Company Profile
A leading food manufacturer based in Auckland.
The Situation
The Client engaged Expense Reduction Analysts (ERA) to review their Office Supplies costs. For some years, the Client had kept to a ‘two supplier’ policy as they believed that each would ensure the other company would maintain competitive prices. Across the range, they had hundreds of line items for general stationery, computer consumables and copy paper.
Our Approach
ERA analysed purchases for the previous 12 months to identify and capture all purchasing including seasonal trends. Discussions were held about the ‘two suppliers’ policy, and it was agreed that this worked against the Client because neither supplier had all the business and therefore the pricing was not as competitive as it could be. A further issue identified was the unnecessary duplication in processing invoices from multi suppliers.
Benchmark data was collated which confirmed that there were significant price variations between suppliers for the same products and it was agreed by the Client that they would prefer to consolidate all their Office Supplies purchases with one supplier.
Three major Office Supplies providers were contacted and provided with annual supply details in a specific Request for Proposal. The responses were analysed, and the findings were presented to the Client’s stakeholders in a Recommendation Report.
The Results
By moving to a sole supplier partnership, the Client was able to achieve a massive 37% saving across the board. Because the supplier was one of the original providers, nothing changed except the price and the existing relationships were able to be maintained. Post-implementation, product rationalisation was undertaken and by limiting the range of products within certain sub categories, further savings were achieved over and above that
identified initially.
During the course of the Project, ERA also discovered several overcharges and duplicated invoices and credits were obtained for the client adding further to the benefits.
“They provided a very professional service and kept us fully informed throughout the entire process.”