Case: Publisher renews contracts
A medium-sized publisher with various weekly and monthly publications was about to renew its contracts for pre-press, printing, paper and finishing.
PaperChainManagement had to delineate the following parts of the supply chain:
– current prices and contract conditions
– conformity with the market
– optimisation of the supply chain
After the initial analyses (desk research, examination of invoices, analysis of contracts), a plan was drawn up for the savings that could be made and changes in the workflow. The savings that could be made formed the point of departure for negotiations on contract renewals. PaperChainManagement developed an RFQ procedure. Negotiations were held separately with each supplier. The main focus in the final stage of drafting new contracts was on the duration and conditions of the contracts.
PaperChainManagement’s approach was a great success and resulted in a saving of 14% on a budget of more than € 30 million. In the words of the publishing firm’s CFO: “We knew savings would be possible but this was beyond our wildest expectations.”
A nationwide foundation with a large marketing and promotion budget wants clear insight into how its various budgets are spent. Large and costly campaigns are conducted every year; many direct marketing campaigns, such as mailings etc.. PaperChainManagement’s assignment was to make the costs transparent with its PMScan, and especially to check that the procurement of all products was in line with the market.
There have also been organisational changes. “The results of the PMScan made it impossible to leave the organisation unchanged. We have now outsourced most of the procurement and supervision of all productions. The advantage is that our performance is much better, while our costs are much lower and we have fewer people. From the procurement perspective, we’re now always up-to-date and we’re in contact with the right suppliers. PaperChainManagement for us are professionals, who also create a clear added value in that area.”
Case: European mail-order business/retailer
The case concerned a successful retailer (best in its class) with businesses in various European countries that regularly published numerous mail-order catalogues in several languages. Following various cost-saving studies by one of the larger and most well-established international consultancies the company finally called on PaperChainManagement’s specific know-how.
PaperChainManagenment’s assignment was to examine the entire supply chain (from pre-press to transport) and point out the main cost drivers and possibilities for savings.
After analysing the existing situation, PaperChainManagenment drafted an initial report for members of the management and board of directors with advice on where cost savings could be made.
This included analyses of price developments in recent years and identifying consistencies/inconsistencies, etc.
An extensive RFQ complete with explanation was drafted for existing and new suppliers. The existing and new suppliers were based in several European countries. Separate negotiations were conducted for each stage of the supply chain.
This resulted in savings of more than 13%. The reaction of the head of the procurement department was clear: “We can’t ignore a sum like that on a budget of 30 million euros. PaperChainManagement’s analysis made the whole process transparent. We now know what the main cost components are and how to influence them.”
Case: Procurement strategy
This case concerned a large retailer with a turnover in billions and with different store formulas in various European countries that spent tens of millions of euros per year on promotional printed matter. The new owner wanted to improve the results on the basis of the total cost of ownership.
PaperChainManagement’s assignment included the following objectives:
– to make the value chain (from pre-press to distribution) completely transparent
– a level of savings of more than 10% of the annual budget
– a turnaround time for the procurement project of 8 weeks
– use of suppliers based anywhere in Europe
This major procurement project started with a meeting of suppliers. All the relevant prospective European suppliers were invited. The CEO explained the objectives and approach to the project in a presentation: a new procurement strategy. PaperChainManagement then analysed and made calculations for all the products. This formed the basis for providing an insight into where all the possible savings could be made. RFQs were drafted for more than 50 products. All the suppliers were informed in the same way about the method of working, approach, terms of payment, etc. PaperChainManagement eventually automatically processed more than 550 completed RFQs. Each product was ranked on the basis of the results. The final negotiations were then conducted in cooperation with the client.
PaperChainManagement finished the scheduled work on time and achieved savings well in excess of the required level. The director of procurement was delighted: “This is an enormous amount on a budget of more than € 45 million. We’d have to sell an awful lot to achieve a profit windfall like that structurally.”
Case: A corporate group’s international procurement models
An international listed corporate group wanted to investigate possibilities for sourcing paper directly. Options were required for a pan-European approach, as advertising and promotional material had to be printed and distributed in various countries. The total budget was more than € 50 million.
PaperChainManagement surveyed the methods of working in the various countries and the raw materials that were used. SWOT analyses were made for each region and hidden synergies in terms of formats, waste, paper quality, etc., were investigated. An assessment was also made in cooperation with the local management in each country of tasks, responsibilities, fund flows and potential impairment risks.
PaperChainManagement developed two procurement models for directly sourcing paper and drafted protocols that enabled the client to achieve structural savings of 8% with the minimum workforce and risk. The procurement director: “The project taught us a lot about how the paper industry and printing industry deal with each other. We also have transparency with direct sourcing.”