas and electricity (curiously, fuel-oils were removed                         initiatives:
                                                            least the next 12 months.                                   from the scheme in the budget !), at the rate of £12 per                       Smart Energy Management
                                                            –	 Unless you have a new mobile device, 4G will not         tonne, rising to £16 per tonne. You may believe that                           Energy Reduction
                                                            work, potentially forcing employers to upgrade their        your organisation falls below the threshold, but if it is                      Sourcing and Financing Alternative Low Carbon Fuels
                                                            company handsets.                                           a subsidiary or associated company, it is the total group                      Carbon Auditing Service
                                                            –	 Coverage outside major cities in the UK is still poor.   consumption figure that counts.                                                Carbon Offsetting Procurement
                                                            –	 As it is quicker to download data, sharing large
                                                            work files will be easier but this may have financial       *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.
                                                            implications and may put an additional strain on the        Reporting is required by all organisations with at least one half-hourly electricity meter. Participation is required by all organisations consuming more
                                                            company network.                                            than 6,000Mwh of electricity p.a., but Allowances are calculated on both electricity and gas.
EXPERT NEWS - Bruce Murray                                                                                               EXPERT NEWS - Jason Adderley



Go paperless in 2013 Sustainable savings a
                                                                                                                         must for UK Law Firms
W
                hilst we have been talking about the                           Simple steps
                paperless office for many, many years
                now, we seem to producing more              There are many simple smaller steps that you can take
                printed products than ever before. In       to reduce environmental impact, improve workflow
January, the mighty Google launched its support of the      and best of all reduce cost. Steps such as sending out
Go Paperless in 2013 campaign – a strategy that the         your invoices electronically, adopting cloud-based
team at Expense Reduction Analysts wholeheartedly           collaboration systems for projects, shared documents
endorses.                                                   and data, the introduction of electronic signatures
                                                            on legal documents or the introduction of on-line
Whilst there is some cynicism in what Google                proofing and ordering systems for marketing and
is actually looking to achieve by supporting this           promotional collateral.
campaign, as behind everything they do there is a
large dollar sign in return, in more ways than one the      When it comes to paper based items coming into
principles of a paperless office make sense. Going          your organisation, then the adoption of electronic
paperless, or at least part of the way, can help an         document scanning of purchase invoices not only
organisation towards its financial and environmental        frees up valuable real estate for revenue generating
goals as well as improving workflow, information            income and operations, but also speeds up the access
management and potentially cash flow.                       to information and the speed of resolution of queries.

Now, to completely eradicate paper from your                                 Strategic review



                                                                                                                         T
organisation in one rapid sweep may never happen, but
to start with why not make it a New Year’s resolution       However, like everything else, to sit down and                       he latest Law Firms Survey by PwC has once          We are often engaged by firms where, prior to our
to review your organisation’s complete document             produce a review takes time, dedicated personnel and                 again highlighted the fact that Law Firms are       appointment, cost reduction and process improvement
workflow and cycle from start to finish. These are          quite frankly you may find that you have far more                    failing to develop sustainable procurement          may have been short term and tactical, rather than a
not just the documents and paper consuming items            important operational and sales issues to concentrate        programmes within their organisations, despite              sustained strategic process with buy-in at executive
that you create during the normal working operation,        on in these challenging times.                               reiterating that this is high on the agenda.                level.
but also the paper items you receive from suppliers,
customers and supporting functions.                         That’s just where the team of specialist consultants at      Whilst the survey is restricted to gauging performance      The evidence from the work we have carried out
                                                            Expense Reduction Analysts comes in: we are ideally          amongst the Top 100 firms in the UK, many of the            indicates that opportunities exist to codify and simplify
                                                            placed to provide essential support your organisation        themes and trends identified are applicable across the      processes, and explore the judicious use of automation
                                                            across multiple disciplines and activities such as IT,       profession.                                                 and outsourcing.
                                                            Finance, Marketing, Managed Print Solutions and
                                                            Document Archiving.                                          Some of the headline figures bring the problems of the      Just a few of the many areas where savings can be
                                                                                                                         last four years into sharp focus. Amongst the Top 10        made include:
                                                            With over 150 UK based consultants, many with over           firms, profit per equity partner (PEP) fell 24% despite a   Postage
                                                            20 years’ experience within their specific industry,         reduction of 6% in equity partner numbers. This trend       With the myriad of postal tariffs available, the advent of
                                                            Expense Reduction Analysts can work alongside your           was even more pronounced amongst the 11th to 25th           Online Business Accounts (OBA), downstream access
                                                            key stakeholders to profile, analyse and map your            largest firms, where PEP declined by 31% despite a          providers, VAT issues and the potential flotation of
                                                            existing document lifecycle. Utilising their extensive       reduction of 20% in equity partner headcount. As a          Royal Mail, is postage a cost you can afford to ignore?
                                                            industry knowledge, the team can then present a              key component to protecting margins, cost reduction         Insurance
                                                            range of options and solutions that capture the latest       remains high on the agenda with 53% of firms having         Greater competition, aided by new entrants to the
                                                            processes, technology and standards that maximise            completed a cost reduction programme in the past 24         market, has led to a small reduction in PII premiums.
                                                            savings in workflow and the resulting cost benefits.         months.                                                     When did you last review your Insurance Schedule in
                                                                                                                                                                                     its entirety?
