Case Study

The leading premium express delivery company employing more than 6,000 people and operating over 3,000 vehicles, City Link has been successfully delivering documents, parcels, pallets and freight since 1969. They provide high quality, flexible and innovative service solutions across the UK and Worldwide, to the benefit of over 18,000 customers. With 85 depots in Britain, their global presence does not detract from a truly dedicated, local, account management service, and with an annual turnover of £382m, they are the market leading service provider of guaranteed next day and timed delivery services. Part of Rentokil Initial plc, a FTSE 100 Company with annual revenues in excess of £2bn, City Link benefits from continued investment, allowing them to constantly develop their services, systems and people.

Challenges

A £5m yearly temporary agency labour spend caused by inconsistent supplier margins and massive agency overcharging, was mirrored by 15,000 invoices processed annually, impacting heavily on accounts and administrative staff. Conflicting pay rates also caused variations in the quality of staff used. City Link identified that they had minimal visibility of commitments and control of expenditure, having recently purchased Target Express and various former City Link franchisees.  Other problems included high agency usage at depot level, with as many as 76 supplying agencies nationally, and a lack of any formal terms of business, risking legal exposure.

The Solution

Carry out a full review of the City Link supply base and establish good relationships with key suppliers to obtain a full understanding of the business needs from all perspectives. Consolidate suppliers, building a new 'panel' of audited agencies with a mix of local, national and specialist knowledge to satisfy the needs of all locations. Ensure that individual depots continue to engage with local agencies.

Introduce formal service agreements to ensure adequate legal protection and encourage a superior level of customer service. Renegotiate pay and charge rates to their optimum level, to eliminate agency overcharging, reduce overall spend and further enhance service delivery. Implement use of web based electronic timesheet and invoice processing system to reduce the number of weekly invoices, relieve administrative costs and allow visibility of management information across the business, critical for spend control. Establish low-risk fee structure whereby payment depends on the direct cost savings achieved.

The Response

City Link welcomed opportunities to outsource management of supply where they could keep contact with local agencies and retain business with quality, existing suppliers. They recognised the value of the solution in its capacity to massively reduce contingent workforce spend, consolidate suppliers, streamline the administrative process and increase visibility and control at a time when they needed it most. They embraced the fee structure as low-risk from a cost perspective, citing the business model as "robust and consistent".

Implementation

de Poel experts began a thorough analysis into the existing supply arrangements and staffing needs at all levels of the business and at each of the specific 65 spending locations. They reviewed and renegotiated charge rates, taking into account seasonal as well as regional, variations. Once a full understanding of the business' key drivers had been obtained, de Poel worked to establish a standardized set of optimum rates which would reduce overall spend, and introduced their unique, web-based, electronic timesheet and invoice processing system e-tips® to simplify the payment process. de Poel's meticulous implementation team arranged a series of three agency presentations to outline the new pricing structure and then set about training depots and agencies on how to use the system and make it part of their weekly routine. This was viewed as comprehensive and well-managed, requiring minimal input from City Link themselves at either a procurement or operational level. Following the presentations, where agencies were additionally reassured of the mutual benefits of more formal terms of business, service agreements were also prepared in order to protect City Link from any illegal activity.

The Results

Savings of almost £250,000 on temporary agency labour (nearly 6% of their yearly spend)

• Invoices reduced from 15,000 per year, down to 52, cutting transactional and processing costs
• Visibility and control achieved through the e-tips® reporting function reached further than expected, benefitting central procurement and finance departments as well as regional recruitment planning
• Payment process made significantly easier and more simple, extending to benefit accounts payable on top of central finance department and the depots themselves
• Consolidation of supplying agencies from 76 down to 60, many of whom were existing suppliers to City Link, maintaining a quality supply base, improving depot-agency relations and increasing agency loyalty
• Better quality of staff supplied through rate optimisation
• Legal compliance ensured and agency performance monitored through formal service agreements

Quotes

Colin Tyler, Finance Director:

"No supplier friction, timely clear management information and a simple low cost execution. If PG Tips gave us the Perfect cuppa, eTips certainly gave us the Perfect transaction!"

Philip White, Interim A/P Manager

"The impact of using de Poel was significant.  The de Poel purchase to payment process is strategic for us - operationally this means that the process is long term and fit for purpose, as we are able to integrate the process into our portfolio of AP services.

de Poel also assisted with what I call the "wood for the trees" syndrome. Operational volumes of paper invoices were significantly reduced in an area where our purchase order process is not efficient (due to difficulty in predicting spend / hours worked in advance). The process has also created operational space so we can do a better job with the other paper invoicing - providing more chance for us to improve compliance and process exceptions. As an added extra, we now receive fewer calls from suppliers as these often now go to de Poel."

City Link Case Study.pdf