CASE STUDY

Mechanical Handling Equipment

The client was largest B2B and B2C parcel delivery company in the UK which undertook deliveries for major high street brands and online retailers.

The Challenge

Following the acquisition of its major competitors and huge growth, forecasted to continue over the following 12 months, our client had to make major investments in its sort mechanical handling equipment (MHE) of over £350,000 to build volume capacity before the impending Christmas ‘peak’ period.

Due to market conditions and technical requirements there was only one viable supplier available, as such, a cost model and contract which represented good value had to be established without the ability to competitively tender.

Our Strategy

The nature of the service was highly specialised and complex and the priority from the client was to ensure the equipment was installed on time.

As such, our approach was to collaborate with the chosen supplier to establish a cost model that was clear and transparent, and able to be validated against comparable market rates.

Further, to agree a robust and clear supply and maintenance contract that would give the client confidence on delivery.

Our Solution

Our solution took the form of two distinct stages:

  • Firstly, the agreement to an open book cost model open book P&L based cost model that included all direct costs, indirect and subcontract elements and adhering to a set profit margin that Oculus agreed up-front. Oculus used its experience and knowledge of comparable services to ensure labour rates and mark-ups were competitive throughout negotiations.
  • Secondly, a defined set of service levels, KPI’s and break-fix maintenance expectations pre-award to ensure the actual contract negotiations were equitable and balanced.

Business Benefits

  • On-time and on-budget delivery of the MHE
  • Certainty of cost by way of the open book and margin-based cost model, which was benchmarked against comparable services to ensure it represented good value
  • A robust supply contract which bound the supplier to fixed implementation dates, service and break-fix arrangements
  • A comprehensive training and spares package to ensure there is no over-reliance upon the supplier in terms of equipment downtime and repairs

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