                                                            With the average cost of an organisation’s print alone       However, the majority of firms reported savings of only     Email Encryption
                                                            calculated at 1-3% of turnover, it makes perfect             5% or less, and not one of the Top 25 firms reported        A City Council was recently fined £120,000 after an in-
                                                            sense to ensure one of your New Year’s resolutions           cost savings in excess of 10%.                              house solicitor sent unencrypted sensitive emails to the
                                                            is to go paperless in 2013 and reap the financial and                                                                    wrong address. Do you have a policy on encryption?
                                                            environmental benefits that come with it.                    This disappointing figure reflects our own observations.    Is it followed?




Expense Reduction Analysts Success Story


Strategic purchasing advice for
CB Imports in a volatile market
I
      nspirational and innovative, CB Imports are the       John Shaw explains the background to his comment:            on whether the correct freight buying decisions can be      “In addition, from time to time, we receive unsolicited
      leading importer of floral sundries, giftware,        “For the last four years or so, contrasting commercial       made. Having a strategic view of what is happening in       offers on freight that appear to offer market-beating
      glassware, silk flowers, pottery, homewares, and      elements have been in force. The shipping lines have         the short, medium and long term is vital to their bottom    rates. I always ask John to take a forensic look at these.
      Christmas and seasonal products. The company          increased capacity by bringing larger and larger vessels     line.”                                                      I have to say, nine times out of ten, they are too good to
prides itself on providing the latest trends, designs and   into service – these are ships that they ordered some                                                                    be true. A vital service element may be missing; there
ideas to volume buyers through extensive collections        years ago – but at the same time world trade has             Steve Wood is therefore only too glad of John’s freight     may be currency or payment terms issues. We trust
and literally thousands of product lines. Furthermore,      slumped and international freight volumes have gone          expertise: “John keeps an eye on our freight rates and      John to give us the bottom line.”
their ranges of artificial flowers, pottery and glassware   through the floor.                                           compares them to those he sees in the market, just to
are the UK’s largest.                                                                                                    confirm that we are getting best value for money. This      However, the ongoing Expense Reduction Analysts
                                                            “With such an imbalance between supply and demand            is not as straightforward as it sounds, because ancillary   service that CB Imports value most is their strategic
Expense Reduction Analysts’ Client Manager Neil             the whole industry has become chaotic, as lines attempt      charges can make all the difference. It is the end-to-end   view of the market, an analysis of what will happen
Cullen first started working with CB Imports in             to balance volume and traffic. The lines try to force        cost that is important, not the headline rate that we are   in the future which enables CB Imports to plan their
2006. Neil brought in Expense Reduction Analysts’           rates up with varying degrees of success but market          paying for the seafreight element of the journey.           Import Freight buying with intelligence and confidence.
International Freight expert John Shaw, saving the          forces prevail, usually with one of the lines giving way,
company £123,451 on Import Freight in the first             others following and the rates starting to dive again. For   “The difference between buying well and buying
18-month period of engagement. With the Import              a company like CB Imports, this means that there are         poorly can easily run into six figures”
Freight industry being highly volatile, Steve Wood,         large amounts of money to be gained or lost, depending
Managing Director of CB Imports, asked John Shaw of
Expense Reduction Analysts to continue to work with
                                                              Steve Wood summarises the value of this service:
them on this area. Expense Reduction Analysts have
now been providing this service to CB Imports for over        “John is quite simply our expert on international freight. This is a crucial area of expenditure for our
four years.                                                   business – the difference between buying well and buying poorly can easily run into six figures – and we do
“The whole seafreight industry has been more                  not take a major decision on our international freight without consulting or referring to John’s knowledge.”
volatile in the last four years than I have seen it in
the previous thirty”
EXPERT NEWS - Sean Bingham                                                                                                                                                         Expense Reduction
                                                                                                                                                                                    Analysts Success Story


Smarter spending tips for your Fleet                                                                                                                                                Improved processes
                                                                                                                                                                                    and reduced costs
W
                ith the next 12 months predicted to


                                                                                                                                                                                    for The John
                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,
                                                                                                                                                                                    Townsend Trust
including HMRC business mileage audits, duty of                                                                                                                                     The John Townsend Trust charity was founded in
care and rising fuel costs challenges. In addition, we                                                                                                                              London in 1792. Since 1863, the trust has been based
will have to cope with the upcoming CO2 legislation,                                                                                                                                in Kent and today incorporates The Royal School for
which adds another level of pressure and complexity.                                                                                                                                Deaf Children Margate and Westgate College for Deaf
                                                                                                                                                                                    People. The trust provides education, therapy, medical
Expense Reduction Analysts’ top tips for Fleet aim to                                                                                                                               support and independence training for young deaf
provide business fleets with a basis for tackling key                                                                                                                               people with additional needs.
procurement challenges over the following months:
                                                                                                                                                                                    After an initial meeting with Robert Stearn, Business
          Smarter Spending top tips                                                                                                                                                 Development Manager and the introduction of David
                                                             is set to continue. Unit costs per litre are heavily       periods in recent memory, but what concerns us is           Keating as Client Relationship Manager, John Fearon,
•	 CO2 emissions legislation – this comes into force         influenced by duty tax and VAT so concentrating on         that many organisations are not fully prepared for the      Finance Director engaged Expense Reduction Analysts
in April 2013 for writing down allowances and lease          behaviour management of your drivers will have the         following 12 months. For many reasons, relying on           (ERA) to assist The John Townsend Trust in achieving
restrictions. Every company car over 130g/km CO2             biggest impact on cost.                                    traditional cost-cutting measures is just not sufficient,   effective procurement by increasing the level of value
emissions will face a restriction on the amount that         Top tip – ensure refuelling at supermarkets and            so everyone from the CEO to the fleet manager must          they receive from their suppliers.
