Bottom line boost for Linens Direct

Linens Direct is a company that recognises the importance of managing its cost base, especially in the current economic climate. However, with a growing network of stores and a popular internet business to boot, its internal resources are fully committed to operating and growing the business.

This has left little time to focus on the kind of forensic, line-by-line scrutiny of expenditure required to generate significant savings or the market research needed to negotiate streamlined contracts with suppliers.

Karen Everson, Financial Controller, says: “I know that there are significant benefits to be achieved from a thorough review of costs and the impact clearly goes straight to the bottom line. But, despite the benefits, it’s just not feasible that we could find the time in-house to manage such a review; as the whole team already have demanding schedules.”

In business for over 18 years, Linens Direct sells a wide range of soft home furnishings through its network of 32 stores across the country as well as online.

The company’s solution to tackling its supplier costs has been to establish a partnership with cost, purchase and supplier management consultants, Expense Reduction Analysts, and during the four years the two companies have worked together on a number of different areas of expenditure to identify savings.

In many cases, these have been worth more than 30 per cent of the existing spend and have included stationery (where savings of 37 per cent were made), print (savings of 35 per cent), cash handling (savings of 31 per cent) and waste (savings of 29 per cent).

St John Rowntree, consultant at Expense Reduction Analysts, says: “Many of the savings we’ve achieved for Linens Direct have resulted not just from price negotiations, but from improved procurement and supply chain efficiencies that better suit the way the company operates.”

For example, over time stores in the chain had ended up with individual contracts for wastes services and these varied from private contractors to local authority collections, all with their own pricing structures and rates. Expense Reduction Analysts was able to streamline this important area of the company’s operations and put in place a centralised management system with a single point of contact to co-ordinate all charges and contracts.

Similarly, the contract for cash handling was reviewed and following a detailed review of processes and seasonal requirements, a rationalisation of cash collections was recommended resulting in savings of 41 per cent.