Sawmillers and Wood Processors
We have got to know this industry intimately since we first started working with Nelson Forests and Waimea Sawmillers in our initial years. From small beginnings we now work with a wide range of mills and wood processors throughout New Zealand.
Sadly, over the last couple of years we have witnessed firsthand many sawmilling and wood processing businesses forced to cut production and reduce staff levels to remain viable … while a significant number have closed.
Unfortunately, these sometimes necessary steps reduce your ability to really hone in on vital cost saving programmes. And without an on-going and constantly reviewed cost reduction program, a company’s profit cannot be maximised.
The Buying Group’s resources, expertise and combined 30 years of procurement experience is guaranteed to generate significant bottom line improvement immediately.
We achieve this through the purchasing power of our buying-group.
We’re able to pool the total expenditure of our members – and ask our suppliers for significant cost savings. As you may have experienced, the more you spend with a supplier, the larger discounts you get. We are able to provide significant discounts through the combined purchases of our entire member base, and considered by some to be the best pricing in the industry.
Two product lines can have the biggest impact on sawmills and it is critical they are right:
Using the wrong specification strap can have major health and safety implications for your staff, and potentially the public during transportation if it fails. It is also one of the biggest expenditure items and so pricing is also important. It is a constant balancing act between the two competing demands of appropriate specification /quality and price.
And because your sawmill branding is reflected in the quality and presentation of the timberwrap, this too demands the balancing act of a strong, puncture and tear-resistant wrap with lower priced, lower quality options.
Over the years, we have worked with our suppliers to select products that are extremely price competitive, but also meet the demanding requirements of many different mills and working environments.
Our buying-group specifically targets products such as:
Fastners and fittings
Gaskets and seals
Hose and fittings
Conduit and fittings
Industrial plugs & sockets
Measuring and test instruments
Motors and actuators
Wet weather gear
Case Study – Nelson Forests
To help illustrate the value we can add to sawmillers and wood processors, the following is a case study on one of our buying group members, Nelson Forests:
Nelson Forests Limited operates a sawmill on the outskirts of Blenheim. The majority of products produced at the Kaituna mill are either appearance grade timbers used for finishing applications in buildings, or industrial structural products for both indoor and outdoor use.
Nelson Forests first started working with the Buying Group back in 2001 when it was looking to review its safety equipment and clothing expenditure. The Buying Group undertook a benchmarking process, which resulted in a saving of 15% on its existing expenditure.
Over the years, as The Buying Group’s buying power increased, we have been able to provide further price reductions to increase the savings to 25.9%, equating to $17,940 for the last 12 months.
Then in late 2004, we undertook a review of Nelson Forests’ packaging expenditure, including strap and timberwrap. The initial savings were 9%, but this was further increased to 28.8% ($47,136 in the last 12 months) due to further reductions in prices in subsequent years. These price reductions resulted from The Buying Group’s increased buying power and a new supplier agreement that took into account total expenditure with Protector Safety, Packaging House and Blackwoods Paykels when setting prices.
At times, our steel strap pricing wasn’t always market-competitive. In response, we used our leverage to improve our pricing. It is an example of how we are relentless with our suppliers – we demand the best pricing, the best service and the best technical support for our buying-group members. In return, our suppliers receive our loyalty and our members’ ongoing business. I think a good description is “tough but fair”.
In 2005, Nelson Forests also implemented our Travel Agency solution, which provided a customised online corporate travel solution for Nelson Forests’ staff. This gave them the ability to easily identify which airline and fare was the best option when making travel bookings. It enabled them to add in rental car and accommodation bookings at the same time, providing a faster and simpler booking process.
The last category that Nelson Forest implemented was engineering consumables in 2010. Right at the outset they expressed concern due to the service they had received in the past. We addressed this issue immediately with the supplier’s senior management attending a meeting with key Nelson Forests’ staff.
The result was an immediate change in how the account was serviced that met Nelson Forests’ satisfaction. The Buying Group moved rapidly to resolve a problem. Our relationships at senior management level with our suppliers mean we can facilitate changes quickly.
Following implementation of our engineering solution, Nelson Forests made an immediate savings of 22.5% on its existing prices.
One of the key areas that The Buying Group puts a lot of effort into is checking that our clients are being charged the right prices. Based on our experience, what a company says they are going to charge you and what is printed on the invoice can be poles apart. This is not suggesting that suppliers purposefully mislead, rather their quoting and pricing systems are often at a disconnect.
The Buying Group has a “Cost plus” arrangement with its suppliers. We regularly check that the pricing has been correctly loaded. If we find an error, we immediately get the correct pricing loaded and a credit generated for the incorrect invoices.
Overall, since becoming a member of The Buying Group, Nelson Forests have saved over $295,984, which is an average of 16.3% savings across all the three major categories of engineering, packaging and safety.
Whilst the savings have been significant, the equally important issue of high service standards has been critical to ensure that Nelson Forests remain satisfied with The Buying Group solution.
L1, 124 Vickerman Street,
Port Nelson, Nelson 7010
PO Box 1136, Nelson 7040
+64 3 539 0623