can be written down for tax purposes. Regardless of          ban the purchasing of high octane fuels.                   recognise the key roles that they and smarter spending
whether you buy or lease your company cars, this                                                                        strategies can play.                                        “Initially, we were a little sceptical at ERA’s claims
will affect their overall cost. In addition, the financial   •	 Duty of care – it is believed that as many as one                                                                   as we didn’t realise there was quite the volume of
element of contract hire leases will have a restriction      in three road fatalities/serious injuries each year          ERA announce “Core Fleet” Offering                        savings available, but we took the view point that we
on how much can be offset against corporation tax.           involve business mileage journeys. While there is                                                                      couldn’t lose and it’d be a worthwhile exercise. We
Top tip – ensure you amend your car choice policy            no legislative requirement for business to report at       ERA Fleet Cost Management are delighted to                  are extremely pleased with the results uncovered by
and set a maximum CO2 emission of 130g/km.                   work driving incidents, it is believed that responsible    announce a further development in their overall             the experts.” John Fearon, Finance Director, The
                                                             employers should adopt vigorous procedures to record       Fleet offering. Until now ERA FCM has conducted             John Townsend Trust.
•	 Business mileage – HMRC has been auditing                 such incidents as ‘RIDDOR’.                                bespoke projects on fleets with a minimum number
business mileage claims procedures to ensure they            Top tip – consider adopting a post-incident                of 50 vehicles (cars and van up to 3.5t) with an            Expert in Food supplies, Andy MacDonald was
are robust and not open to inflated claims. HMRC             reporting mechanism including a one-to-one                 ever increasing number of clients delighted with the        enlisted to conduct a review of the trust’s arrangements
is actively looking at business organisations and, if        interview with the driver.                                 savings and benefits achieved . This new “Core Fleet”       for food at The Royal School for Deaf Children. As the
the private/business mileage split recorded by your                                                                     solution, which is the result of demand for a similar       school has boarding facilities for many of the students,
drivers is more than 40/60, then you are at risk of an       Over the last 12 months, Expense Reduction Analysts’       solution for sub 50 fleets clients, is compelling in that   Andy recognised that the site required a variety of
audit by HMRC.                                               team of business fleet consultants has found that the      it provides a “Corporate Styled” fleet solution for non     foods to provide a balanced diet for the children.
Top tip – ensure that your mileage recording                 majority of the businesses they have dealt with had        Corporate sized fleets, and covers the key areas of         Andy conducted a review of the school’s purchasing
procedures are robust and accurately audited.                implemented cost-cutting measures in response to           acquisition, operation and policy – ultimately adding       and found it was sourcing its food from a number of
                                                             rising costs across their supply chain.                    value to your fleet operation irrespective of fleet size.   different suppliers. One of the main suppliers was only
•	 Fuel costs – fuel prices have increased by                                                                                                                                       able to make deliveries a few times a week, which was
approximately 38% since January 2010 and this trend          Business fleets have just faced one of the toughest        For more information please visit: www.erafcm.net           not ideal as preparing food that is fresh and nutritious is
                                                                                                                                                                                    of great importance to the school.

EXPERT NEWS - Ian Broughton                                                                                                                                                         The client is so impressed with Andy’s success in the
                                                                                                                                                                                    school’s food procurement that he has been asked to


Why packaging costs may
                                                                                                                        A new innovative solution was sourced, tested and           visit the school’s agricultural site, Monkshill Farm
                                                                                                                        implemented with the client’s approval, and the level       to assess the procurement of animal feed. The farm
                                                                                                                        of returns has dropped to almost zero.                      allows the students to gain valuable work experience
                                                                                                                        In addition to the money that the client saved through      in producing high quality, organic produce. In addition,


be hurting your bottom line
                                                                                                                        reduced warranty claims, there has been a vast              Andy is so confident in the farm’s ability that it could
                                                                                                                        improvement in client satisfaction as a result of the       potentially become a proposed supplier to other local
                                                                                                                        reduced number of products being damaged in delivery.       clients.




F
                                                                                                                        Auditing
                                                                                                                                                                                    Expert in Office Supplies, Nigel Richards was
          or many companies, the thought of reviewing        that in some industries, the packaging cost of some        In many scenarios, effective auditing can generate
                                                                                                                                                                                    appointed to review the trust’s expenditure in this
          their packaging costs, whether primary or          products can be as high as 40% of a product’s selling      significant savings. This can include ensuring that the
                                                                                                                                                                                    category. Nigel collaborated with the existing
          secondary, can seem a daunting process             price. Smart packaging decisions can lead to a healthier   right packaging products are being purchased for the
                                                                                                                                                                                    supplier to correct the trust’s cost levels and achieved
          because of the amount of expertise and             bottom line.                                               job they are intended to do, checking that the correct
knowledge needed to generate a return. However, by                                                                      products have been delivered through the use of             a significant saving. Nigel’s aim was not to simply
ignoring this area of the business, many are failing to      There are significant savings that can be made, and        specialist machinery, and then following up with the        source the cheapest option but work with the trust and
capitalise on the significant savings available.             below are just a couple of examples how:                   supplier over any discrepancies.                            the supplier to ensure that the client’s needs for quality
                                                                                                                                                                                    and service were absolutely met.
