AlanLow_2013.jpg“Recent benchmark reports have shown price variances for specific items of more than 60% and on A4 paper in excess of 40%.”

Alan Low has seen both sides of the stationery supply world: from benchmarking stationery supply arrangements for many of South Africa’s top organisations, to being the Managing Director of a UK stationery company in 1980s.

“From a supplier perspective, the cost of fulfilment (the procure-to-pay process for the supplier) is inordinately large when compared with the average value of a stationery order. When you factor in service requirements such as to-desk delivery and no minimum order value, making a profit becomes even harder,” says Low, of Purchasing Index (PI) in this month’s SmartProcurement.

Stationery suppliers must recoup their costs through the sales price charged to each customer. Consequently, the mark-ups on each stationery item can vary dramatically. Recent benchmark reports have shown price variances for specific items of more than 60% and on A4 paper in excess of 40%.

 

Category2Overview.pngPI benchmarks stationery (including paper) for a number of South African companies and compares prices paid for brand-specific and generic items across a core catalogue of items. The resulting reports show how pricing on different brands differs and moves from quarter to quarter, as the figure alongside shows, and how the basket of items shifts over time.
 

Getting hold of this information is often complex, especially when organisations rarely know their actual total spend on the category. “PI’s experience is that data held on clients’ ERP systems is often incomplete and prices inaccurate,” notes Low.

Knowing how your organisation’s prices and service requirements compare with your peers is vital to managing spend that can often run into millions of Rands. “PI has repeatedly illustrated that stationery is a commodity where volume does not necessarily lead to lower prices or better service,” says Low.

What can stationery category managers do to make spend more effective?

Low suggests users consider the following:

• Supplement your own internal information with reports from your suppliers (sales information is usually more accurate than purchase data);
• keep the core catalogue small and non-brand specific;
• find a way to compare your price and service arrangements with the marketplace;
• ask suppliers to suggest different service and supply alternatives and see how that affects the cost; and
• regularly test the market.

“Organisations often overlook ‘low hanging fruit’ that a review of stationery arrangements can provide,” concludes Low.