Growing firm makes savings of 18% in ‘Indirect Spend’
Focusing on core business growth
A UK manufacturing firm has achieved annual savings of 18% across its ‘indirect spend’ by joining a set of Purchasing Frameworks aimed specifically at small to medium sized businesses.
Launched in 1999, the firm manufacturers and distributes specialist components for wholesale, retail and consumer markets. It has enjoyed rapid growth over the last 4 years with annual sales reaching £17 million, 290 colleagues and an expanding market place including customers in over 25 countries.
The Chief Executive and Finance Director had been looking at options to get ‘Indirect Spend’ (everyday business overheads such as Telecoms, IT, Print, Office Supplies and Utilities) under tighter control, where it was believed significant savings could be achieved. But they also wanted to ensure that the business continued in its core growth objectives and was not overly distracted.
Identifying a practical solution for the management of Indirect Spend
Indirect spend had historically been managed by various departments with support provided by the central finance division (as one of many other pressing tasks and priorities). With no professional procurement management in place, prices had been rising steadily – significantly in some categories – and otherwise excellent profit levels were being eroded.
The business had decided against appointing a dedicated internal procurement resource at this stage in its journey and although external consultancy help had been considered, the team were unsure about investing in significant procurement cost reduction programmes.
A risk free / zero cost option
Following a recommendation, the business was introduced to the Procura Purchasing Frameworks
Designed exclusively for a community of smaller to mid-sized organisations, the Frameworks combine the collective purchasing power of many companies – enabling members to access significantly lower prices with leading suppliers of like for like goods and services.
With membership of the Frameworks completely free of charge, the firm decided to work with Procura on a review of its key indirect spend areas.
Immediate savings across 11 categories of spend
Following a review, by Procura, of the firms spend data, contracts and agreements with existing suppliers, price comparisons were explored across 11 categories:
IT Peripherals, Consumables
Workwear & PPE
Postage & Franking
Telecoms - mobile, landline, data
Marketing - promotional products
Archiving & Shredding
- With Telecoms and Office Supplies having not been reviewed for some time, very significant savings of over 40% were achievable very rapidly.
- Large savings were also possible on print (25%), IT consumables (22%) and Office Furniture (21%)
- Savings were also achieved across Utilities, Couriers, Archiving, Marketing Promotional Products and Postage and Franking
Long term peace of mind
Following a handover phase, managed directly by Procura the firm were introduced to framework suppliers across each of the 11 categories, with access to lower prices immediately available.
The firm became one of many new members of the frameworks. With membership levels rising and framework spend increasing all the time, the ability to leverage this growing pool of combined spend will ensure prices remain highly competitive, providing long term peace of mind for the business.
Find out more about the Procura Frameworks
The Procura Purchasing Frameworks are free to join. We are delighted to accept membership from small to medium sized businesses who are looking to control their indirect spend areas.
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