It is very easy to see why: a simple search for ‘cardboard   Technology                                                 A typical example may be where shrink wrap has been
boxes’ reveals choices including single wall boxes,          Technology has played a considerable part in the           purchased from a supplier, which may be over specified      Nigel also carried out an assessment of the trust’s
double wall boxes, export boxes, BDCM, Korrvu, Euro          innovation of packaging solutions, whether that is in      for its intended use, checking the shrink wrap itself to    procurement of Janitorial supplies and found that
Modular, Eco, Palletised Containers and more. This is        environmentally friendly pallets, in the increase in       ensure that what has been delivered is what is on the       the client had a number of different suppliers, and
before even considering sizes, protective padding and        recycled materials being used within the packaging         invoice and what has been paid for.                         that different members of staff were managing the
so on. Given the vast range of products, sourcing and        products themselves or in protective packaging options                                                                 purchasing of different items.
selecting the correct supplier can have a positive impact    available instead of bubble wrap.                          These are just two areas where Expense Reduction
on your business.                                                                                                       Analysts has helped our clients with smarter spending       Nigel and the client worked together to create a core
                                                             In one scenario, Expense Reduction Analysts identified     of packaging products, thereby adding value to the          list of products and quickly identified that one of the
Packaging can represent a significant proportion of a        that there were high levels of purchased products          bottom line whilst streamlining processes without the       incumbent suppliers that was only fulfilling a small
product’s selling price. For example, it is estimated        being returned as they were damaged in delivery.           need to employ additional internal resources.               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
Packaging Examples:                                                                                                                                                                 products from many different suppliers.

Primary Packaging
Customer Facing Packaging, Carrier Bags,                                                                                                                                            Table of Savings:
Presentation Boxes
                                                                                                                                                                                    Category	                               Annual Saving
Secondary Packaging                                                                                                                                                                 Office Supplies	                                 19%
                                                                                                                                                                                    Janitorial Supplies	                             28%
Cardboard/Corrugated Boxes, Labels,
                                                                                                                                                                                    Food	                                            19%
Bubble/Shrink Wrap, Polythene Products
Strapping, Pallets, Airbags, Adhesive Tapes,                                                                                                                                        Upcoming projects
Bottles, Drums and many more.                                                                                                                                                       Fixed Communications
                                                                                                                                                                                    Utilities
                                                                                                                                                                                    Facilities Management

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profit news jan2013

  • 1. PROFIT NEWS inSiDe thiS iSSue Smarter spending tips for your fleet Psychology of procurement Sean Bingham, reveals why now is the time to integrate critical procurement barriers are holding back effective procurement into strategic business planning. uK business growth, reveals white paper. What is your payment strategy? Will 4g streamline your business costs? the Payments team, consider whether competitive Brian holmes, discusses the latest mobile service advantage can be gained through alternative payment taking the uK market by storm. solutions. “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 Critical procurement barriers are holding back UK business growth Short-term perspectives and lack of procurement discussions at board level are holding back businesses B usinesses in the UK and Ireland are Analysts (ERA). The research was carried out among to business growth strategies. It suggests FDs and – Ensure effective procurement becomes a part of fighting a host of psychological finance 100 Financial Directors (FDs) from companies with CEOs are struggling to master the balance between every organisation’s DNA - led from the board room, and procurement barriers, according to revenues between £10 million and £500 million in the cutting and managing costs to survive today, and but extending all the way to the shop floor and the a recent survey by Expense Reduction UK and Ireland, to uncover the psychological barriers investing to grow tomorrow. supply chain Rob Allison, Managing Director at ERA, explained: – Ensure that procurement is not an empty seat in the ‘Businesses and government have responded to the board room economic downturn by implementing wide-ranging cost-cutting initiatives. Unfortunately, while cost – Ensure all staff adopt a smarter spending cutting may work in the short term, it won’t enable psychology - just because your staff are good at them to compete effectively in the long term. And purchasing core products, it doesn’t mean they will be for that reason, we’ve tried to uncover the reasons good at ‘indirect spend’ why organisations aren’t approaching procurement strategically.’ – Ensure performance management is aligned to a smarter spending psychology Barriers to Effective Procurement – It’s essential that internal and external reporting The report has uncovered a series of barriers that provides accurate measurements and detailed block FDs from implementing effective procurement business intelligence to allow the FD to provide strategies: strategic guidance for future procurement strategies • Short-term procurement strategies • A lack of procurement understanding at board level – Conduct regular evaluations of your supply chain • Limited internal procurement skills and build closer relationships between your staff and • Resistance towards procurement from internal suppliers departments • Inefficient supply chain partnerships Rob Allison concluded: ‘The survey results demonstrate a disconnect between the finance director A Smarter Spending Psychology and procurement. This illustrates a cultural issue which should be addressed - if nothing else, finance directors Rob Allison said: ‘Organisations must start thinking must be equipped with procurement knowledge and long-term instead of short term. Cutting costs may keep the appropriate skillset. Ultimately, finance should businesses afloat temporarily, but it won’t enable them drive and influence procurement, to compete long-term. A smarter spending strategy, enabling businesses to free up combining effective cost control and development for cash, drive growth and deliver innovation and investment is the only way businesses more sustainable and profitable will be able to successfully ride this storm.’ smarter spending habits.’ Based on the findings of the research, Expense To download your free copy of the white paper, Reduction Analysts has offered some smarter spending please visit: tips, showing how companies can break down some of www.smarter-spending.co.uk the barriers to business competitiveness and growth.
