Ceram Case Study
2
Expense Reduction Analysts Success Stories find extra profit www.expense-reduction.co.uk A solution that fits Savings and service improvements for Ceram Ceram is a global expert in materials testing, analysis and consultancy, providing customised solutions that help to measurably improve performance and profitability through safer, regulatory-compliant and better- engineered products. The client was satisfied with the service they were receiving from the suppliers, but Mark profiled their usage and found that they were paying more than they should have been. Mark established that Ceram were able to acquire all of the required office products from one of the suppliers, streamlining the supply chain. This resulted in a saving of 25% and improved processes for ordering and invoicing. Mark enlisted the assistance of his colleague, Manoj Pabari, a chemistry expert with a background in industrial gases and chemicals; Ceram uses these types of gases in research and wanted to achieve better value. Due to contractual obligations with the supplier and the specific requirement to have the exact same products, implementing a new supplier was not a feasible option. Manoj’s extensive knowledge of the industry allowed him to negotiate the rates with the existing supplier, putting them in line with the market conditions and uncovering a saving of 25% and an additional benefit of consolidated invoicing. Ceram had been using the same company to carry their samples for many years. Mark conducted a review of the client’s rates for UK Parcel Carriage and found that they were not in line with the current market conditions. A tender was carried out and the client selected a carrier that could provide the same level of service at a cost that was 50% lower. The new supplier was implemented and Ceram experienced a minor adjustment issue around pick up times. As part of the ongoing supplier management service that ERA provides, Mark worked between Headquartered in Staffordshire with laboratories and offices around the world, Ceram employs a team of research and product development professionals who are involved in physical and chemical materials testing, research, process engineering, product design and failure analysis. Rob Broad, Financial Controller, Ceram, wanted to explore effective procurement to increase purchasing control and improve profits without compromising on quality or service. It was felt by Rob that some of Ceram’s suppliers had become complacent and were no longer offering the best value available. Rob said: “I was initially sceptical about the ERA concept. Without experience of ERA’s approach it appeared that some claims could have been unrealistic given the work we had already done – we now know that this scepticism was unfounded.” Ceram’s internal buying staff had looked at several expense areas and achieved some significant reductions, but enlisted the assistance of Mark Davis and a team of specialist procurement advisors from ERA in a number of cost areas that Ceram didn’t have the internal resource to explore. “We felt that the ERA consultants had the knowledge and influence to further this initiative, achieving savings that we couldn’t tap into.” Rob Broad, Financial Controller, Ceram. Mark has carried out numerous office stationery reviews since joining ERA in 1999. Ceram had previously been ordering their office supplies including stationery and printer toners from two different suppliers. Table of Savings Category Annual Saving Office Stationery 25% Industrial Gases 25% UK Parcel Carriage 50% Waste Disposal 41% Laboratory Supplies & Chemicals 12% TOTAL 30%
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Transcript of Ceram Case Study
Expense Reduction Analysts Success Stories
find extra profitwww.expense-reduction.co.uk
A solution that fitsSavings and serviceimprovements for CeramCeram is a global expert in materialstesting, analysis and consultancy,providing customised solutions thathelp to measurably improveperformance and profitability throughsafer, regulatory-compliant and better-engineered products.
The client was satisfied with the servicethey were receiving from the suppliers,but Mark profiled their usage and foundthat they were paying more than theyshould have been. Mark established thatCeram were able to acquire all of therequired office products from one of thesuppliers, streamlining the supply chain.This resulted in a saving of 25% andimproved processes for ordering andinvoicing.
Mark enlisted the assistance of hiscolleague, Manoj Pabari, a chemistryexpert with a background in industrialgases and chemicals; Ceram uses thesetypes of gases in research and wanted toachieve better value. Due to contractualobligations with the supplier and thespecific requirement to have the exactsame products, implementing a newsupplier was not a feasible option. Manoj’sextensive knowledge of the industryallowed him to negotiate the rates with theexisting supplier, putting them in line withthe market conditions and uncovering asaving of 25% and an additional benefitof consolidated invoicing.
