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Profit News September 2012


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Profit News September 2012

  1. 1. PROFIT NEWS INSIDE THIS ISSUE Mailing Surcharges Apple vs Samsung Bruce Murray explains how to avoid extra costs The battle of the technological giants A Glowing Report from Celotex Adapting to the Economic Climate Detailed analysis result in significant savings Laurence Knott explores marketing in a recession “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 of the consultants was a pleasure to work with.” Oskar Wakare, Financial Director of GMKExpense Reduction Analysts Success StoryBig Bang for BucksSignificant savings and procurement improvements for GMK LtdG MK Ltd, formerly known as Gunmark, that are legally allowed to carry them. GMK Ltd had accounts would be complicated and time consuming, is the UK’s leading shooting sports two suppliers in place, one which carried ammunition Merchant card fees but Expense Reduction Analysts made sure it was a distributor and has been trading since and another for the distribution of guns and other straightforward process. It was reassuring to have an 1971. GMK Ltd exclusively represents shooting paraphernalia. Consultant, Paul Davidson, was brought in to review expert there to assist and ensure it all ran smoothly.many well known brands for shooting apparel and GMK Ltd’s spends on merchant card fees. The Expense Reduction Analysts were able to secure aalso provide guns and shooting equipment to the UK Charles worked with the suppliers to streamline the company had numerous accounts provided by 2 significant saving in GMK Ltd’s spends on marketingLaw Enforcement and Ministry of Defence. dispatch process with one carrier to take all goods different suppliers; Paul recommended simplifying print. GMK Ltd were pleased with the service they excluding ammunition, where the contract with the this process by consolidating all of their accounts to were receiving with the print supplier they had inGMK Ltd engaged Expense Reduction Analysts in incumbent supplier was maintained. This uncovered a a single supplier. This uncovered an annual saving place; whilst maintaining the relationship betweenSeptember, 2009. Consultant, Danny Rogers met with saving of 19.5% and a significant reduction of time in of 21.4% and an improved service for GMK Ltd as GMK Ltd and the supplier, Danny was able to securePaul Charleston, GMK Ltd’s Warehouse Manager the warehouse, with much fewer invoices to process. it allowed them to manage only one bank for each a saving of 20% by working with the incumbentto discuss areas of the company where procurement of their different accounts. The chosen supplier also supplier to renegotiate GMK Ltd’s contract at a lowercould be improved and savings could be achieved. Significant savings provides a dedicated Relationship Manager to handle price. GMK Ltd’s accounts, meaning they won’t have to callDanny enlisted the assistance of his colleague, Speaking of this project, Charles said: “Initially, this bothersome help lines if they incur an issue which is Danny appointed Brian Holmes, expert in telecoms,Charles Reid, to analyse GMK Ltd’s expenditure on was a tricky implementation due to the sensitive an additional improvement. to review GMK Ltd’s spends on their fixed telecoms.distribution. This category was not straightforward cargo, but with patience and bringing the correct Brian identified a new supplier that was able to offeras firearms and ammunition are a specialist category; contacts into play from the supplier, good service Lyn Emery, Purchase Ledger Administrator said: “I a better service for less than GMK Ltd were paying.therefore there are a limited number of parcel carriers levels and a significant saving was achieved.” was initially nervous as I thought rearranging our 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 their products are of a sensitive nature, there were many challenges 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 service they were receiving.” Table of Savings Category Saving(%) Distribution 19.5% Merchant card fees 21.4% Print 20.0% Telecomms 17.1%
  2. 2. EXPERT NEWS - Bruce MurrayWatch out for those mailing surchargesRoyal Mail offers three months grace period to get it right. It also proposes to introduce a system of proportionality requirements for DL and above sizes that are presented whereby surcharges will be based on low volumes, in trays to allow for 35mm of unsealed flap at either medium volumes or high volumes of mail that have end, up from 25mm. failed to meet the relevant product specification. It believes that this will ensure customers see a In response to the Royal Mail tightening up their surcharge more comparable with the scale and impact checks of machinable mail against the specification, a of not meeting the specification. number of mailing houses have revised their envelope specification to meet Royal Mail guidelines more Sealing surcharges explicitly and to help avoid costly mail reversions. Royal Mail plans to adopt a phased approach to the When supplying outer envelopes, or artwork for reimplementation of sealing surcharges after the envelopes for machinable mail, please use the grace period ends on the 15th September, which will following specification for flap shape and glue areas start at an additional 20% surcharge on the mail and as a guide. increase to 50% by