IESA buys and manages indirect materials on your behalf
At first glance this might appear to be a somewhat unsexy proposition and beg the question: “Why would we work with IESA?” The sector it occupies is “indirect” procurement. In other words, IESA takes care of buying and storing things for its clients which don’t end up in the final product. This includes anything from safety goggles and uniforms to production line motors and bearings.
So to grab the attention of potential clients, chief executive Glenn Timms has a more up-front strategy.
He starts by listing clients. “In automotive we work with Jaguar Land Rover, for example. In food we work with Kellogg’s, Premier Foods and Weetabix, among many others. In beverage we work with Carlsberg, Greene King, Molson Coors, and in pharmaceuticals, we look after AstraZeneca, Eli Lily and Pfizer. We also work with General Electric, Johnson & Johnson and Proctor & Gamble…”
He can keep going.
Then he’ll mention his revenue. Not to be boastful (far from it as he bashfully explains), rather because the numbers reflect the strength of IESA’s business model. IESA – pronounced i-esa, it sounds like iPad or iPhone yet shows its heritage as it stands for Integrated Engineering Stores Associates – was founded in 1892 and generated revenue of just over £1 million only 12 years ago.
We guarantee we will improve your bottom line
Then it reinvented itself as a cloud-based industrial BPO (business process outsourcing) specialist. The model made immediate sense to clients. IESA grew sales to £49 million four years ago, to £142 million this year and will pass £200 million in the next two years. It’s a growth story explosive enough to land IESA on The Sunday Times Tech Track lists several times as well as securing many other awards and accolades.
Attention guaranteed, Mr Timms will then explain what IESA does.
In a nutshell, it buys non-core products and manages them on behalf of its clients. Jaguar Land Rover may keep the procurement of windshields and brakes in-house, because it is core to them along with all other direct material and anything else we can take care of. This might include components for maintaining the production line, repair, overhaul, health and safety, consumables and stationery. These indirect supplies account for around 20 per cent of expenditure with a typical manufacturer, processor or assembler.
As a bulk purchaser for approximately 60 of the world’s leading manufacturers, IESA has phenomenal buying power. It has relationships with 20,000 suppliers. That’s the first way it saves money for clients.
Second, IESA will provide a complete management service for the transaction and stocking of the products on the client’s site. Ensuring that the profile of the inventory held, and hence client working capital, is optimised at all times. Reducing client spend and lowering the value of their cash tied up on shelves can double the value of savings realised.
Third, it automates and simplifies the entire P2P (purchase-to-pay) process. Instead of clients wrestling with hundreds and indeed thousands of purchase orders, invoices, payments and reconciling supplier statements, they receive a single invoice.
The final piece in the jigsaw is the physical handling of indirect stock. Mr Timms explains: “When we take on a new client, we manage the indirect inventory. This means their stores employees join us, under TUPE [Transfer of Undertakings (Protection of Employment)] regulations, although they stay in the same factory or plant as before.
“The employees respond positively because whereas before they were in a back-office function, dealing with products which the clients may not see as a strategic priority, they work for us in a core function which is revenue generating and drives our business. They are the front line of our team and have an exciting career path.”
IESA runs on a bespoke cloud-enabled SAP platform, meaning it is inherently more efficient and user friendly than the paper, proprietary or legacy systems used by many manufacturers. Procurement specialists instinctively grasp this, while Mr Timms says he wants to reach out to the C-suite too.
“Once we explain the benefits, clients start to grasp why they should be working with us as we guarantee we will improve your bottom line. A client-saving in excess of 10 per cent is the goal and is currently running at an aggregate 11 per cent. We’ll save you money on procurement, reduce your working capital and we’ll take care of the long administrative chain, taking over your middle and back-office functions so you are free to concentrate on the things which are really core to you. Product savings are often typically only 30 per cent of the overall saving,” he says.
Given the chance to deliver his solution, backed up with testimonials from the long, long list of blue chip client relationships IESA has secured in the past few years, Mr Timms feels he’s got a profoundly attractive proposition.
“While it might not trip off the tongue – the procurement and management of indirect materials in manufacturing and process industries – once people understand what IESA can do for them, it becomes compelling. They listen intently and quickly follow up with the opposite of their opening statement: “Why wouldn’t we work with IESA.”
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