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GEON gives green light on single supplier strategy

Thursday, 22 February 2007
By Print 21 Online Article

Three winners – Agfa, CPI and Red Paper Group – look at sharing GEON’s $80 million yearly spend on consumables in a taste of scale leverage from the private equity backed group. An intense tendering process under the aegis of management consultants, AT Kearney, saw all the industry’s major suppliers put to the test.

Incumbent suppliers to the 12 different printing companies in Australia and New Zealand, as well as other companies that met the tests of scale and capability took part in what Graham Morgan, Group COO, described as “ a robust process.” While conceding GEON is seeking immediate bottom line benefits from the massive realignment of its supply chain, he maintains price was not the decisive factor.

“We analysed the responses including prices obviously, but also looked at business continuity, resilience, ethical behaviour and environmental commitment. We tried to keep the process as open and transparent as possible and approached the supply chain in a holistic manner,” he said. “All the suppliers in the final selection were very credible and we have tried to minimise disruption to the unsuccessful incumbents.”

The company intends to develop long-term strategic relationships with its chosen suppliers and has developed joint working parties to see to the transfer and development of ways to extract further costs from the supply chain. The initial contracts are for two years. While there is no assurance the impending purchase of Promentum will see that group follow suite, it’s more than likely, according to Morgan.

  • Plates set to go Agfa thermal
    • The printing plate contract, being relatively simple, will be the first to make the switch. Already Agency Printing in Sydney has switched to Agfa and Morgan expects the entire group to have made the move within two months. The migration towards processless plates will take place over the length of the contract as the technology matures.

  • Inks to CPI with Tokyo Cervo
      The process ink supply is likely to be a more complicated turnover with only two of the 12 firms currently running the product. The decision to go with the Tokyo Ink product from CPI came down to blind data-based choice following extensive testing at Independent Ink Technologies at Parramatta, NSW. A panel of GEON Group’s general managers reviewed the findings and picked Tokyo Cervo, although it was not necessarily the cheapest product, according to Morgan.

      The win was welcomed by David Bull, CPI director, who said it vindicated the company’s long-standing ink business. Having seen the GEON single source process from both sides – winning on ink, missing out on paper – he maintains it was a very thorough process. “From an industry perspective it was quite new, very different from other tenders, which are often simply calls for a price or a low quote. We’re very pleased the ink division was chosen. It has gone from strength to strength in recent times and is now larger than it has ever been in the 25 years we’ve been selling ink,” he said.

  • Paper goes to the Red Group
    • The consolidation of GEON’s paper supply is likely to prove the most challenging with end-customer preferences for specific grades of paper to be taken into account. The time line for the switch is likely to around six months. “We’re very aware that paper companies operate on thin margins so we’re not about to beat them up every six months on price,” said Morgan. “ We’re looking for longevity in our relationship and on extracting costs from the whole supply chain.”

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