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CW PURCHASING CONSULTANCY

Here are some documented case studies to show our scope of cost savings, service level improvements, culture anlaysis and implementation strategy.
We are proud of the deliverables listed here and believe they epitomise our approach and scope of the breadth of our deliverable. More importantly we are proud that we delivered the proposition and they are happy we share this with you.

 

Purchasing Consultancy Cost Reduction, Surrey, London, Purchasing Consultancy Cost Reduction Methodolgy

1. Leatherhead Football Club  - The Phoenix Rises From the Ashes

2. Blood Plasma Negotiation - American Protein Corporation – Spillers Petfood

3. Recruitment Strategy at Philips Electronics

4.Building Works - Philips for NHS & Private Hospitals

5. Warehousing Logistics - Philips Marketing - Pick and Pack Warehouse Selection

6. NV Van Hoop - Value Add Project managemnet on Tuna Fish Residue

1. Leatherhead Football Club  - The Phoenix Rises From the Ashes

 

Background to the Requirement

Leatherhead Football Club were a semi professional football club which was famous in the mid 1970s and reached the 4th round of the FA Cup in 1975 narrowly losing to Leicester City of the 1st division (now the Premiership). The club was trading insolvently and were being supported in their annual losses by a rich individual. The owner refused to put any more money in June 2000 and effectively the club would cease to exist. The season was due to start in mid August 2000, which gave 10 weeks to try and get a team on the pitch. The club held a winding up meeting in July 2000 and a group of fans led by Colin Ward (CW) decided to take on the rebirth of the club. The club had not spent anything on infrastructure since 1975 and amongst other matters the roof was leaking, there was no boiler or hot water system and it was being occupied by homeless persons. There were monies owed to a large number of individuals that needed to be addressed. Critical financial information of exact income and expenditure was not available and a help yourself in the till culture has set in.

 

The Reference

The mentality of football clubs and fans is to win football matches. Fiscal prudence seems to be an alien culture to those who run clubs so managing expectations v the deliverable is the hard part. CW led the takeover of a group of fans including a solicitor, an accountant, various tradespersons and senior managers in business. CW went in as a full time make it happen trouble shooter/MD on a voluntary basis (whilst running his meat trading business), and immediately set out a business plan with tight financial controls. A strategic plan was written for 6 weeks then 6 months then 1 season then 3 seasons and 6 seasons. Projects were started and analysed. Any project that did not generate revenue in 14 days was shelved as a case study to be revisited Cash flows and strategy were repeatedly checked to ensure adherence to fiscal targets.  Work days and joint ownership were set up for the fans, who were to become 100% owners of their club’s shares. Credit for the roof and boiler (must haves) was obtained on goodwill based upon projected revenues from a robust business plan. Credit for supply of beer and sundries for 6 months was obtained from a local pub owner to create cash flow from the main source of cash revenue – the bar. Retail analysis was done on bar sales so all wastage was eliminated. Players contracts were terminated leaving the club with a positive cash flow for the first time in 25 years A football manager was chosen based upon the criteria of managing a budget of £0. The well of football fans goodwill was tapped as was all facets of selling on commission by teams appointed by CW. A partnership with the local homeless charity was established and dead buildings were refurbished on a shoestring. The council were persuaded to back off for a short period. Full fiscal analysis and cash flows were enacted to ensure that the crunch points of the start of the season (6 weeks) cash flow then winter were overcome. All assets that could generate revenue were examined and implemented based upon immediate cash for short term poor contracts with a longer term view 6 months on.

 

Final Deliverable and Success

An inherited deficit of  £83k became a 1st year £119k surplus with all monies going into infrastructure renewal with a break even achieved. The pitch, which was the worst in the league, became the best. The manager appointed by CW (Alex Inglethorpe) went on to become the assistant to Brendan Rogers at Liverpool and may one day be a Premiership manager.

The methodology developed at Leatherhead was copied by AFC Wimbledon, when their takeover consortium approached Leatherhead FC for the template and numbers. AFC Wimbledon rose from nowhere to reach the football league. The strategic plan written in the first week achieved 90% of its targets and showed increased revenues for 6 seasons, which was used to renew infrastructure and pay wages within a fiscal plan of never spending more than revenue. The plan yielded 2 promotions and in 2011 the first trophy since 1969 - a league cup win and progression to the 1st round proper of the FA Cup. A new bar was built from revenues and the Tanners Lounge became The Grove - a destination. In 2009 a part time commercial manager was employed by the club from revenues with a view to doubling the commercial revenue. The club is now established in the Ryman Premier, which is 2 promotions below the Football league.

2. Blood Plasma Negotiation - American Protein Corporation – Spillers Petfood

 

Background to the Requirement

:

·           To reduce the purchases price of the most expensive part of the chunk binder in wet petfood.

·           To agree a new purchase price

·           To negotiate in one sitting a reduction of 25% from a monopoly supplier

·           Aim for win win, but adversarial if required.

