Geodis Saves 18% on Labels

Category:     adhesive paper labels

Savings:       18%

 

As one of the foremost logistics companies in Europe, Geodis is responsible for the distribution of a huge number of packages and goods to countries all over the world by land, sea and air. Every item needs to be labeled. This means Geodis uses about 140 million adhesive paper labels every year and they are a major item of expenditure.

The company’s purchasing function is complex, structured by country, regional groupings such as the Benelux, and in the case of France by regional purchasing sites. Each of these sites has its own system, specific requirements and methods of purchasing. This means there is great diversity in approach, budgets and reporting structures.

Senior procurement managers at the Geodis head office in Paris recognised that by embarking on an eAuction project for the labels category they could not only achieve savings, but also facilitate a group sourcing approach across the company’s sites, sowing the seeds of a common purchasing framework.

They were also aware that their spend on labels was likely to be hit by substantial price increases because of impending rises in the cost of paper, energy and other factors in their production. They saw an eAuction project as a way of attempting to stave off potential price increases and even achieve some savings.

The Process

Procurement managers at Geodis called on TradingPartners to lead the project from start to finish. They had confidence in TradingPartners’ knowledge and expertise of the labels market. They also knew that TradingPartners were able to offer the latest technology to achieve cost reductions, underpinned by a fully managed eAuction process.

Michael Brunet, Purchasing Engineer at Geodis, said:  “We thought it would be best to try this kind of process first on a product area that was not too complex and offered a significant volume. Moreover, we knew that there were price increases ahead for labels so it made sense to go through a tender to contain the costs and limit the effects.”

Equally important would be the insight gained into the costs of a local supply scenario compared with a national, centralised arrangement. During the project, TradingPartners recommended splitting the total package into several geographical lots for the one-year contracts. The biggest was for the whole of France. An alternative scenario was also offered by splitting France into four regions. This was in part to accommodate the local nature of the supply of labels, as many of the incumbent suppliers were regional.

The remaining lots offered in the eAuction covered Spain, Italy, the Benelux countries, the UK and Germany. TradingPartners identifi ed several suitable suppliers in  addition to those already known to Geodis throughout all the countries involved, and 21 went forward to take part in the eAuction.

The Results

In the online event lasting two hours and twenty minutes, suppliers made 232 bids as they competed to lower the price for the contracts on offer. As a result of the eAuction substantial savings were identified - significantly higher than those expected by Geodis. Michael Brunet said, “It was a good result for us which achieved better savings than we had forecast. TradingPartners managed the eAuction in several countries efficiently and professionally. It was a successful pan-European project.”

Paul Cook, Commercial Manager at TradingPartners, said, “This was a highly successful project for both parties.  We were able to offer a number of solutions to a complex eAuction project in a relatively short time. A traditional sourcing approach with this number of suppliers across so many different purchasing structures would have taken many months. We provided a solution in line with the client’s strategy and were able to achieve considerable savings in a challenging market environment."
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