  • 2. EXPERT NEWS - Payments Team EXPERT NEWS - Ian Morrison Gaining competitive advantage through ‘Smart’ energy management: your payment a hot topic for Financial Directors systems T he amount of energy that commercial programme is to help building owners reduce operating of an effective energy management programme. buildings consume and the amount of expenses. savings they could generate if they were The four components of effective energy management: Unit Rate Savings managed more efficiently One key aspect to remaining competitive on your Behaviour energy management is to ensure that your organisation Much of the importance of this topic stems from the Simple changes in behaviour can quickly lead to is currently paying competitive marketing rates for global need to save energy – this global need affects significant energy savings but such changes will your gas and electricity. Typically this can be a daunting energy prices, emissions targets and legislation, all only happen if the people are aware of the energy process, as it requires benchmarking, expertise and of which lead to several compelling reasons why you consumption that they have the power to control. industry contacts. Do you know if your gas and O should save energy at your organisation. Most people will only be motivated when you can electricity rates are in line with current market trends? ver the next few years there are going to demonstrate just how much energy they are wasting and be considerable changes to the payments Energy management is the process of monitoring, just how much potential there is for them to improve. Sustainable Energy Sources landscape last seen with the introduction of controlling and conserving energy in a building or Solar thermal water heating, photovoltaic electricity bank cards and electronic payments in the organisation. Smart Technology generators and wind turbines are no longer science late 1960s. These changes, will ultimately impact on Whether this involves investing in simple high efficiency fiction. They are proven sustainable energy solutions the way that we make and receive payments – and for In recent years, the global recession has driven building energy saving lighting, installing active lighting, or which can deliver actual benefits and a return on those looking to gain a march on their competitors, a owners to cut costs where possible. One of the main implementing the use of building energy management investment. prime opportunity to gain competitive advantage. reasons for implementing an energy management systems, using smart technology is just one component But, no matter which approach you decide best meets Anyone who has struggled to send funds overseas or your requirements, it is crucial that you have an pay for goods on the internet will appreciate the loyalty effective means of monitoring consumption to assist they feel to those who make the process easy. Look at you in choosing the right strategies and then measuring the success of retailers like Amazon, payment schemes the impact of the changes. Only then can you be certain like Paypal, the growth in Faster Payments since it was that your actions are delivering results. launched. Businesses trading outside the UK need to consider the payment methods preferred in each market Making Sense of the UK’s CRC Energy – e.g. Alipay in China and bank transfer in Germany as Efficiency Scheme well as the impact of SEPA payments. The Carbon Reduction Commitment Energy Efficiency In our most successful clients we see payment strategy Scheme is a government-managed carbon-trading being developed jointly by IT, Finance and Marketing scheme that aims to reduce the energy consumption of Directors. This will determine how organisations will larger UK businesses and public-sector organisations. receive and process payments. What would the impact be if you decided not to accept payments from Paypal? The CRC scheme can seem complicated but our ERA’s Payments Team believes that now is the perfect energy management specialists can cut through the opportunity to gain competitive advantage through jargon, explain what the scheme means for your developing a payment strategy, is this something you organisation and outline your response options. can afford to miss? EXPERT NEWS - Brian Holmes EXPERT NEWS - Ken Rogers Is it possible to reduce The cost of carbon costs with 4G? compliance U T K businesses will be able to save time EE’s 4G network offers faster mobile internet access, and cut travel expenses through video and is now available on a host of the latest smartphones, he summer of 2012 saw the introduction conferences and share corporate data including the Apple iPhone 5. of significant new costs for up to 7,500* quicker as mobile 4G services continue to UK organisations. Internal accounts are hit the market. Japan, Germany and the United States are already now having to feature a new line entitled benefiting from 4G which has been introduced, saying “CRC Allowances”. Whichever way it is dressed up, that the technology has helped to increase innovation, the CRC Allowance scheme is a significant extra cost boost productivity and cut costs. on larger electricity and gas users, and the summer of 2012 was the first time that signatures had to be In the meantime, UK businesses should assess whether put on some hefty cheques. It is just the latest of the the reliability and cost of 4G is sufficient to justify Government’s initiatives to “encourage” business to a move from fixed-line broadband, as nationwide reduce its carbon footprint. If writing that cheque to coverage is anticipated to take at least two years. DEFRA hurt this summer, brace yourself, because as further “encouragement”, the Chancellor quietly The advantages and disadvantages of 4G announced in the budget that the cost per CRC Pros Allowance unit is to go up by a third. – With speeds up to five times faster than 3G, data can Whilst carbon reduction initiatives such as Offsetting be sent and received quicker. Some businesses have previously been motivated to projects reduce net footprints to satisfy CSR and – 4G is more efficient in the way it uses radio reduce their carbon footprint from a sense of Corporate supply-chain customer requirements, they provide no waves, meaning that more users can benefit from 4G Social Responsibility (CSR). Some significant relief from the CRC Allowance scheme. simultaneously. corporations have gone further in publically declaring – In terms of economies of scale, as more users gain an aim of achieving a net zero carbon footprint, and The introduction and rapid inflation of CRC Allowance access to 4G, prices could fall to lower than the cost of are now requiring similar performance from their costs provide a further incentive for organisations to 3G. key suppliers. Now, however, if your organisation become much more proactive in energy management. – 4G is more suitable for video or streaming services. “qualifies” (see below), you will have to pay for Expense Reduction Analysts can currently offer you Cons every unit of carbon generated by your consumption of assistance with the following Carbon Reduction – 4G is currently more expensive, and will be for at gas and electricity (curiously, fuel-oils were removed initiatives: least the next 12 months. from the scheme in the budget !), at the rate of £12 per Smart Energy Management – Unless you have a new mobile device, 4G will not tonne, rising to £16 per tonne. You may believe that Energy Reduction work, potentially forcing employers to upgrade their your organisation falls below the threshold, but if it is Sourcing and Financing Alternative Low Carbon Fuels company handsets. a subsidiary or associated company, it is the total group Carbon Auditing Service – Coverage outside major cities in the UK is still poor. consumption figure that counts. Carbon Offsetting Procurement – As it is quicker to download data, sharing large work files will be easier but this may have financial *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. implications and may put an additional strain on the Reporting is required by all organisations with at least one half-hourly electricity meter. Participation is required by all organisations consuming more company network. than 6,000Mwh of electricity p.a., but Allowances are calculated on both electricity and gas.