Ceram had been using the same companyto carry their samples for many years.Mark conducted a review of the client’srates for UK Parcel Carriage and foundthat they were not in line with the currentmarket conditions. A tender was carried outand the client selected a carrier that couldprovide the same level of service at a costthat was 50% lower.
The new supplier was implemented andCeram experienced a minor adjustmentissue around pick up times. As part of theongoing supplier management service thatERA provides, Mark worked between
Headquartered in Staffordshire withlaboratories and offices around the world,Ceram employs a team of research andproduct development professionals who areinvolved in physical and chemical materialstesting, research, process engineering,product design and failure analysis.
Rob Broad, Financial Controller, Ceram,wanted to explore effective procurementto increase purchasing control and improveprofits without compromising on qualityor service. It was felt by Rob that some ofCeram’s suppliers had become complacentand were no longer offering the best valueavailable.
Rob said: “I was initially scepticalabout the ERA concept. Withoutexperience of ERA’s approach itappeared that some claims could havebeen unrealistic given the work we hadalready done – we now know that thisscepticism was unfounded.”
Ceram’s internal buying staff had lookedat several expense areas and achievedsome significant reductions, but enlistedthe assistance of Mark Davis and a teamof specialist procurement advisors from ERAin a number of cost areas that Ceram didn’thave the internal resource to explore.
“We felt that the ERA consultants hadthe knowledge and influence to further thisinitiative, achieving savings that we couldn’ttap into.” Rob Broad, Financial Controller,Ceram.
Mark has carried out numerous officestationery reviews since joining ERA in1999. Ceram had previously been orderingtheir office supplies including stationery andprinter toners from two different suppliers.
Table of Savings
Category AnnualSaving
Office Stationery 25%Industrial Gases 25%UK Parcel Carriage 50%Waste Disposal 41%Laboratory Supplies & Chemicals 12%TOTAL 30%
find extra profitwww.expense-reduction.co.uk
the client and the new carrier to identifysuitable pick up times for both, resolvingthe problem before it became a real issue.
Expert in Waste, Steve Jones, was enlistedto develop Ceram’s arrangements for wastedisposal. At the time, Ceram was in theprocess of application for the ISO14001accreditation, an internationally acceptedstandard based on reducing environmentalimpact. Steve’s approach in this project wastherefore not to just reduce Ceram’s costsfor waste, but also increase sustainability.Steve worked with the client to introducean internal waste segregation systemwhereby the different types of waste wereseparated into designated containers beforedisposal. Separating the waste in this waydiverts the recyclable material fromunnecessarily going to landfill, making itmuch more environmentally sound and dueto increasing landfill tax, much more costeffective. In addition to a substantialsaving, this has had multiple benefits forthe client including increased CorporateSocial Responsibility, compliance withevolving waste legalisation and anenhanced application for the ISO14001accreditation.
Mark appointed Peter Randall to reviewCeram’s expenditure in the LaboratorySupplies and Chemicals category. As aprevious role of Peter’s involved beingresponsible for all aspects of managementof an established drug foundation, he wasaware of the need for consistent qualityand supply in this area. Peter conducted areview and established that the client hada number of incumbent suppliers in place.Although a range of alternative supplierswere considered, the client decided toretain one of the existing suppliers as theyhad a good working relationship and washappy with the service levels beingreceived. This has resulted in a savingof 12% and greatly reduced the numberof invoices to process.
Describing the importance that ERAplaces on improving value as opposed touncovering cheaper unit cost prices, whichinevitably results in a poor quality ofservice, Rob said:
“Most businesses are under pressure toreduce costs but it is crucial to avoid thishappening at the expense of underminingservice to the business elsewhere, so I fullysupport the ERA concept.”
Summarising the results of engaging ERA, Rob added:
“In addition to cost savings we have formed a verystrong working relationship based on teamwork andtrust. We have gained knowledge to ensure that wewill continue to receive best prices and the bestquality of service in the future.”