November. From January all mail that fails to meet the new sealing specification will be Where outer envelopes are received outside of this surcharged. specification, we ask you to confirm with your print/mail partner if these will attract a surcharge or Finally, the company pledged to review its bulk mail alternatively contact the ERA Print Team for further specifications to ensure they remain appropriate and advise. to introduce minor changes to its envelope sealing Envelope SpecificationR ecently Royal Mail has outlined a series of Following the subsequent furore, Royal Mail Envelope Style: Wallet proposals which it hopes will quell the print introduced a three-month grace period on sealing Minimum Envelope Size: C6 industry backlash over its sudden increase in issues in June and pledged to refund 90% of surchargesreversion charges. dating from March 2012 following intervention from Maximum Envelope Size: C4 the DMA and the Strategic Mailing Partnership. Other Envelopes: Any size that falls between C6 and C4The company had come under fire after doubling the Side to Side Clearance: 15mm minimum for all envelope sizesnumber of staff in its revenue protection facilities Royal Mail’s proposals, which it presented at a DMAand stepping up the policing of its specifications, summit in July, include publishing on its website a Paper Stock: Minimum 80gsm, Maximum 115gsmwhich led to a dramatic rise in the number of mailing league table of the most common faults together with Envelope Flap Depth: Minimum 40mmenvelopes found to be faulty and printers and mailing advice on how they can be avoided. Preferred Envelope Design: Straight Flaphouses facing surcharges of up to six figures. Expense Reduction Analysts Success Story EXPERT NEWS - Jason AdderleyERA find the right supplysolution for Prima Systems Cash flow crunch for law firmsP rima Systems is a family-run business Prima’s Financial Director, Sue Halfpenny, was fed that manufactures, supplies and fits up with her relationship with her incumbent provider I windows for the construction industry and but struggled to find the time and resources to embark local authorities. They were becoming on the lengthy process of negotiating and transferring n its latest quarterly survey, the Law Society’s These trends represent a challenge for Financeincreasingly dissatisfied with their energy supplier, supplier. Law Management Section (LMS) reported a Partners and practice management staff, particularlyso employed the services of specialist procurement deterioration in law firms cash flow positions. A where modest profits and a poor working capitaladvisors, ERA, to orchestrate a reduction in cost, and Calling in the experts quarter of firms reported operating within 25% position can bring pressure from the bank.manage suppliers. of their overdraft limit, whilst a sixth of firms were So she called on the services of ERA. Paul Gannon, operating within 10% of their overdraft limit on a Naturally, firms can make efforts to improve theirThis change resulted in a massive 43% savings - Client Relationship Manager and Nadim Vanderman, regular basis. position in a number of ways. It makes sense to dealequating to £8,319 - in the first year. Energy Project Specialist, seamlessly managed Prima with foreseeable cash outflows such as bonuses, System’s move from one electricity provider to Some explanation for this can be found in Crowe taxation, VAT and quarterly rental payments byPrima Systems had a general awareness that they were another. Clark Whitehill’s Solicitors Benchmarking Survey converting work in progress to debtors and thenpaying too much for their current energy alongside 2012, which found that the average number of lock-up collecting debts promptly.specific grievances including: Massive savings days has not improved significantly over the past year – with 41% of firms experiencing lock-up in excess Cash flow• The original supplier did not notify the company Nadim negotiated with the incumbent supplier a of 150 days. of a price increase contract termination fee of just £1500, and then Proactive cash flow management ought to be a• They were hit with a £4000 ‘catch-up’ bill out sourced an alternative provider. The move has resulted Non-salary overhead costs strategic objective for firms, and should have a of the blue in a 43% annual saving of £8,319 after the payment of bearing on the type and mix of work undertaken.• The supplier failed to notify them of their the termination charge. Earlier in the year the LMS reported that non-salary contact renewal date, automatically binding overhead costs per fee earner had grown 2.6% year Needless to say, some of the most effective them to an expensive contract Notably, the energy contract has subsequently been on year, bucking the downward trend seen in the contributions to proactive cash flow management• Attempts to resolve these grievances were met reviewed each year by ERA with the objective of last few years. This may, in part, be explained by the can be derived from reviewing costs and processes to with an unwillingness to negotiate - although keeping costs as low as possible. additional COFA and COLP regulatory roles (largely ensure sustained best value, and exploring outsourcing they eventually offered a 40% discount on the adopted by Finance Partners) diverting resources and opportunities. catch-up fee, the ‘damage had been done’. attention from the management of costs and suppliers.
