CASE STUDY
SPEEDY STATIONERS Ltd.
And UTL (TURBINES) Ltd.
SUPPLIER – DRIVEN CHANGE
Learning Obrjectives
1. Understand how real life organizations
develop and implement strategy
2. Show how staff can be motivated or
demotivated by different approaches to
strategic change
3. Appriciate the managers can exercise
considerable choice in terms of their
organizations strategy
Background
Speedy Stationers the development of a
partnership between Speedy Stationers Ltd. And
UTL (Turbines) Ltd, whereby the former took
responsibility for the provision and in-company
management of all UTL’s stationery
requirements.
Speedy Stationers was founded in 1953, and in
1994 had turnover of roughly L 50 milion.
Orginialy the firm acted just as a wholesaler
selling to distributors and retails. In the mid1980s, almost by accident (an acquaintance of
the managing director happened to appointed to
the same position in UTL)
Partly influenced by possibility of selling directly to
large companies. Speedy embargked on an
expasion programme in the late 1980s tha doubled
its number of distribution centres from three to six.
This geographical spreading of risk allowed the
company to wether to recession of the early 1990s
without any significant loss of business – thouggh
its profit margins were squeezed.Nevertheless, by
1993, senior managers came to recognice that the
possibilities of contiued expansion through the
establishment of more distribution centres was
limited, as well as expensive
A Strategy emerges
The strategy that emerged had three objectives :
1. To offer a complete stationery service to its
existing customers, including printed
letterheads, forms, etc.
2. To develop partenerships with its customers
whereby the direct slaes division would supply
and manage their stationery stock
3. To triple turnover in three years whilst
maintaining its profit margin
The thinking behind this strategy
1.
2.
3.
4.
The turnover of direct business was L 750.000 from 15
customers
Direct customers were mainly located near its
headquaters in Birmingham and therefore could easily
be serviced by one group of staff.
Speedy only accounted for 20-25 per cent of direct
customers’ stationery requirements, because it did not
provide printed stationery.
In the early 1990s, the concept of partnerships
between suppliers and customers began to take off,
the wholesale business was discussing managing the
inventory for a numberof medium-sized distributors, so
it did not seem totally unfeasible to offer a similar
service to direct customers
UTL (Turbines) Ltd.
The company is part of large multinational group,
and serve markets worldwide, UTL (Turbines),
as its name implies, is the division responsible
for the design and manufacture of turbines,
which are supplied to a wide range of industrial
users. Like many manufacturing operations in
the UK, the plant had experienced severe
reductions in the number of people employed.
From over 1.500 in 1987, the number working at
the factory by 1994 had shrunk to about 900. In
1992, two different aspects of business – export
and domistic turbine – merged their operations
Speedy takes the inisiative
By 1993, the reorganisation and reorientation of UTL’s
Purchasing departement was well under way. In
particular, the seminar series, which at first attracted
some adverse comment within the company, was
proving a key vehicle for introducing new idea and
generating fresh thinking. When the director for direct
sales at speedy heard about the seminar programme, he
offered to come and talk about its new approach to
working with customers.
Toward the end of 1993, Speedy and UTL signed atho-year
contract covering the provision of all stationery
requirements from the beginning of 1994. Though the
contract included certain specific details, it was
acknowledge that most of the mechanics of arragement
would only emerge as the system was implemented
Implementing the new system
The new system entails significant reductions in
the bureaucracy of supplying stationery, but
also challenges many traditional approaches to
buyer-supplier relationship, especially in
relation to trust.
1. In the absence of direct checks, UTL has to
have complete confidence in the equality of
product supplied by Speedy and the reliability
of its operation
2. UTL has totrust that Speedy is actually
dilivering what it is invoicing for
3. UTL has to be sure that a single-source
supplier will not exploit its position and
introduce opportunistic price rises
The Benefit to
1.
•
Speedy
It increased its business with UTL from approximately
L 50.000 per year to over L 200.000, and actualy
improved its profit margin to 8.5 per cent
•
It proved that the new arrangement could work, and
had three other customers keen to develop similar
arrangement
2. UTL
•
It made a 20 per cent saving on its annual stationery
bill – twice as much as aticipated, even taking account
of using up old stock
•
Consumption of stationery decline in home usege as
one manager put it
•
The number of complaints relating to stationery
dwindled almost to zero.
summary
1.
2.
3.
4.
What this case shows is that customers and suppliers
can link together consciuosly to change the nature of
the environmet in which they operate to their mutual
benefit
The study also shows the serendipitous and
unplanned anture of much of business life.
The manner in which suspicion and resistance were
overcome is also worth noting.
Another major point is that both parties were prepared
to set aside the distrust that permeates so many
business relationships, and attempt to establish a
partnership based on trust.