Insurers get tough on costs
- Greater demand to reduce spend
- 'More innovation required' by suppliers to insurance trade
- Aviva backs 'open book' approach
Press release
30th March 2012
Insurers demanding ‘open book’ approach to purchasing
INSURERS are demanding so-called ‘open book’ deals with suppliers in order to drive down costs, say procurement experts.
Banner Business Services, is one of the UK’s largest stationery suppliers includes Aviva, Allianz, Friends Provident and Ecclesiastical as clients.
It says a trend of agreeing acceptable margins with suppliers in an open, transparent way is revolutionising the purchasing process in the insurance industry.
Insurers are leading the charge into this unique method of purchasing originally adopted by the Government when it awarded a £37m annual contract to supply office supplies in an ‘open book’ method.
‘Open book’ is a novel approach to business where the seller is transparent with the buyer about the true cost and profit margin for an item.
For example, the cost to supply a stapler to a business is 90p. The seller sells the product to the buyer for 98p (declaring that 8p is a fair and reasonable profit and breaking down the other cost components such as raw material, picking, handling, packaging and delivery).
The key is transparency and each item is individually costed at the start of a contract and a fair and reasonable profit margin acknowledged by both parties.
Leading organisations including Aviva, McDonalds and HMRC use Banner to supply a managed procurement service to reduce spend on business supplies.
Banner says insurers are starting to mirror public sector buying methods to increase efficiency and cut costs.
Banner’s customers outside insurance include Virgin Media, Barclays, Deloitte, PwC and Ernst & Young but the company says insurers and large brokers are adopting this ‘open book’ managed procurement model quicker than other sectors.
Richard Costin, managing director, Banner Business Services, said:
“Traditionally office suppliers have split their product ranges into ‘core’ items sold at cost and ‘non-core’ items sold at significant mark-ups. We’re now seeing a revolution in the way that insurers purchase their office supplies. The future for our industry is an ‘open book’ approach where customers know exactly, to the penny, how much a product will cost their business and have a transparent view of the ‘cost to serve’ and the profit.
“Too many businesses are still paying too much for their general office supplies which ultimately affects business profitability. If HMRC and three of the Big Four accountancy firms are customers of ours then our strategy on costs must be right.
“Purchasing directors and finance directors at insurance companies want to see the bottom line of each product. It’s a system that’s paying dividends in the public sector and is quickly being taken up by finance directors and purchasing directors in the insurance industry.”
Jason Fletcher, Supplier Relationship Manager at Aviva UK, said:
“Aviva have had an excellent working relationship with Banner since 2005. Towards the end of the existing contract, Banner were keen to introduce an alternative and innovative transparent trading relationship where all product and process costs were provided. After a comprehensive tender process Banner were re-awarded a 5 year contract to 2016 based upon their unique open book Managed Procurement Model. Banner consistently provides an excellent level of service and support and this is reflected in the good feedback received across the Aviva business units.”
Ends
Notes to editors
About Banner
- Banner is one of the leading suppliers of office products and services in the UK and Ireland.
- Banner’s parent company is office2office which is listed on the London Stock Exchange.
- Group turnover in 2010 was £207.6m compared to £187.5m in 2009.
- The company employs more than 1000 people across the UK with offices in Norwich and depots in Hampshire, Manchester and Northern Ireland.
- Banner routinely makes more than 7,500 deliveries every day to customers.
- 70 per cent of orders are processed electronically.
- See www.banner-online.biz
About ‘open book’
- ‘Open book’ is a novel approach to business where the seller is transparent with the buyer about the true cost and profit margin for an item.
- For example, the cost to supply a stapler to a business is 90p. The seller sells the product to the buyer for 98p (declaring that 8p is a fair and reasonable profit and breaking down the other cost components such as raw material, picking, handling, packaging and delivery).
- The key is transparency and each item is individually costed at the start of a contract and a fair and reasonable profit margin acknowledged by both parties.
- Leading organisations including Aviva, McDonalds and HMRC use Banner to supply a managed procurement service to reduce spend on business supplies.
For further information, interviews and photography contact
Peter Davies
peter@rmspr.co.uk - 0161 927 3131 / 07779 033 016
Peter Davies
Director
peter@rmspr.co.uk
0161 927 3131
Tags: