The Bemis Group, world leader for flexible plastic packaging, commissioned Expense Reduction Analysts to optimise their transportation costs. Yannick Magnon, Purchasing Manager for Bemis Europe, comments on a successful partnership.
What project did you entrust them with?
“They were commissioned to optimise the transportation expenses (road, sea and air) for the Group in Europe.”
How did you coordinate the management between countries?
“First, there was a phase of data gathering within the various companies of the Bemis Group. By definition, transport is a local operation, split between the different production sites, warehouses and clients. The individual needs of each unit have been well understood and alternative solutions initiated.
The data was then edited and a strategy developed to launch a tender in the market with a number of transport providers able, with all our purchasing volume, to deliver the expected competitive service. We chose them together.”
What was the next step?
“There was then, for both teams, a very active programme to validate results and options to choose from. Proposals will be made on the basis of a thorough analysis of the suppliers’ offers. Then an elaborate iterative procedure enabled us to evaluate which was the best compromise for each of our individual units, the final decision being ours, both at local and corporate levels."
What was the last step about?
“The last step was about the implementation of options. This was a very significant and crucial stage. It is quite easy to display savings on an Excel spreadsheet or PowerPoint presentation. It’s harder to make them real. Changing suppliers never goes as planned. It’s something practical, there are always some problems. You have to load and unload pallets, be on time, deliver and ensure quality... it’s a very competitive market and Bemis has a high reputation in the market with regards to services. Therefore we did not want to compromise on the quality of services."
How did you manage operational and cost-related issues?
“Expense Reduction Analysts helped us, and are still helping with the implementation of the different options chosen. This is not a seamless task. We meet with the operational and logistics managers from each site to try and find solutions. They make sure that every month the services provided are consistent with the ones we agreed upon. They check invoices. If there are any issues with claims on quality, they manage them with us. They are putting normal sales pressure on providers to make sure they honour their commitments. Even today, this expert panel is the preferred interface for the Bemis group transport providers. The tender process lasted around 6 months and the implementation phase was monitored for about 2 years."
How do the external partners behave with the work done in-house?
They respect the work done by our employees, take into account their ideas and experience and come up with concrete solutions. They offer options whilst identifying the risks and opportunities, but the decision remains the responsibility of the client, i.e. the Bemis Group. Where they differentiate themselves from other consultants is with regards to implementation and monitoring. There are always people on the market who promise the earth, but disappear when faced with the unexpected, and you are left to deal with all the problems. This different monitoring is a great improvement. Once you decide to buy, when you change suppliers or renegotiate prices, things don’t go according to plan because the decision is made. There are always unforeseen problems, issues. And you must devote large amounts of energy to solve them."
And finally, did you achieve savings by outsourcing transportation costs?
“Yes, and first of all, it enabled us to have an overall view of our transportation expenses. We have no common IT systems to all sites. Then it helped us make significant double-digit savings on our transport services. We have worked with suppliers we had never worked with before. This allows us to have a real rotation in the suppliers’ portfolio. We kept many of our incumbent suppliers, whilst challenging them, but have also brought in new ones. This qualitative gain will also generate value and savings for Bemis for years to come. Once there is a dynamic, the market players see that it is still possible to come into our group. Both these reasons – not having the internal resources and being able to save money thanks to this partner – fully justifying drawing on their expertise."