  3. 3. EXPERT NEWS - Laurence Knott Expense Reduction Analysts Success StoryMarketing your Delivering savingsbusiness in a recession and improvements in Logistics for Celotex 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. C elotex is the UK brand leader of PIR with products of high demand, the company typically Survey your clients thermal insulation solutions for the distributes around 60 lorry loads of insulation boards building and construction market. With a each day. Ken undertook a detailed assessment of As the economy changes, so do the needs of your history of continual product innovation, Celotex’s UK Road Distribution and identified that clients and prospects. This means that even if you technical progression and an unrivalled product and the company would benefit from a more innovative surveyed your potential clients in the past and found service package spanning over 85 years, Celotex pricing structure than they currently had in place. out what they need, that information is likely to be remain the insulation specialist of choice. Using his extensive market knowledge, Ken workedY old news. You may find that your clients now require with the incumbent supplier to restructure the pricing different services and different information at different As the fastest growing insulation category within the scheme, making it both flexible and more cost ou’ve probably heard it many times, ‘the price points. Therefore, you may want to survey your UK, PIR insulation provides the ideal solution for effective for Celotex. When addressing Celotex’s best time to market your business is during target clients to find out what their needs are and how meeting both current and future building regulations operational requirements, Ken negotiated with the a recession’ but how do you actually their needs are changing. and other carbon reduction programmes. PIR supplier to provide additional loading facilities at achieve that when your business isn’tperforming the way it should, which in turn is forcing insulation delivers high thermal performance allowing no extra cost. These solutions were implementedyou to consider reducing your marketing budget due Be more creative! homes and buildings to achieve premium levels smoothly by Celotex, resulting in a category saving ofto cash flow constraints? Your competitors are likely of energy efficiency and with some of the thinnest 11% and an improved be in the same boat and are probably reducing their How effective is your current marketing? Do you rely possible spends, so how can you take advantage of on just one or two routes to market? It’s harder to find For more information on how Expense Reductionthe situation? This is a question on the mind of many clients these days, so now is the time to review your Thorough review Analysts can assist you in uncovering savings andbusiness owners and marketing professionals right current marketing campaigns and the channels that improving procurement, visit our specialist Logisticsnow. you use to communicate your messages. Research In 2009, Celotex engaged Steve Rhodes of Expense website: alternative marketing methods and test them. Are you Reduction Analysts to assist them in reducing costsThe good news is that much can be done without utilising online social networking for instance? There and improving their procurement systems. Stevespending money that you don’t have. There are ways are some excellent and free tools to get your message Rhodes enlisted the help of his colleague, Ken Rogersof promoting your business and winning new clients across. Do your homework, find out what others are of Expense Reduction Analysts’ specialist Logisticswithout increasing marketing spend. Many of the doing and what works for them, then test and review. Team who conducted a thorough review of Celotex’stips below are completely free and can be adopted Use many different routes in order to bring in more expenditure on Logistics. Celotex pride themselves onstraight away. One of the biggest barriers to success buyers to your products and services. the service they provide to their clients such asis businesses who do not change their behaviours. Welive in times of great economic uncertainty and those wholesalers and construction sites;businesses that make changes and try new routes Get personalto market will see positive outcomes versus thosebusinesses that do not. Try them for yourselves and How much of your messages are tailored to yourmonitor the results. prospects? Your future clients are likely to get bombarded by other businesses vying for a slice of “We were incredibly impressed with the work of the the action, so your campaigns really need to stand consultants, who definitely proved their expert status. Ask for referrals out. Review your prospect, what’s happening to their business right now, how is their market sector Although the project required an investment of our time,Referrals are one of the top ways of growing your performing? Tailor your communications to their business first; what do they need right now and how it was certainly worth the results. Having previouslybusiness. You probably know that you can increasethe number of referrals you get, radically increasing can your business help? Do you have clients in the made internal efforts to