Courtesy: http://www.manmonthly.com.au/
THE Anglo-Irish Trading Company (AITC) produces a unique range of dairy and non-dairy drink products with annual sales of around $2 million. But the company only has three employees, including While, and all aspects of the business except general office, sales, marketing, and product development are outsourced.
Areas outsourced include technical, packaging, raw materials, manufacturing, warehousing, distribution and pack design.
AITC procures its blending of finished product from a number of companies on the eastern seaboard of Australia. The advantage to the AITC business model is that there is no capital expense in setting up property, plant, leasing costs, and food accreditation requirements, and ongoing costs such as labour, workers’ compensation, superannuation, holiday entitlements and technical staff are not carried by the company.
“We realized that the best strategy was to work with blending companies that could amortize these costs over a number of clients and bring these economies together within the end manufactured cost of the product. Also, it was recognized that the various products that AITC sells to domestic and overseas markets require various types of manufacturing, which would mean a host of different types of equipment”, While told Manufacturers’ Monthly.
Outsourced warehousing
AITC warehouses and distributes product from a distribution centre at Sunnyfield Independent Enterprises (SIE) in Sydney.
“SIE has worked closely with AITC to put together an efficient and cost effective distribution warehouse encompassing all the technical requirements to supply our overseas and domestic clients.
The cost benefits are reflected in the amount of stock held at a given time and enable us to keep warehousing and distribution costs directly proportional to the business turnover”, While explains.
“If AITC had its own warehousing facility the cost would be fixed and not totally proportional to the turnover of the business. Yet again the fixed costs would include rent, equipment leasing, and warehouse staff etc.
“We do recognize that at a certain turnover there is a point where it could be beneficial for a business to provide its own warehousing, but such a decision would depend on many variables. At this stage we still see economic benefits in outsourcing these overheads whilst they can be amortized in the overall product costing”.
He said that AITC is currently working towards integrating aspects of outsourcing, including packing of cans, warehousing and distribution. This is being undertaken at SIE with a view to reducing the costs of transportation of bulk products to and from other packaging facilities on the east coast. SIE, a sheltered workshop, has proved to be efficient and competitive in providing packaging services and meeting tight delivery deadlines.
“Outsourcing provides diversity options and economic benefits to our company, and the companies we outsource to form part of a team with a focus on ensuring that we further develop as a competitive supplier to both domestic and overseas markets,” said While.
THE Anglo-Irish Trading Company (AITC) produces a unique range of dairy and non-dairy drink products with annual sales of around $2 million. But the company only has three employees, including While, and all aspects of the business except general office, sales, marketing, and product development are outsourced.
Areas outsourced include technical, packaging, raw materials, manufacturing, warehousing, distribution and pack design.
AITC procures its blending of finished product from a number of companies on the eastern seaboard of Australia. The advantage to the AITC business model is that there is no capital expense in setting up property, plant, leasing costs, and food accreditation requirements, and ongoing costs such as labour, workers’ compensation, superannuation, holiday entitlements and technical staff are not carried by the company.
“We realized that the best strategy was to work with blending companies that could amortize these costs over a number of clients and bring these economies together within the end manufactured cost of the product. Also, it was recognized that the various products that AITC sells to domestic and overseas markets require various types of manufacturing, which would mean a host of different types of equipment”, While told Manufacturers’ Monthly.
Outsourced warehousing
AITC warehouses and distributes product from a distribution centre at Sunnyfield Independent Enterprises (SIE) in Sydney.
“SIE has worked closely with AITC to put together an efficient and cost effective distribution warehouse encompassing all the technical requirements to supply our overseas and domestic clients.
The cost benefits are reflected in the amount of stock held at a given time and enable us to keep warehousing and distribution costs directly proportional to the business turnover”, While explains.
“If AITC had its own warehousing facility the cost would be fixed and not totally proportional to the turnover of the business. Yet again the fixed costs would include rent, equipment leasing, and warehouse staff etc.
“We do recognize that at a certain turnover there is a point where it could be beneficial for a business to provide its own warehousing, but such a decision would depend on many variables. At this stage we still see economic benefits in outsourcing these overheads whilst they can be amortized in the overall product costing”.
He said that AITC is currently working towards integrating aspects of outsourcing, including packing of cans, warehousing and distribution. This is being undertaken at SIE with a view to reducing the costs of transportation of bulk products to and from other packaging facilities on the east coast. SIE, a sheltered workshop, has proved to be efficient and competitive in providing packaging services and meeting tight delivery deadlines.
“Outsourcing provides diversity options and economic benefits to our company, and the companies we outsource to form part of a team with a focus on ensuring that we further develop as a competitive supplier to both domestic and overseas markets,” said While.
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