  • 3. EXPERT NEWS - Bruce Murray EXPERT NEWS - Jason Adderley Go paperless in 2013 Sustainable savings a must for UK Law Firms W hilst we have been talking about the Simple steps paperless office for many, many years now, we seem to producing more There are many simple smaller steps that you can take printed products than ever before. In to reduce environmental impact, improve workflow January, the mighty Google launched its support of the and best of all reduce cost. Steps such as sending out Go Paperless in 2013 campaign – a strategy that the your invoices electronically, adopting cloud-based team at Expense Reduction Analysts wholeheartedly collaboration systems for projects, shared documents endorses. and data, the introduction of electronic signatures on legal documents or the introduction of on-line Whilst there is some cynicism in what Google proofing and ordering systems for marketing and is actually looking to achieve by supporting this promotional collateral. campaign, as behind everything they do there is a large dollar sign in return, in more ways than one the When it comes to paper based items coming into principles of a paperless office make sense. Going your organisation, then the adoption of electronic paperless, or at least part of the way, can help an document scanning of purchase invoices not only organisation towards its financial and environmental frees up valuable real estate for revenue generating goals as well as improving workflow, information income and operations, but also speeds up the access management and potentially cash flow. to information and the speed of resolution of queries. Now, to completely eradicate paper from your Strategic review T organisation in one rapid sweep may never happen, but to start with why not make it a New Year’s resolution However, like everything else, to sit down and he latest Law Firms Survey by PwC has once We are often engaged by firms where, prior to our to review your organisation’s complete document produce a review takes time, dedicated personnel and again highlighted the fact that Law Firms are appointment, cost reduction and process improvement workflow and cycle from start to finish. These are quite frankly you may find that you have far more failing to develop sustainable procurement may have been short term and tactical, rather than a not just the documents and paper consuming items important operational and sales issues to concentrate programmes within their organisations, despite sustained strategic process with buy-in at executive that you create during the normal working operation, on in these challenging times. reiterating that this is high on the agenda. level. but also the paper items you receive from suppliers, customers and supporting functions. That’s just where the team of specialist consultants at Whilst the survey is restricted to gauging performance The evidence from the work we have carried out Expense Reduction Analysts comes in: we are ideally amongst the Top 100 firms in the UK, many of the indicates that opportunities exist to codify and simplify placed to provide essential support your organisation themes and trends identified are applicable across the processes, and explore the judicious use of automation across multiple disciplines and activities such as IT, profession. and outsourcing. Finance, Marketing, Managed Print Solutions and Document Archiving. Some of the headline figures bring the problems of the Just a few of the many areas where savings can be last four years into sharp focus. Amongst the Top 10 made include: With over 150 UK based consultants, many with over firms, profit per equity partner (PEP) fell 24% despite a Postage 20 years’ experience within their specific industry, reduction of 6% in equity partner numbers. This trend With the myriad of postal tariffs available, the advent of Expense Reduction Analysts can work alongside your was even more pronounced amongst the 11th to 25th Online Business Accounts (OBA), downstream access key stakeholders to profile, analyse and map your largest firms, where PEP declined by 31% despite a providers, VAT issues and the potential flotation of existing document lifecycle. Utilising their extensive reduction of 20% in equity partner headcount. As a Royal Mail, is postage a cost you can afford to ignore? industry knowledge, the team can then present a key component to protecting margins, cost reduction Insurance range of options and solutions that capture the latest remains high on the agenda with 53% of firms having Greater competition, aided by new entrants to the processes, technology and standards that maximise completed a cost reduction programme in the past 24 market, has led to a small reduction in PII premiums. savings in workflow and the resulting cost benefits. months. When did you last review your Insurance Schedule in its entirety? With the average cost of an organisation’s print alone However, the majority of firms reported savings of only Email Encryption calculated at 1-3% of turnover, it makes perfect 5% or less, and not one of the Top 25 firms reported A City Council was recently fined £120,000 after an in- sense to ensure one of your New Year’s resolutions cost savings in excess of 10%. house solicitor sent unencrypted sensitive emails to the is to go paperless in 2013 and reap the financial and wrong address. Do you have a policy on encryption? environmental benefits that come with it. This disappointing figure reflects our own observations. Is it followed? Expense Reduction Analysts Success Story Strategic purchasing advice for CB Imports in a volatile market I nspirational and innovative, CB Imports are the John Shaw explains the background to his comment: on whether the correct freight buying decisions can be “In addition, from time to time, we receive unsolicited leading importer of floral sundries, giftware, “For the last four years or so, contrasting commercial made. Having a strategic view of what is happening in offers on freight that appear to offer market-beating glassware, silk flowers, pottery, homewares, and elements have been in force. The shipping lines have the short, medium and long term is vital to their bottom rates. I always ask John to take a forensic look at these. Christmas and seasonal products. The company increased capacity by bringing larger and larger vessels line.” I have to say, nine times out of ten, they are too good to prides itself on providing the latest