improve our procurement, same sector or in their locality? Make sure they areyour client base, by doing one simple thing – askingfor referrals; but are you doing it? aware. You need to understand your prospect before we found that the category knowledge and extensive they understand you. buying power of Expense Reduction Analysts was Ask for a testimonial of great assistance in delivering savings. As well as Laurence Knott - Head of Commercial andIt’s what clients say about your business that really Marketing Strategy, UK and Ireland achieving a significant saving in our logistic spends,matters and what you want your future clients to read. Expense Reduction Analysts we now have an easier and consolidated supply chain which is of real value to our organisation.”EXPERT NEWS - Paul Giness“For what it’s worth - theimportance of valuations” Mark Goddard Financial Director of Celotex Speaking of the work Ken carried out in this category said:P roperty News, an online magazine providing business rates relief and Enterprise Zones, future Other publications that recently featured property news, features and comment across factors that will affect a property’s value such as Expense reduction analysts experts... the South, South West & Wales and the energy efficiency and the green credentials of a S Midlands requested ERA’s senior consultant building.and lead property expert, Paul Giness to share his imon Phippen contributed to Direct field communications, augmented reality, imageadvice for businesses on the importance of property “Future factors may be a little speculative at this point; Commerce magazine’s feature on packaging, recognition and interactive TV. The article exploresvaluations. but it demonstrates a very tangible point: a financial entitled “Boxing Clever: is your packaging how retailers are implementing these technologies to director can really benefit from keeping a close eye working for you and your customers?” deliver a seamless shopping experience to customers. Background on factors that will dictate property value in the future The article demonstrated ‘key steps to success’ and getting wise to incentives, which could help them including factors such as environmental, material Paul Seddon, specialist on Higher EducationPaul is a chartered surveyor with 20 years’ experience work around an inflexible ratings system. costs, protection of goods, security, shipping costs, procurement was asked to provide his expert insightin the property industry, he began his career with a fulfilment and returns. on UNI: University News and Insight’s articlenational firm of chartered surveyors, specialising in “In many ways rental values and the business rates on the benefits and pitfalls of Higher Educationbusiness rates - an area that has developed into his they dictate can actually be a great yardstick for Brian Holmes, communications expert with over procurement consortiums. Collaborative procurementcore expertise. organisations. Attitudes towards valuations are 25 years of industry experience, provided his has been largely successful in the public sector with constantly evolving and, if approached wisely, they insights into in-store retail technology as part of participation rates in the UK high in terms of bothPaul’s feature offered readers an insight into the can offer businesses useful insights into when and’s article, “Are in-store technologies membership of the consortia themselves and the usechallenges of the current system of rating valuations, how to invest in property – it just takes some forward revolutionising customer experience?” on retail of the framework agreements which are put in place.government proposed solutions including the small thinking.” customer’s increasing use of smart-phone apps, near
  4. 4. EXPERT NEWS - Brian HolmesApple vs SamsungI n a landmark ruling in a U.S. Court, Apple Samsung is currently considering increasing its was awarded $1.05 billion from Samsung over reliance upon Windows Phone after its difficult legal alleged patent infringement on the Galaxy loss to Apple. If that happens, it’s only good news for device maker’s part. The jury also found that Microsoft. Granted, Samsung already offers WindowsApple did not infringe any patents Samsung brought Phone devices, but if the company leaves Android inbefore the court. It was a major victory for Apple. favour of Microsoft’s operating system, it’s a win-winFor its part, Samsung is expected to appeal the case for the software giant and a major blow to Google.and try to prove that it didn’t do anything wrong. Inaddition, the company will attempt to keep selling Now that Apple has won the ruling, there’s a gooddevices that might face a ban on Dec. 6 when the U.S. chance it’ll attack other Android vendors, and thoseDistrict Court judge holds a hearing on the matter. vendors know it. So it wouldn’t be all that surprisingApple is requesting at least eight Samsung devices be if they run to Windows Phone to protect themselves.banned from sale in the U.S. and inevitably this andfuture rulings will have a major impact on Samsung Perceptionglobally. From the consumer standpoint, Apple can be viewedThe fallout from this ruling extends far into the as a bully and Android vendors might appear to betechnology space and Microsoft is one of the