Archive

Default page subtitle

Freight Market Changes

Have your Logistics costs reduced in 2017? Are fuel surcharges reappearing or are you expecting a price increase from your transport provider? It is a fact that diesel prices have increased severely in recent weeks but this 5% increase should not significantly impact your logistics costs as fuel constitutes only 17-32% of your supplier’s total annual vehicle operating costs*.

Does your business depend on the efficient and effective delivery of parcels, boxes, pallets or containers to your clients? If so, have you benchmarked the non-price aspects of the service e.g. quality, innovation and reporting capabilities?

If you are interested in reducing transport costs or increasing quality services, talk to us today, as there are daily changes in the transport sector which will benefit your business in 2018 e.g;

  1. Automation: Globally, automation is well-established in many distribution centres and is becoming more prevalent in Ireland now too, with a range of robotic solutions offering the ability to introduce automation into DC operations without the need for major structural alterations.
  2. Labor Costs: Have been increasing due to a severe shortage in drivers and rate pressures on ground-staff in most logistics operations. While OPEC play monopoly with global oil supply and prices, a real concern for the transport industry is the impending labor cost increases (while thankfully, Insurance cost increases borne by all over the past few years are not expected to continue).
  3. Consolidation: There have been a raft of mergers, acquisitions and alliances within the global freight industry over the past 5 years, which are turning traditional supply chains upside-down. The increased competition and coopetition is triggering supply efficiencies and price wars, which is flooring global freight rates (and we hope it is sustainable)
  4. Technology: There are very few industries immune to the technical breakthroughs of the last 5 years, while the transport industry is no different with ground-breaking advances expected to continue via drones, autonomous vehicles, Blockchain, IoT solutions, automation (as above) etc, with customers benefiting from increased efficiencies, reduced risk, improved governance, transparency and service etc.
  5. Customers: The aforementioned technical advances are fuelling customers expectations and demands, where same day deliveries are being explored by many retailers. Argos are leading this campaign, with their 2017 Christmas advertising highlighting online orders delivered in as little as four hours through its nationwide Fast Track same-day delivery service.

So will a single trend above or a combination of all impact your supplier and customer deliveries in 2018?

As Arvo have managed Logistics Reviews recently with clients benefiting from commercial savings in the region of 25% – are you interested in such reductions for your business? Contact us today to discuss further.

*FTA’s ‘fuel fractions’ table shows fuel costs as a proportion of total annual vehicle operating costs

http://www.fta.co.uk/policy_and_compliance/fuel_prices_and_economy/fuel_prices/fuel_fractions.html

 

Group Buying Challenges

 

10 Group Buying Challenges

Group Buying is not a new concept even though it has become very popular in internet shopping since the Global Recession of 2008. Groupon & Living Social etc. have popularised this age-old volume leverage technique, but traditional buying groups have existed for decades, helping cooperatives and buying clubs pool their buying requirements to leverage better deals. Purchasing consortia have established themselves as a vital link in today’s world-class supply chain strategies, used as a powerful tool to significantly reduce costs in the most effectively run procurement organisations (not just for SME’s which is a common misconception).

Cooperative commerce facilitating Group Purchasing Organisations (GPOs), has in-fact been around for a hundred years, with the first healthcare GPO established in America in 1910. While the modus operandi has not changed since, with buyers empowered to aggregate their purchasing power and obtain lower prices than they otherwise would be able to get individually.

So the business case for buyers is obvious, with the opportunity to reduce commodity costs directly by 10-20% plus the reduction in time spent sourcing, negotiating and administering individual product/service deals. Suppliers also benefit with the opportunity to reduce their Cost of Sale (& possibly Logistics Costs), while they increase turnover and market share. Manufacturers can often offload excess inventories, while certain suppliers use collective purchasing groups to launch new products on the market (again availing of low customer acquisition costs).

However, the diminishing success of Groupon has highlighted one of the age-old flaws with Group Buying – greed! The value for buyers and suppliers needs to be sustainable, while there should be limited hassle or “friction” for buyers and suppliers to engage in group buying activities.

 

10 Group Buying Challenges;

  1. Administration – as hinted above, joining a GPO can be difficult gathering all company, financial and spend data. However, without the data, the opportunity is impossible to define
  2. Consolidation – as varying product and service data is amalgamated, difficulties arise when negotiating with the buyers to consolidate their specifications and go to market with a limited product/service range
  3. Quality – as prices decrease, there is a perception that the quality of product/service may diminish also
  4. Autonomy – buyers like to make decisions and joining a buying group may limit their autonomy in the marketplace thereafter
  5. Commitment – closing the Intention-Action Gap is a constant task for most GPO’s
    , ensuring buyers and suppliers actions align with their initial intentions
  6. Credit Risk – suppliers can struggle with the creditworthiness of buying groups, with the one-to-many relationship leading to a price premium within certain purchasing alliances
  7. Margin – suppliers need to gain market share at an affordable margin reduction. Similar to greed below, the commercial terms of each GPO need to be sustainable for all parties
  8. Greed – is the business model viable for the buyer, supplier and GPO?
  9. Privacy – with multitudes of commercial data being shared within co-ops, between third-parties etc, data privacy is an utmost concern to all stakeholders
  10. Trust – Trust is the glue that holds all business relationships together, and new GPO’s or members to a group (including new suppliers), suffer with a lack of trust initially

 

So what other Group Buying Challenges have you met?