 

The Reference

American Protein Corporation had spent a lot of money putting their equipment into European slaughterhouses. As such the volume of sterile blood for factor 8 clotting had gone up as had the volume for petfood grade. The price of factor 8 had dropped. Spillers protein from APC had not. Within the market place egg protein had also dropped. Protein was required for binding the chunk. Blood plasma more efficient as a binder than egg protein which was cheaper. Spillers process worked better with blood plasma protein. The aim was to set up a negotiating team which would seek a 25% cost reduction based upon the fact that there were only 2 players in the market Spillers (Nestle) and Mars (Pedigree Petfood). As both Nestle and Mars were secretive organisations who did not divulge trade secrets and APC were so efficient in collection then it was estimated (from information sources) that APC had increased their stocks of petfood grade plasma. It was proposed by Colin Ward (CW) to enact a targeted negotiation. CW proposed the negotiation strategy idea that Nestle were considering switching to egg protein. This was not really realistic as the amount required was 20% greater to get the same binding qualities as plasma, but the idea was to be transparent and see how APC would react. APC had previously negotiated with a rather bullying  ‘we are a monopoly so we dictate the price’ attitude. CW saw this stance as a weakness which indicated to me they would probably not be expecting a negotiation strategy and Spillers were also offering a partnership going forward based upon continuous use of a product that APC needed to sell. All facets of the negotiation including volumes of stock being kept high (were APC to try and extend the negotiation) were planned. CW got the buy in from all stakeholders (manufacturing, planning and the Director of Purchasing) including the factory canning managers who were very nervous about any supply interruptions as line stoppages were akin to a death in the family. All downsides were examined to ensure that their worries about not having supply would be groundless. There was skepticism that CW could achieve any reduction let alone a 25% reduction. CW put together the team and the strategy of the negotiation was planned prior to the negotiation, which was held in Barcelona.

 

Final Deliverable and Success 

Following a tough negotiation where all strategies were applied the Americans conceded an 18% price reduction, which equated to £618k cost saving yoy.

Part of the negotiation was the implied threat to move away from blood plasma, but more importantly it was selling benefits of a partnership and APC giving back the value of the price reduction. APC relaised that keeping a customer to make a good return was infinitely better than pursuing profit and passing on cost savings was the way forward.  The relationship became one of partnership when Spillers continued to develop more products and started to work more collaboratively

No volumes were agreed, but it was agreed that adversarial negotiations were not the way forward and the partnership model was set out as going forward.

The relationship prospered and there was an exchange of technical information. More importantly, APC adapted their negotiation stance and sought volume guarantees rather than seeking to regain their previous price.

3. Recruitment Strategy at Philips Electronics

 

Background to the Requirement

 

Purchasing were tasked with a brief from HR to use a third party recruitment process:

·           To benchmark current costs

·           To review existing contract coverage

·           To obtain the buy in from Department heads for the tender process for an in house recruitment company

·           To ensure a robust contract was in place following the exercise

·           To ensure the contract measured the effectiveness of the change

 

The Reference

Recruitment was managed differently across the 3 divisions at Philips head office. The aim was to utilise the skills of an in house recruitment agency, which would improve the quality of recruit of Philips employees and reduce staff turnover and apply a measurement criteria for recruitment. It would enable HR to focus on the quality of training and staff improvement. The scope was to get the specific requirements of each department (Consumer Lifestyle, Lighting, Healthcare) and incorporate any differences they wanted in the tender question document to ensure complete buy. Any specific variances could be fed into the document as a weighing factor and preferences set into the calculation covering specifics outside the core skills and capabilities required of a Philips employee.

CW conducted an extensive internal review with all major stakeholders to discuss the reasons and future aspirations of the sectors. Following the review it became evident that existing delivery methods from both a cost and general service perspective could be improved significantly if the right partner could be selected.

Tenders were sent to 6 companies who were whittled down to 3 based upon an initial assessment of the tenders by purchasing and HR.

A panel of 6 persons judged a beauty contest and subjective marking criteria was applied. Carlisle Recruitment were chose and 2 employees were seconded to work at Reigate to cover Healthcare recruitment. The trial was judged at the end of 1 year and then rolled out to Guildford head office and 4 personnel from Carlise were based permanently at Guildford.

 

Final Deliverable and Success

HR measured the result as a 10% improvement on delivery and a cost saving of £80k with a further £28k of overhead recovery negotiated by Colin Ward. Department heads were pleased with the speed of recruitment and calibre of candidate. Colin Ward drafted a new contract including strict measurement criteria on costs and ways of working including on-going overhead recovery for the Philips head office.

4. Building Works – Philips for NHS & Private Hospitals

 

Background to the Requirement

Colin Ward (CW) saw the opportunity to align quotes and reduce cost through standardisation:

·           To benchmark current ways of working

·           To review existing contract coverage for the quotes

·           To make the bid process best in class v Siemens GE & Toshiba

·           To ensure robust contracts in place following the exercise

 

The Reference

Philips along with Siemens GE and Toshiba make advanced medical equipment such as MR, CT and Ultrasound to sell to hospitals. To aid the sale all 4 do the building works as part of the sale so are effectively selling added benefits. Siemens used a transparent tender bid process whereas Philips used a quotes process. Quite often the same builders were bidding for the same work for both Siemens and Philips and Siemens started to win more business. The quotes received by Philips would often be difficult to understand and no comparison could be made of quotes because every builder did them the same. CW devised a standardized costing sheet whereby all facets of the build works were set out in a standardized format within 5 distinct segmented categories. The builders initial reluctance to change was replaced by committed stakeholder involvement as they realized the value of the new ways of working and a new harmonious working relationship was enacted between the Philips project managers and the builders.

