Bloodstone gives Cancer Council $17,000 for projects to help patients and carers

December 22, 2009 EXECUTIVES from Norwest company Bloodstone have presented an early Christmas gift to Hills cancer patients and carers. The innovative consulting company handed over a cheque for $17,000 to Katherine Watson at the Cancer Council’s Hills Community Hub at Rouse Hill recently. The expense analysis experts work with organisations and businesses to find ways of saving them money without cutting staff or jobs from the payroll. "We look at cheaper ways of doing things and if we don’t find savings you don’t pay," Bloodstone managing partner Colin Manning said. When clients do pay, a percentage of the fee is then donated to the Cancer Council. Daryl Smith from Bloodstone said office supplies, freight, telephones, IT and insurance costs were all areas that money could usually be saved on, with up to 50 per cent savings in some areas. Working with the Anglican Schools Corporation to review campus cleaning costs resulted in savings in excess of $1 million. Mr Manning said by donating money to the Cancer Council the company and their clients were giving something back to the community while saving money

COST CREEP

Is it destroying your profits?

Automatic annual price hikes by suppliers resulted in one of Australia’s most prominent, internationally active sportswear manufacturers being “taken for a ride to the tune of a least $370,000”.

“And that was just in excessive freight charges over the preceding two-year period”, says Mike Aitchison, Speedo’s former Warehouse & Distribution Manager. The problem, he explains, lay in the fact that no internal checks were being kept on these continual - apparently unjustified - tariff increases.

“Had it not been for the intervention of expense reduction specialists, Gordon Rhodes and Colin Manning, there’s little doubt Speedo would still be paying through the nose for its domestic and international freight instead of making comparative savings of around 38% a year as it does now.”

“What I particularly liked about Bloodstone was its reports. These invariably contained hard facts and statistics; not cosmetics. The sort of information you could take to the boardroom,” he added.

Time and again we come across situations like this where all sorts of entrenched suppliers engage in what we call ‘unperceived cost creep’, explains Gordon, Bloodstone’s managing partner.

“It may be just a few per cent a year but, over a period of time, this can add up to a sizeable slice off any organisation’s increasingly important bottom line. Particularly in today’s difficult economic climate”

As with all new clients, Bloodstone’s first task in this ‘fee for results’ Speedo exercise was to determine the Company’s precise requirements, then critically analyse existing supplier costings and performances. In this case, the need was to ensure constant, reliable delivery of an extensive range of products to a wide variety of markets - both domestic and international - by the most cost-effective means available. Because of an exceptionally large number of promotional and ‘competitive event’ deadlines, guarantee of ‘on-time’ delivery was vital.

“Working closely with Mike, we recommended certain internal procedural changes plus moving to a more efficient, far less costly delivery arrangement under which suppliers were reduced from five down to two”, says Colin. “Increased use of overnight airfreight and air satchels played an important role, not only in achieving our primary aim, but also helping to nullify a competitor’s activities in a vital market area.”

Bloodstone specialists were also successfully engaged on a further two, fee-based projects by Speedo’s National Operations Director. These were to investigate and make recommendations on switching from agency to a direct corporate involvement in New Zealand and warehouse outsourcing.

Recession or Depression.... It's Your Golden Opportunity

"You can lose money indefinitely but you only run out of cash once," 
 a well known business adage.

Every week, more and more corporate releases talk about restructuring and lower earnings. In practice, ‘restructuring’ is invariably a euphemism for "heads will roll".

This, in turn, significantly impacts on an organisation and its people.

Making matters worse, many so-called restructuring efforts are undertaken in haphazard, arbitrary ways - then poorly communicated ‘down line’ by management.

As a result, instead of employees focusing on what they're supposed to be doing and helping the company back along the road to prosperity . . . they start worrying about job security. Their families. Their future. They waste valuable time discussing with workmates their increasingly precarious job and financial situations.

Tom Peters, author of In Search of Excellence, recently stated “Tough times are in fact golden opportunities to get the drop - and the long-term drop at that - on those who respond to bad news by panicky, across-the-board slash and burn tactics and moves that demotivate and alienate the workforce at exactly the wrong moment."

Have you considered the current economic crisis may well be your golden opportunity to give the "undiscovered talent" in your organisation new responsibilities? While headcount reductions may be necessary, strive to avoid across-the-board cuts. Instead, employ performance reviews to remove poor or marginal performers. If at all possible use the opportunity to build your talent base by recruiting top performers.

Scale back non-value-adding administrative activities such as allocations processes and standard reporting. Dispense with time-consuming tasks that often take on a life of their own by continuing to be produced even when they no longer have value. Review your ad hoc reporting, too, and limit this to truly essential work.

Most importantly, carefully examine and identify unnecessary cost burdens, particularly those outsourced agreements which are no longer relevant or cost effective.

Remember, however, when negotiating with suppliers it is essential to try to understand their situations, too. If, for instance, they are in industries characterised by high fixed costs then volume is critical which makes them open to pricing or payment flexibility.

If their cash position is strong, you may also be able to improve your own position by obtaining extended payment terms. Alternatively, if a prospective supplier is a public company, knowing the terms it offers to its average customers gives some idea of where to start negotiations.

While not always possible, being aware of the financial health of your suppliers is crucial. They may be profitable, but if they are being squeezed by slow-paying customers and lack sufficient short-term credit access, they could get snuffed out.

Obviously, this is a prioritisation exercise with the focus being on fast-moving or strategic items or suppliers, or those that would be hard to replace quickly.

In a nutshell, leverage your best suppliers and actively manage supply chain risk. Seek opportunities to consolidate and improve pricing, payment and inventory terms. Make every effort to understand suppliers' needs, their cash position, and their financial health. Above all, ask yourself, if a key supplier runs into financial problems, can you replace it quickly?

Tough times require tough and unpleasant decisions - but thriving, not just surviving, is an option for those who mix wisdom and boldness of leadership with transparency. A rare opportunity for organisations to maximise employee involvement and engagement.

Picking the ‘bottom of the market’ is an impossibility. Or knowing precisely when business and industry will start to pick up again. The trick is to be prepared. Ready to move when the time is right.

That’s exactly how some of today’s most successful organisations were built by visionaries. Astute businessmen like Jack Hannes (Hanimex), Dick Smith, Lindsay Fox and Rupert Murdoch.