trends, designs and into service – these are ships that they ordered some be true. A vital service element may be missing; there ideas to volume buyers through extensive collections years ago – but at the same time world trade has Steve Wood is therefore only too glad of John’s freight may be currency or payment terms issues. We trust and literally thousands of product lines. Furthermore, slumped and international freight volumes have gone expertise: “John keeps an eye on our freight rates and John to give us the bottom line.” their ranges of artificial flowers, pottery and glassware through the floor. compares them to those he sees in the market, just to are the UK’s largest. confirm that we are getting best value for money. This However, the ongoing Expense Reduction Analysts “With such an imbalance between supply and demand is not as straightforward as it sounds, because ancillary service that CB Imports value most is their strategic Expense Reduction Analysts’ Client Manager Neil the whole industry has become chaotic, as lines attempt charges can make all the difference. It is the end-to-end view of the market, an analysis of what will happen Cullen first started working with CB Imports in to balance volume and traffic. The lines try to force cost that is important, not the headline rate that we are in the future which enables CB Imports to plan their 2006. Neil brought in Expense Reduction Analysts’ rates up with varying degrees of success but market paying for the seafreight element of the journey. Import Freight buying with intelligence and confidence. International Freight expert John Shaw, saving the forces prevail, usually with one of the lines giving way, company £123,451 on Import Freight in the first others following and the rates starting to dive again. For “The difference between buying well and buying 18-month period of engagement. With the Import a company like CB Imports, this means that there are poorly can easily run into six figures” Freight industry being highly volatile, Steve Wood, large amounts of money to be gained or lost, depending Managing Director of CB Imports, asked John Shaw of Expense Reduction Analysts to continue to work with Steve Wood summarises the value of this service: them on this area. Expense Reduction Analysts have now been providing this service to CB Imports for over “John is quite simply our expert on international freight. This is a crucial area of expenditure for our four years. business – the difference between buying well and buying poorly can easily run into six figures – and we do “The whole seafreight industry has been more not take a major decision on our international freight without consulting or referring to John’s knowledge.” volatile in the last four years than I have seen it in the previous thirty”
  • 4. EXPERT NEWS - Sean Bingham Expense Reduction Analysts Success Story Smarter spending tips for your Fleet Improved processes and reduced costs W ith the next 12 months predicted to for The John 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, Townsend Trust including HMRC business mileage audits, duty of The John Townsend Trust charity was founded in care and rising fuel costs challenges. In addition, we London in 1792. Since 1863, the trust has been based will have to cope with the upcoming CO2 legislation, in Kent and today incorporates The Royal School for which adds another level of pressure and complexity. Deaf Children Margate and Westgate College for Deaf People. The trust provides education, therapy, medical Expense Reduction Analysts’ top tips for Fleet aim to support and independence training for young deaf provide business fleets with a basis for tackling key people with additional needs. procurement challenges over the following months: After an initial meeting with Robert Stearn, Business Smarter Spending top tips Development Manager and the introduction of David is set to continue. Unit costs per litre are heavily periods in recent memory, but what concerns us is Keating as Client Relationship Manager, John Fearon, • CO2 emissions legislation – this comes into force influenced by duty tax and VAT so concentrating on that many organisations are not fully prepared for the Finance Director engaged Expense Reduction Analysts in April 2013 for writing down allowances and lease behaviour management of your drivers will have the following 12 months. For many reasons, relying on (ERA) to assist The John Townsend Trust in achieving restrictions. Every company car over 130g/km CO2 biggest impact on cost. traditional cost-cutting measures is just not sufficient, effective procurement by increasing the level of value emissions will face a restriction on the amount that Top tip – ensure refuelling at supermarkets and so everyone from the CEO to the fleet manager must they receive from their suppliers. can be written down for tax purposes. Regardless of ban the purchasing of high octane fuels. recognise the key roles that they and smarter spending whether you buy or lease your company cars, this strategies can play. “Initially, we were a little sceptical at ERA’s claims will affect their overall cost. In addition, the financial • Duty of care – it is believed that as many as one as we didn’t realise there was quite the volume of element of contract hire leases will have a restriction in three road fatalities/serious injuries each year ERA announce “Core Fleet” Offering savings available, but we took the view point that we on how much can be offset against corporation tax. involve business mileage journeys. While there is couldn’t lose and it’d be a worthwhile exercise. We Top tip – ensure you amend your car choice policy no legislative requirement for business to report at ERA Fleet Cost Management are delighted to are extremely pleased with the results uncovered by and set a maximum CO2 emission of 130g/km. work driving incidents, it is believed that responsible announce a further development in their overall the experts.” John Fearon, Finance Director, The employers should adopt vigorous procedures to record Fleet offering. Until now ERA FCM has conducted John Townsend Trust. • Business mileage – HMRC has been auditing such incidents as ‘RIDDOR’. bespoke projects on fleets with a minimum number business mileage claims procedures to ensure they Top tip – consider adopting a post-incident of 50 vehicles (cars and van up to 3.5t) with an Expert in Food supplies, Andy MacDonald was are