copycats. Microsoft, meanwhile, is sitting on thecompanies most affected by it. The software giant is sidelines and out of the headlines.trying desperately to catch up to Google and Android.With Google’s chief vendor partner getting hit hard So far, Apple hasn’t gone after Microsoft or Windowsby the court ruling, this might be Microsoft’s chance Phone. That’s likely to be because Microsoft has suchto finally win one. a deep patent portfolio that targeting the company wouldn’t make much sense. As long as that continues, Good news for Microsoft Microsoft can do what it wants and watch Google worry.According to a recent report from the Korea Times,Expense Reduction Analysts Success StoryERA–Leading theway to economic Expense Reduction Analysts NEWSrecovery in Ireland Mobile Site Launched E RA has launched a mobile version of their “Our mobile friendly website still features all of website aimed at providing all of the latest the latest news, comments and delighted clients procurement news whilst on the move. that everyone has come to trust of us as specialist procurement advisors, but with the functionality that is required of mobile devices.” Chris continued. “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.” To view the mobile site for yourself, point your phone comments Chris Aston, Marketing Director, ERA. to EXPERT NEWS - Manoj Pabari Update on the industrialY ou can’t fail to read the gloom and doom work to do. Many businesses are simply not aware of that surrounds the Irish economy which what ERA Ireland can achieve and our experiences gases market remains deep in crisis, with no sign of an show that our clients are delighted with the results. We immediate turnaround as the European handle everything for our clients so they can continueUnion enters recession. Cash constrained business to focus on their core business activities. Addingowners continue to look for ways of injecting profit value and profit back into the bottom line is only partback into their books as every possible area of fat has of the story, it’s how we manage our client’s on-going Malready been trimmed to the bone, or has it? business costs. It’s all about savings today, tomorrow and into the future.” anoj Pabari, ERA associate and expert gases can increase considerably for customers year More businesses turn to ERA Ireland chemistry and pharmaceuticals advises on year. Under these circumstances, it is normally Experts at achieving savings that there is a lot of overpricing in this difficult for individual companies to know whatExpense Reduction Analysts Ireland was formed in market, not because customers are not the correct price to pay is. A significant example of2009, adopting the tried and tested cost management Current client Whale Pumps, who manufactures keeping an eye on this cost area, but because this cost a current worldwide shortage is helium. Not onlysolutions that ERA UK has been using to reduce the valves, pumps and plumbing systems for use in mobile area by it’s nature is a very difficult area to keep on has the price increased for helium, but supplierscost of doing business for over 20 years. In just a short and low voltage environments, have been in existence top of. Furthermore, customers are often in a difficult are having to ration their existing customers, oftenperiod of time, ERA Ireland has many well-known for over 200 years, engaged ERA Ireland back in position of not being able to directly negotiate with prioritising them by industry such as manufacturing,and not so well known businesses on their books and 2009. Wesley Hanson, Finance Director, Whale suppliers as they are very frequently committed to research, recreational uses.currently has over 25 million Euros of client spend Pumps stated; “ERA Ireland have been excellent supplier agreements.under review. Moreover, a year-on-year growth figure to work with; they are experts at achieving savings When there is significant shortage of a given gas type,of 46% is set to rise, as more and more businesses turn whilst keeping a close eye on what else is important Manoj’s work not only enables clients to lower suppliers are reluctant to take on new customers,to ERA Ireland for help, as their effective self-funding to the business. They have found economies that we costs without affecting the service levels or product which has recently been the case for helium gas duecost management successes are talked about. could not have discovered on our own, and they have quality, but also to ensure that their indirect costs are to the shutdown of key market producers in countries always been sensitive to our long-established supplier minimised, as most clients are often unaware that such as the USA and Australia.Neil Copland, Director of ERA Ireland commented; relationships and I look forward to working with them various service enhancements are available to them.“We are committed to reduce financial waste of in the long term”. It is not expected that this shortage will last forever,medium to large businesses in Ireland. We are proud Visit ERA Ireland’s website: 1. The industrial gases marketplace periodically but suppliers remain cautious about the immediateof our successes to date; however, there is still much experiences gas shortages thus the prices for various availability.