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The objective of sharing the following case
studies with you is to give you an indication of the different types
of opportunities which exist to significantly increase your company’s
profitability.
Company A is an Irish based chilled and frozen
foods manufacturer with an annual turnover in excess of €100m.
A project aimed at understanding in detail the manufacturing cost
structure of a commodity on which A spends around €8m per annum
resulted in a new deal which realised savings of €1.4m per
annum.
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Company B is a significant player in the frozen
foodservice market. B found that they were having increasing difficulty
in competing in the poultry products section of their business due
to the increasing penetration of imported products of high quality
and low cost. A joint NPD/Purchasing project undertaken on B’s
behalf saw them with a range of fully cooked products which matched
or bettered the best available in the market; and savings of around
19% which enabled B to earn better margins, compete effectively
and grow their poultry business ambitiously.
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Company C is a key branded player in the frozen
retail market. C found that supplies of a commodity imported from
North America and Canada were occasionally unreliable due to the
variable shipping time. A project conducted on C’s behalf
led to an agreement on the part of a European manufacturer to invest
in the technology required to replicate the qualitative attributes
of the imported commodity. C also benefited from a substantial cost
saving as a result of the reduced shipping cost.
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Company D is a frozen and chilled food distributor,
supplying the foodservice and independent retail sectors. The increasingly
competitive climate in the foodservice market has meant that being
even slightly out on price where some key high volume, internationally-traded
commodities are concerned can lead to a substantial drop in sales
within a matter of days. A project aimed at providing D with a mechanism
to independently track price movements in these commodities has
been successful. D is now equipped with a cost model for their key
commodities, can independently track price movements and so negotiate
the prices which will keep them competitive week to week.
In the pursuit of their business, Company E spends €1.5m approx.
per annum on container transport of frozen and chilled foods. A
comprehensive review of their business’ requirements conducted
in conjunction with a review of the container traffic sector resulted
in savings of 12% being negotiated.
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Company F, in order to reduce working capital and
free up warehouse space for expansion; implemented a policy of lower
stock holding. One of the effects of this policy was that it highlighted
the poor service level of a small number of suppliers which occasionally
led an embarrassing service failure to F’s customers. A KPI
system based on ‘on time in full’ continuous rating
and an agreed penalty system for faulty or late deliveries negotiated
on behalf of F improved service levels significantly and recouped
€80,000 approx. for F in the first year.
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Company G’s chicken supplier was reluctant
to revise prices downwards in line with market movement. Following
the identification of a suitable alternative vendor capable of meetings
G’s product, service, technical and price requirements; the
original supplier suddenly became willing to negotiate and an auction
situation developed which led to even greater savings than had originally
been envisaged.
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Company H found that following sudden shifts in
the international marketplace, a recently entered into annual contract
worth €4m per annum was now very uncompetitive. Delicate and
lengthy negotiations resulted in the contract being reviewed to
H’s satisfaction
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The opportunities to save money and increase profits are almost
inexhaustible, especially when the continuously changing nature
of the industry and commodity markets is considered. To discuss
how Radix® Consultancy
Ltd. can increase your business’ profits, click
here
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