robust and not open to inflated claims. HMRC reporting mechanism including a one-to-one ever increasing number of clients delighted with the enlisted to conduct a review of the trust’s arrangements is actively looking at business organisations and, if interview with the driver. savings and benefits achieved . This new “Core Fleet” for food at The Royal School for Deaf Children. As the the private/business mileage split recorded by your solution, which is the result of demand for a similar school has boarding facilities for many of the students, drivers is more than 40/60, then you are at risk of an Over the last 12 months, Expense Reduction Analysts’ solution for sub 50 fleets clients, is compelling in that Andy recognised that the site required a variety of audit by HMRC. team of business fleet consultants has found that the it provides a “Corporate Styled” fleet solution for non foods to provide a balanced diet for the children. Top tip – ensure that your mileage recording majority of the businesses they have dealt with had Corporate sized fleets, and covers the key areas of Andy conducted a review of the school’s purchasing procedures are robust and accurately audited. implemented cost-cutting measures in response to acquisition, operation and policy – ultimately adding and found it was sourcing its food from a number of rising costs across their supply chain. value to your fleet operation irrespective of fleet size. different suppliers. One of the main suppliers was only • Fuel costs – fuel prices have increased by able to make deliveries a few times a week, which was approximately 38% since January 2010 and this trend Business fleets have just faced one of the toughest For more information please visit: www.erafcm.net not ideal as preparing food that is fresh and nutritious is of great importance to the school. EXPERT NEWS - Ian Broughton The client is so impressed with Andy’s success in the school’s food procurement that he has been asked to Why packaging costs may A new innovative solution was sourced, tested and visit the school’s agricultural site, Monkshill Farm implemented with the client’s approval, and the level to assess the procurement of animal feed. The farm of returns has dropped to almost zero. allows the students to gain valuable work experience In addition to the money that the client saved through in producing high quality, organic produce. In addition, be hurting your bottom line reduced warranty claims, there has been a vast Andy is so confident in the farm’s ability that it could improvement in client satisfaction as a result of the potentially become a proposed supplier to other local reduced number of products being damaged in delivery. clients. F Auditing Expert in Office Supplies, Nigel Richards was or many companies, the thought of reviewing that in some industries, the packaging cost of some In many scenarios, effective auditing can generate appointed to review the trust’s expenditure in this their packaging costs, whether primary or products can be as high as 40% of a product’s selling significant savings. This can include ensuring that the category. Nigel collaborated with the existing secondary, can seem a daunting process price. Smart packaging decisions can lead to a healthier right packaging products are being purchased for the supplier to correct the trust’s cost levels and achieved because of the amount of expertise and bottom line. job they are intended to do, checking that the correct knowledge needed to generate a return. However, by products have been delivered through the use of a significant saving. Nigel’s aim was not to simply ignoring this area of the business, many are failing to There are significant savings that can be made, and specialist machinery, and then following up with the source the cheapest option but work with the trust and capitalise on the significant savings available. below are just a couple of examples how: supplier over any discrepancies. the supplier to ensure that the client’s needs for quality and service were absolutely met. It is very easy to see why: a simple search for ‘cardboard Technology A typical example may be where shrink wrap has been boxes’ reveals choices including single wall boxes, Technology has played a considerable part in the purchased from a supplier, which may be over specified Nigel also carried out an assessment of the trust’s double wall boxes, export boxes, BDCM, Korrvu, Euro innovation of packaging solutions, whether that is in for its intended use, checking the shrink wrap itself to procurement of Janitorial supplies and found that Modular, Eco, Palletised Containers and more. This is environmentally friendly pallets, in the increase in ensure that what has been delivered is what is on the the client had a number of different suppliers, and before even considering sizes, protective padding and recycled materials being used within the packaging invoice and what has been paid for. that different members of staff were managing the so on. Given the vast range of products, sourcing and products themselves or in protective packaging options purchasing of different items. selecting the correct supplier can have a positive impact available instead of bubble wrap. These are just two areas where Expense Reduction on your business. Analysts has helped our clients with smarter spending Nigel and the client worked together to create a core In one scenario, Expense Reduction Analysts identified of packaging products, thereby adding value to the list of products and quickly identified that one of the Packaging can represent a significant proportion of a that there were high levels of purchased products bottom line whilst streamlining processes without the incumbent suppliers that was only fulfilling a small product’s selling price. For example, it is estimated being returned as they were damaged in delivery. need to employ additional internal resources. 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 Packaging Examples: products from many different suppliers. Primary Packaging Customer Facing Packaging, Carrier Bags, Table of Savings: Presentation Boxes Category Annual Saving Secondary Packaging Office Supplies 19% Janitorial Supplies 28% Cardboard/Corrugated Boxes, Labels, Food 19% Bubble/Shrink Wrap, Polythene Products Strapping, Pallets, Airbags, Adhesive Tapes, Upcoming projects Bottles, Drums and many more. Fixed Communications Utilities Facilities Management