Article: EVO develops "Product Conveyor" process
| 21 April, 2017
What are your current projects?
One very important development is a new process for product launches and catalogues. Since I started in the industry some 28 years ago, building a catalogue has always followed the same process, after agreeing commercial terms: we select products, build the catalogue and establish pricing, and every year we follow the same pattern. However, this year we have developed a new process called the “Product Conveyor”, which turns the previous method on its head. You can best understand the new concept by picturing a product conveyer belt that is driving through the business with products added to it at any time throughout the year. This is backed up by dedicated product marketing, ecommerce and commercial activity. When we need to build a catalogue, we take a snapshot of this conveyer. However, the conveyer does not stop moving and new products, either virtual or stocked, are constantly being added.
How does this affect product launches?
It means that there are no time barriers to launching new products, so we have far more flexibility. This is a major advantage as product lifecycles have become shorter. This process is not new as the printer consumables and technology markets do not follow catalogue timelines, however, it is a fundamental change in how products are brought to market in the office supplies industries. We are working to roll this out throughout the product range in order to drastically reduce the time taken between the decision to stock a product and it going to market. Previously this can be as long as 18 months if a product narrowly misses the selection phase for a catalogue. My goal is to reduce this to 24 hours! It’s raising the bar very high, but for some winter products we were recently under 48 hours, so it is achievable.
How important is the catalogue in this new process?
Online and printed catalogues are marketing tools and will no longer be the basis of product launches. It is the products that drive the business forward and we are now able to launch products far more quickly. Catalogues and publications are however very important tools in our marketing armoury.
What obstacles have you encountered?
The challenge is that the traditional, catalogue-based model is engrained in the whole industry. With the notable exception of Amazon, companies across Europe work back from the catalogue deadline in their approach to merchandising, instead of using the catalogue as a snapshot of a continually changing product offering. Changing this mentality across the channels will be fundamental to the success of this strategy.
In terms of products, which new lines are you developing?
Well-being is one of the big trends in the market and we have just launched a range of Contour products to help people feel more comfortable and healthier in the workplace. For example, ergonomic sit stand workstations can help reduce the health risks from sitting for long periods in front of a computer. Well-being is a major focus, but there are other new opportunities. One which might seem futuristic is wireless charging. Wireless charging stations are already on the market, but companies such as Amazon and Google are looking at developing technology so that charging can take place without having to place the device on a charging station and the implications of this technology is far reaching. Another category we have been developing is 3D printing, although there needs to be further technological developments for it to reach its full potential.
Which other categories are you focusing on?
Jan San is again a priority for us this year and we are developing a range called 2Work which encompasses over 150 products and is doubling in size every year. Jan San is a £2 billion market in the UK and we are only scratching the surface with our current market share so the growth possibilities are enormous. Other FS categories such as catering and packaging also offer further opportunities. Addition to this we are giving significant focus to our furniture and print categories.
How about Personal Protective Equipment (PPE) products?
This is another huge market that we estimate to be over £1 billion. However, this covers clothing and catering for different sizes of each item results in a category of many thousands of SKUs, which means we are not able to stock the majority of SKUs ourselves. It is a category we are exploring but supply chain considerations are at the forefront of our thinking.
Last year you told us that writing instruments and Viscom were performing very well. Is this still the case?
Writing instruments are always in demand as they are an extension of people’s personality and are very much brand driven. Viscom is also seeing good results because as it touches the digitalisation process. It also helps that we have brands such as Bi-Silque which are producing some very innovative products to help drive the category forward.
How have you adapted to the drop in the British pound?
Before the Brexit vote and the resulting drop in the value of the pound there was a general reluctance to increase prices throughout the market. When the pound dropped by 10%, companies either had to put up prices or face the risk of going out of business. These new circumstances mean that companies are having more open conversations with customers about pricing and margins than before. Of course, this is not always an easy process and there is always reluctance to price increases, but there is no longer any fear attached to having this conversation with customers.
Are there any other trends that you are seeing in the reseller market?
There is more customer loyalty in the reseller market than before as very few companies change supplier. We have 18,000 customer-specific products that dealers supply to particular customers. This means that changing supplier is complicated as it is necessary to change this infrastructure. The positive aspect of this is that dealers are focusing less on changing supplier and pricing, as I previously mentioned, and more on sales, which is where there attention needs to be. On the manufacturing side, there could be a move towards more local production after Brexit. We have already seen in the United States that some manufacturers are deciding to shift production from Mexico following the election of Donald Trump. It will be interesting to see if this trend happens in the UK in 2017 and beyond.
How do you see 2017 developing?
2016 was a year of change in terms of building our portfolio and we have achieved some good results to build on this year. However, there is still work to improve efficiency and drive through the product conveyor belt system. Concerning the overall market, I believe there will continue to be more consolidation both at manufacturer and reseller level. The sale of the European operations of Staples and Office Depot will cause some disruption in the contract market, but it is too early to see what the results of this will be. Most of the major players in the UK market are now owned by venture capital companies, so there is a greater drive for profitability and value than before, so this will also be a factor in how the market develops.
EVO Group is a £660m group, formed from the merger of Vasanta and office2officeplc (o2o). It is the largest multi-channel distributor of business supplies and services in the UK. EVO Group provides sourcing, storage and fulfilment services to over 20,000 resellers, corporate organisations and direct customers through VOW, VOW Retail and Banner.