A National Office Products and Services Contract Case Study - Babcock International Group
Clares awarded Babcock International Limited a 3 year contract to consolidate office product spend over many different product areas with a minimum contract value of over 12.6 million. Due to the nature of Babcock’s business, their 645 offices are often in extreme, remote or highly secure locations and require:
• Fixed annual pricing
• A cost-down strategy for the life of the contract
• Over 60 different billing requirements
• Credit account or purchase card payment
• Core goods delivered next business day
• Deliveries no later than 3pm daily
• Electronic proof of delivery
• Failure to deliver to SLA will result in £80 fine
• All back-orders notified before 10am next business day
• All quotation requests responded to within 3 hours
• All delivery & installation staff to have SC security clearance
• MOD sites delivery staff must attend a Health & Safety induction course
• Customer order number visible on every package
• Produce product data load files for Babcock’s bespoke procurement systems in UNSPSC category
• Provide a double punch-out from SAP
Total Savings Delivered
About Babcock International Group Babcock International is the UK’s leading engineering support services organisation with revenue of over £3.2bn in 2013 and an order book of circa £12 billion.
They have 26,000 skilled staff workers who design, build, manage, operate and maintain assets that are vital to the delivery of many key public services, both in the UK and overseas.
Babcock International has a strong heritage as a proven partner to the UK public sector. They deliver critical services for Police Forces, Fire and Rescue Services, NHS Ambulance Services and Local Authorities, as well as servicing key organisations within the Education and Defence sectors.
In all cases, these complex organisations rely on Babcock to deliver support services critical to their own long-term success. As a valued and trusted partner, Babcock has enabled its clients to realise significant savings and thus demonstrate effective management and spending of public funds.
Historically Babcock had two stationary providers that had no more than 60% compliance, with a further 30 suppliers delivering the rest. Clares account managers worked with each business unit to identify & provide a solution to consolidate this spend with Clares.
Not only has this simplified Babcock’s business but has increased core list savings. Leakage is now less than 10%.
Standardisation of Office Products
At point of tender the core list extended to over 800 product lines, which meant there was too much choice in certain product areas.
Clares were also able to make the customer huge savings, this meant the core list now represented a lower percentage of spend (32%). At the first 3 month review meeting Clares suggested 423 contract deletions and 167 additions. This change was agreed and implemented, increasing contract spend to 82%. The changes also made product selection easer for the users.
Standardisation of Office Furniture
Nationally, Babcock use 26 different suppliers due to local relationships and results in:
• No furniture standardisation of range, quality or corporate identity
• No formal agreements from multiple suppliers
• Need for an MOD accommodation solution
• Average office furniture order is £566 – 61% of orders are less than £300
Clares Performance &
Clares have provided a dedicated internal & external account management team to not only ensure all SLA’s are upheld but to continually save Babcock money & simplify their business;
• All SLA’s are being exceeded, proving Clares are a first class national provider
• Annual saving is reported at £2,200,000
• Contract purchases are at 82% of spend, benefiting from contract pricing
• Online ordering represents 94% of spend, reducing manual Purchase Orders
• 99.1% of all orders are delivered next day
Clares were chosen to supply a standard range nationally because:
• We process more orders than any other supplier - all addresses are known to us
• 94% of orders were processed online - no new system to learn, simple procurement
• Proven track record to consolidate spend – our management information helps to control spend
• 10 day installation - as products are stocked there are no lengthy time delays
• Bespoke catalogue - making selection easy - http://www.clares.co.uk/babcock/flip
Clares identified an £84,000 per year saving if more of the business units used alternative toner where available. After satisfactory customer testing and trials were completed the Babcock board gave the project the green light.
• They purchase 776 different printer consumables 16,158 times per year
• Existing fleet cost varies between 0.3p-16p per copy
• Existing fleet is installed in 315 post codes with 1,096 departments
• Legacy fleet have many low end and inefficient printers installed
• In the last 3 years we have seen toner prices rise by 62%
Our first action was to identify and remove expensive cost-per-printers where possible and make alternative network devices available.
We then evoked our “forced switch” technology to send only alternative toner when the customer tried to order OEM originals.
The customers were informed at point of order of the savings this switch made. Clares now produce monthly saving reports to prove savings to date.
Produced a sustainability action plan to reduce the carbon footprint of supply. One of the key actions of this project was the introduction of recyclable packaging. Customers now “unpack and hand back” which has meant we are able to reuse our packaging up to 8 times.
We also wanted to show customers at point of order if there was a “Globe & Tick” environmental alternative to the product they had selected. Spend on environmental products has risen 82% since September 2012.
Lastly, we introduced Babcock’s to our “closed loop” initiative. This is where we collect office waste paper and remanufacture it back into A4 white copier paper for Babcock to use.