With years of experience managing group buying activities via email, spreadsheets & Aspirin!, Arvo have initiated research with Procurement Insights business iDDea and our academic partner UCC, to resolve the above challenges. We are targeting the trust, transparent, bureaucratic and greed flaws of existing buying groups and hope you can join us on this journey…

Ironman – ABC Campaign for Deaf Enterprises

ABC Campaign for Deaf Enterprises (DE)

Mike McGrath,  Managing Director of ARVO has been recently appointed as Chairperson of DE’s voluntary Board of Management and is leading a great team making an impact to the training, skills development and employment opportunities for the Deaf community in Ireland.

Through ABC Campaign for Deaf Enterprises (DE) we would like to create AWARENESS of DE, before recruiting some BENEFACTORS (for their skills/expertise) before Mike undertakes an Ironman CHALLENGE in late September (to raise some much needed funds for DE).

Awareness

Deaf Enterprises is a not-for-profit social enterprise, and Ireland’s only dedicated employer of members of the Deaf and Hard of Hearing (D&HH) Community. DE’s current services offer Furniture Re-Upholstery, such as Seat and Couch re-covering, Vintage Car, Motorbike, Marine, Boat and Leisure Craft upholstery and be-spoke Cushion manufacturing made to order, while also providing French Polishing for Tables, Chairs, Novelty Chairs and Dressers etc.

Benefact

Fundraising is a full time activity for all charities and DE have recently started a Development Committee to research donations to improve the working environment of our workshop. However my ask here is not for cash but for you to consider acting as a Benefactor to volunteer your skills and expertise to DE on a once-off or ongoing basis – you decide. Your knowledge, skills and expertise will have a significant impact to DE, so take note of our wish list here, outlining the skilled and professional help we require, to support the sustainability of DE and our unique role in the Deaf Community.

Challenge

Mike on participating in Ironman:

“I challenged myself in 2017 to complete an Ironman Triathlon in less than 12 hours – quiet ambitious since I have never swam 3.8KM, I have never cycled 180KM or ran a marathon (42KM) so it is an epic challenge to undertake all in one day (Ironman Barcelona on September 30th). I bought my first road bike 2 years ago (and started cycling with the Ironmen of Ballincollig), while I ran my first road race in March this year (Ballycotton 10 Mile) but I am motivated to complete this challenge as I am lucky to have the opportunity to raise Awareness and Funds for Deaf Enterprises”

You can keep an eye on Mike’s training log here but more importantly, please donate and support his challenge anseo; https://www.idonate.ie/fundraiser/11366084_mike-mcgrath-s-ironman-attempt-for-deaf-enterpises.html

 

 

 

Thank you in advance for raising awareness of Deaf Enterprises, while supporting in cash or in kind, so as we can continue to remove the communication barriers with the Deaf Community and provide direct/indirect employment opportunities for at least 30 more years (considering DE’s upcoming 30 Year Anniversary).

 

Feel free to contact DE with your Furniture queries; www.deafenterprises.ieor simply promote DE on Facebook (link) to create awareness of our excellent services (which will sustain the employment of our 22 person team).

 PS: While all donations of €10 or more will be entered into a draw for a signed Cork City FC jersey.

Procurement Training

Empowering & Transforming the Procurement Professional

 

Arvo in partnership with IDD Consult offer tailored training to meet the needs of buyers, from those beginning their procurement career through to seasoned practitioners. We develop the mindset, toolset and skillset of commercial buyers to ensure you are armed to deal with the growing demands in your role e.g. risk, savings, technology and compliance

 

The first step is to assess your current procurement ways of working across 5 different levers – process, people, technology, knowledge and culture, which will diagnose an appropriate Training Plan, leading to appropriate avenues such as workshop training, Certificate/Degree/Masters Qualifications etc. We develop bespoke courses specifically to your needs, built on this initial self assessment of your procurement competencies.

 

We will empower you and your team to make the process of procurement leaner, smarter, better and develop the procurement department as a hub of trusted advisers for internal stakeholders, suppliers and customers.

Tailor-made courses are designed to meet the specific challenges, requirements or opportunities for your staff and business.
Our bespoke courses can range from specific competencies development, operational process optimisation to strategic procurement transformation.
They can be delivered to suit your preferred location and dates, and are very cost-effective when more than 6 attend the workshop.

 

As always if you have any queries regarding above don’t hesitate to contact us.
1 2 3 7