 

Final Deliverable and Success

The standardised building sheet was adopted across the business and the lowest bid on standardized quotes was adopted (unless good cause could be shown to accept a higher bid) across the business based upon quotes from the same issued specification. The standardized sheet was adopted across all Philips sites globally as well as for all MRO projects which Philips then took on.

All MRO across UK was passed to purchasing for management including the refurbishments of the head office.

Purchasing were then asked to add value to the Olympic lighting delivery at the Stratford Olympic site when issues over contracts and flow downs were identified.

Cost savings were identified as £300k for 2012 which is 10% of the building works spend. The new competitive tendering enabled a 10% increase in projects won from Siemens from 2011. New contracts were drafted by CW and all builders agreed them. Bid wins increased by 2% in the year following the project.

5. Warehousing Logistics -  Philips Marketing - Pick and Pack Warehouse Selection

 

Background to the Requirement

Purchasing were tasked with improving coverage and service level from Pick & Pack warehousing brief:

·           To improve speed and stock levels of Pick and Pack for marketing fro major FMCG brands

·           To review existing contract coverage

·           To suggest alternative processes

·           To ensure 14 marketers could have access to the warehouse within a workable process

·           To review and improve general service levels

 

The Reference

Consumer Lifestyle had 3 warehouses with 14 different Consumer Lifestyle (CL) marketers operating a process including returns and rebates across major FMCG brands such as Sonicare, men’s grooming and Gaggia. The current warehouses were set up without any contracts or ways of working and cost discipline was out of step with the other warehousing in Philips managed by purchasing. Buy in from all the major stakeholders was required, which had been preciously impossible to achieve, so a questionnaire was sent out with the stakeholders stating what was crucial. Once these came back a tender was sent to include all facets of must haves and a standardised costing format based upon deliverables and usage requirements. 3 warehouses were involved in the tender including the current incumbents. 1 new warehouse emerged as the clear winner and the buy in was obtained from within CL to move to the new warehouse.  An intranet ordering system was deployed and processes were put in place to preclude lack of discipline in people not bothering to book in lorries or returns. Basic discipline that was required to run any business was expected and demanded by the head of CL who fully bought in to the process sold by purchasing. 

 

Final Deliverable and Success

A fantastic result as in stock improved and wastage was reduced by 30%. Sample and demonstration products went from 80% OTIF to 98%.  Cost savings were estimated at £100k for previous 3 warehouses with all facets of the offer under 1 roof. Stock coding meant that allocation of stock to budgets was achieved and those over running their budget were being held to task by the head of CL., who was overjoyed that at last his warehousing costs were reducing instead of increasing.

The introduction of process control without impinging upon the demand by marketing that they could not have their flair and creativity restricted or slowed down was tackled.

Lighting saw the process improvements and moved their marketing warehouse requirements into the same warehouse giving further volume discount back to Philips.

6. NV Van Hoop - Value Add Project Management on Tuna Fish Residue

 

Background to the Requirement

NV Van Hoop approached Nestle to offer an improvement of the quality of tuna residue for their brand:

·           To improve grade of tuna .

·           To have boneless product.

·           To suggest alternative processes.

·           To improve perception of the product from the marketing of the brand.

 

The Reference

Nestle had launched Winalot with Tuna. The residue was being purchased from a plant in Algceiras, Spain. It was block frozen then transported back to Yorkshire where it was being ground from frozen and 30% water was being added to enable the frozen grinding to remove large bones. Product was being purchased at £500 per ton then transported to Yorkshire where another £120 per ton was being added. For every ton delivered 1300 kilos was being produced so Nestle were paying £120 per ton for water and the regrinding and degradation of the product turning it grey in colour. The added water was affecting the chunk formation.

Colin Ward travelled to Spain and negotiated with the owner of factory to adopt a simple worm grinding process that extracted the meat from the bone excluding 100% of large bones and 90% of small bones (the remainder would disintegrate in the cooking process at the canning factory. This would enable him to have a higher grade of tuna residue for the petfood market at minimal cost The project tied in with the equipment the factory already had and current flow lines and conveyor belts were utilized The product cost increased to £620 per tom with a  £45 profit for Van Hoop total £665 delivered UK factories.

 

Final Deliverable and Success

Nestle were pleased to obtain a higher grade product at a small increase in cost which coincided with their move to the marketing of pouches that was aimed at the owners perception of cats eating human alongside their owners. The tuna fish project opened up a whole new raft of business for Van Hoop with Nestle and 1 truck per fortnight meant a net income of £16,870 pa for Van Hoop. 

 

 

 

 

 

Purchasing Consultancy Successful Case Studies, England, Europe, Purchasing Consultancy Successful Case Studies
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