Tangram Technology Ltd. - Business Workshop Report 10 - ACCO (Europe) Ltd..

Business Workshop Report 10
- ACCO (Europe) Ltd.

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BUSINESS WORKSHOP REPORT

OFFICE
PRODUCTS

British Plastics Federation

 

THE BUSINESS WORKSHOPS

The Business Workshops are supported by the DTI as part of the Partnership in Plastics (PIP) Programme. The Programme is designed to improve the competitiveness of the UK plastics processing industry by building links between major customers and small to medium enterprises (SMEs). The focus of the Business Workshops is on informing the SMEs of the changing needs of major customers and the means of meeting these needs.


THE PAPERLESS OFFICE

Despite predictions of the 'paperless office', the increased use of computers has increased paper usage and the need to control and store it. ACCO Brands (Europe) manufactures and distributes office products under 14 familiar brand names (such as Rexel, Sasco, Nobo, Twinlock and Derwent) and is one of the largest manufacturers and distributors of stationary and office products in Europe.

The industry is in the midst of rapid supply chain restructuring as the number of customers decreases in number and increases in size and influence. Market consolidation means 80% of sales are now via 20% of customers. These major retailers are moving towards 'own branding' and ‘European pricing’. In this market, price increases are simply not acceptable and customers only want price decreases - raw materials price changes are simply a ‘supplier's problem’. Failure to meet the demands means the customers will source outside the UK where the competition is providing products at similar quality levels and low costs. The upper levels of the supply chain are also consolidating as major manufacturing groups form and the options are rapidly becoming ‘be taken over or go out of business’.

The market price pressures drive a constant search for innovation to both add value and decrease cost. Office products are now commodity products in search of increased ‘design to add value’ but even ‘design added value’ does not remove the need to be the lowest cost producer at the point of distribution.

Manufacturing strategy at ACCO has changed as the market has changed. In-house production has been replaced by supply chain management of both internal and external resources to deliver the market requirements. This is a results biased approach and is supported by world-wide best value tooling sourcing.


“We listen to the user’s needs. We develop solutions. We deliver them worldwide.” Peter Stephens - ACCO (Europe)


VALUE ADDED DESIGN

This trend towards increased competition and commodity products is driving a need to increase added value through design and rapid new product development.

Product life cycles are decreasing but this is not uniform across the product range, some products have long life cycles (steel cabinets) and others have extremely short life cycles (joysticks and computer products). Decreasing life cycles make new product development (NPD) a vital part of the strategy for product maintenance and targets for growth generated by NPD are aggressive - NPD must deliver a minimum of 5% growth per year. This forces a market and customer driven NPD project selection process. The market drives all in both project selection and expenditure.

The office products industry is increasingly using design as a sales tool and is creating added value for all new products through good design and style. Good design is a key to reduced costs and added value.

New technology is also used to add value and reduce NPD times. CAD and other IT tools are used to drive down the design to market cycle. New process technology is also applied to add value and reduce cost. Technologies such as two shot moulding and over-moulding can achieve dramatic colour and hardness variations to provide distinctive products and to add significant value at little cost.

SUPPLIER PARTNERS

The future for suppliers is a partnership between the supplier and the customer. Partnership creates potentially higher rewards but also involves higher risks than the traditional ‘deliver to order’ model, especially when the partnership requires that products are sourced on a strategic basis at minimum cost. Such partnerships are not without the potential for conflict and contracts must provide for machine investment and maintenance of technology leadership.

Despite the need for partnership it is unrealistic to deny the importance of price but this is now one part of an overall performance matrix that includes delivery performance and both commercial and technical development work.


“Price reductions are a reality and must be managed at all levels of the operation” Peter Stephens - ACCO (Europe)


In this changing business model, the role of the plastics product supplier is changing rapidly. Suppliers are expected to have an active design and cost reduction programme and are expected to share in the investment risk for joint projects. In this market ‘turnkey products’ from pro-active suppliers attract the attention of buyers and customers.

Suppliers must be willing to assist in the management of the supply chain to provide improved customer services and yet still deliver a flexible and low cost distribution solution.

Despite significant successes to date, the future is not entirely secure. The sector faces perceived barriers to growth generated by the business environment. Typical barriers are:

  • The short term view of managers and investors towards investment, risk, staff and training - Partnership developments need a long term view of investment in machinery, staff and systems.
  • The ‘machine for hire’ approach of processors - Overseas suppliers develop products in teams, work together and deliver products faster than the UK sector.
  • The cost base in the UK - Overseas companies enjoy better labour, energy and exchange rates than UK companies.
  • An uneven playing field - Manufacturers in the UK must meet tough social and environmental conditions that overseas companies may not be required to meet. 

FUTURE TRENDS

In any market, it is not only necessary to work actively with suppliers but it is also necessary to work internally to reduce costs. Lean manufacturing and waste minimisation initiatives can lead to typical cost reductions of 20%) by concentrating on adding value rather than adding cost.

Supplier numbers will decrease as the recognition of the benefits of partnerships and shared costs and rewards increases. Despite this, the commercial threat has not decreased, exporting production will remain a ‘simple solution’ for some customers.

In future, there will be fewer customers at lower margins with an increased focus on design and cost (with price reductions managed into the process). Turnkey projects will lead to reduced customer investment but create more partnerships as the UK learns to compete with 45 days tooling delivery.

The targets are clear and precise:

  • Reduce tooling costs by 33-50%.
  • Reduce conversion costs by 30-35%.
  • Provide similar facilities and services to overseas competitors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXAMPLES OF PLASTICS IN OFFICE PRODUCTS

Paper management

  • Files and folders
  • Ring binders
  • Display pockets
  • Staplers and punches

Functional components

  • Shredders
  • Paper holders
  • Binding machines
  • Display equipment

THE KEY LESSONS

  • Market consolidation is taking place at all levels of the market.

  • Suppliers must learn to form teams to produce ‘turnkey products’ and produce complete products ready for delivery to the market.

  • Pressure for cost and time will continue and grow in strength.

  • Design to add value and reduce cost is an important driver in the marketplace.

  • New technology can add value and reduce costs.

  • Commercially pro-active suppliers will improve the competitiveness of the UK manufacturers.

  • Failure to react will mean a dramatic reduction in investment and manufacturing in the UK.

GROWTH PROSPECTS

Computers have increased the need for both paper and storage solutions. Trends towards ‘teleworking’ and the home office have increased the need for office equipment. There may well be an ‘office of the future’ but it will still need office products and the future is bright for manufacturers willing to accept the challenges.

The PiP Programme consists of a range of activities including:

  • Business Workshops and Reports
  • Plasticity Seminars
  • Pentamode Code of Practice

The Business Workshops are part-sponsored by Norwich Union Insurance. Contact: Jon Stevens (020 7662 2127 or jon_stevens@uk.cgugroup.com).

Note: Any opinions expressed in this Business Workshop Report represent those of the author and not necessarily those of the BPF, DTi or ACCO (Europe) Ltd. Produced for the PiP Programme by Tangram Technology Ltd. (info@tangram.co.uk)

For further information about the PiP Programme contact:

The British Plastics Federation
6 Bath Place
Rivington Street
London EC2A 3JE
Tel: 020 7457 5000
Fax: 020 7457 5045

This Business Workshop Report is based on the results of a PiP Business Workshop held in March 2001. The customer viewpoint at the Workshop was presented by Mr. Peter Stephens of ACCO (Europe) Ltd.

March 2001

All logos and trademarks acknowledged. The assistance of ACCO (Europe) Ltd. in the provision of artwork and logos is gratefully acknowledged.