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Case Studies

Case Study 1

 

An Australian based fabric manufacturer realized that whilst his local market had little room for growth, the New Zealand market represented an opportunity to increase total sales by about 20%.

They duly set up an operation in New Zealand, employing staff and signing a 6 year lease on a building. Other set up costs involved phone systems, office equipment, pallet racking, handling equipment, company cars and so on.

Sales were higher than anticipated but the set up and operating costs were considerably greater than expected.

Because there was greater distance between the point of supply and point of sale the stock requirement was higher than planned, further increasing capital outlay.

To cover peak periods and holidays staff numbers were increased.

The end result was a branch that was highly successful when measured by product sold and gross profit as a result of sales, but one that suffered heavy losses because overheads were greater than anticipated.

As sales increased it became apparent that bigger facilities and more staff would be required to cope with additional stock requirements.

Then the accountants worked out that the more successful they were, the more money they were losing and the end result was to bail out, suffering considerable losses on leases, cars, redundancies, etc.

After a breathing space, we approached the supplier with an alternative. We knew that they wanted the additional sales that the New Zealand market could bring but obviously they were wary of their recent losses.

We showed that the manufacturer could return to the New Zealand market for very limited risk. In return for a percentage of gross sales we would provide the infrastructure required for them to get back into the game.

After some negotiation it was agreed that the manufacturer would:
  • Employ a commission sales person in New Zealand
  • Arrange to send the stock to us in Auckland

Malcolm Total Logistics would:
  • Arrange Customs Clearance
  • Cartage of containers to our warehouse
  • De-van containers and check stock into store
  • Provide sales support and accommodation for sales staff
  • Carry credit checks on prospective customers
  • Receive orders and prepare packing slips for dispatch
  • Pick and pack product, cutting to length if required
  • Dispatch cargo
  • Invoice client
  • Collect , bank and remit funds
  • Maintain stock records, debtors ledger, GST returns

The worst case scenario for the manufacturer is that if things do not work out, all the need to do is to get their stock returned to Australia and no leases, staff, company cars etc to worry about.

We are motivated by the prospect of a percentage of gross sales and the more product sold, the greater our income.

The net result for the client is a reduction in overheads from 30% of sales to less than 10%.

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Case Study 2

A New Zealand teacher based in China found a manufacturer of quality pens and office supplies that he knew he could sell here. The product range covered ball points, roller ball, markers, highlighters, and also included paper clips and other bits and pieces.

On a visit home he approached us for storage while he pondered on how to make the distribution system work. His prices and margins were particularly attractive to schools but he was at a loss how to operate the business by remote control.
 
The solution?
 
We now handle:

  • Freight from China to NZ
  • Customs Clearance
  • Warehousing
  • Stock control, order placement
  • Receiving orders from clients including schools and institutions
  • Pick and Pack for dispatch
  • Arranging delivery
  • Invoicing
  • Credit control
  • GST return


The client remains overseas and is happy in the knowledge that his business in New Zealand runs quite efficiently while he is away. He also enjoys the benefits of no fixed overheads, wages, rent and the other costs associated with being in business.

In this instance it suits the client to pay us a fixed weekly retainer that is reviewed 3 monthly.
 

For more information contact: Don@malcolm.co.nz or Naomi@malcolm.co.nz

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