Client 

DS Smith Packaging is one of Europe’s largest fibre-based packaging groups, which has recently reported for 2011 increased revenues of 19.5% to £2.75 billion and profits of £136 million, up 39%.  Whilst the UK corrugated packaging market grew by just 1% last year, the UK packaging operation grew by 22% to £917 million and Group CE, Miles Roberts, said: “The strong performance was achieved in the context of significant increase in input costs, which we have been dedicated to recovering."

On the back of this ongoing success, DS Smith has now purchased the majority of SCA's Packaging operations for £1.4 billion, transforming the company into a Pan European giant.

The Challenge

Raw material prices, energy and other cost have escalated rapidly over the last five years.  With paper representing often in excess of 50% of the finished cost of goods, corrugated manufacturers have been left with little option but to increase prices on a number of occasions during this period.  With over two thirds of UK corrugated packaging being supplied to food and beverage manufacturers, this has been and remains a significant challenge.  Brand owners face stiff resistance when attempting to pass through increased costs to their Retail customers and with professional buyers and a fiercely competitive market environment to contend with, a systematic and robust programme of preparation and training was required.

The Programme

Over the last six years, PiP Associates have worked tirelessly with DS Smith, on every aspect of price increase methodology and training by carefully analysing current levels of performance and then coaching management and sales teams in the tactics of value recovery and price and margin management.  We have seen some fantastic results through both broad scale price increases and individual account margin management programmes.  We have tailored this support to every aspect of price increases from having a clear rationale through to negotiating deals and monitoring performance.  This has transformed the commercial teams ability to consistently deliver price and margin improvement. 

Results

The UK Sales Director, Mike Alvis, now describes the UK sales and management teams as “black-belts” in price and margin management and commenting on PiP Associates work has said:           

“PiP Associates have helped us considerably in the ongoing challenge of improving profitability within our highly competitive industry.  From a cost/benefit point of view, the results have far outweighed the costs.  PiP Associates have also invested heavily in keeping themselves abreast of developments within our industry, this ensures that training modules do not become static but highly relevant and in tune with prevailing business challenges.”

With the ongoing scarcity of the basic raw material - waste paper, prices are likely to continue to rise and the skills and plans that have been developed will be a valuable part of the sales, national account and management teams armoury.

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