5 initial meeting cel ppt 050109
TRANSCRIPT
Finding hidden savings for [company name]
Cost reduction solutions from industry experts
1. Introduction to Expense Reduction Analysts
2. Understanding [company]
3. Working with ERA
4. Next steps
About Expense Reduction Analysts
• Global consultancy focused on reducing G&A/non-core operating expense
• Network of more than 700 consultants worldwide, with 300+ in the United States
• Proprietary benchmark data from more than 14,000 cost-reduction projects
• Find average savings of 20% in G&A expenses
About Expense Reduction Analysts
• We bring clients our:
Purchasing expertise and industry knowledge
Current pricing data from completed projects
Proven process for implementing projects
• Help clients implement recommendations for maximized, sustain savings
• Monitor results over 24 months
CFO/ERA white paper
CFO Research Services – within CFO Publishing Corporation – publishes CFO magazine. Surveyed more than 200 senior finance executive from nearly every industry.
•Profitability will come through cost management•Cost reductions can keep organizations fully funded and critical employees on payroll•Companies commit more resources to managing direct costs than indirect costs
CFO/ERA white paper conclusions
Obstacles cited to improving G&A cost management
• Organizational resistance
• Lack of time, attention, resources & tools
• Lack of standardized approach to G&Acost-management across organization
Obstacles cited to improving G&A cost management
• Organizational resistance
• Lack of time, attention, resources & tools
• Lack of standardized approach to G&Acost-management across organization
Chemicals
Factory Consumables
Fleet Management
Food Services
Freight (FTL, LTL, Internat’l)
Information Technology
Insurance
Janitorial Services
Laboratory Supplies
Leased Equipment
Medical Supplies
Merchant Card Processing
Office Supplies
Packaging
Payroll Processing
Print Services
Records Management
Small Package Freight
Telecommunications
Temporary Labor
Travel
Uniforms, Linens andLaundry
Utilities
Waste Management
Many others . . .
Cost categories we review
Savings – Specialty Chemicals
Client — Ceramics manufacturer
Spend — $336,000
Annual Savings — 31%
Hidden Savings — $ 103,000 for year one; $301,450 for subsequent years as capacity expands
The client knew Consultants had superior technical and industry expertise to handle an analysis of both its core and non-core specialty chemicals spend.
Client — Wholesale distributor
Spend — $2.1 million a year
Annual Savings — 23%
Hidden Savings — $400,000 a year ____________________________
13% 17.8%
Savings – Freight (LTL, FTL, International)
Client — Manufacturer
Spend — $256,000 a year
Annual Savings — 34%
Hidden Savings — $73,000 a year
Industry expertise and propri-etary benchmark data led tobetter pricing with tiered rates
Savings – Janitorial Services/Supplies
Client — USSI, Inc. Janitorial service
provider
Spend — $2.2 million
Annual Savings — 16.5%
Hidden Savings — $363,000 a year
Client — Regional Bank 30+ branches
Spend — $250,000
Annual Savings —16%
Hidden Savings — $40,000 a year
____________________________
“These savings help us main-tain current pricing levels and reduce pressure on profit margins.”
~ Stephanie NesterUSSI Controller
13%
Savings - Merchant Card Processing
Client — NutriSystem
Spend — $370,000
Annual Savings — 59%
Hidden Savings — $220,000 a year
____________________________
Client — Goodwill of the Heartland
Spend — $84,000
Annual Savings — 25%
Hidden Savings — $21,000 a year
“It didn’t take me long to appreciate ERA’s professionalism and innovation.”
~ Tammie Erb, CFO Goodwill of the Heartland
Savings – Office Consumables
Client — Regional hospital network
Spend — $370,000
Annual Savings — 33% average over 3-year contract
Hidden Savings — $400,000 a year over 3-year
contract
Client — Law firm
Spend — $68,000
Annual Savings — 23.5%
Hidden Savings — $16,000 a year____________________________
Three-year contract with the existing supplier beat national GPO pricing
Savings – Packaging
Client — Cosmetics and consumer products manufacturer
Spend — $450,000
Annual Savings — 33%
Hidden Savings — $150,000 a year
Client — Universal Printing and Manufacturing Company
Spend — $325,000
Annual Savings — 21%
Hidden Savings — $68,200 a year
____________________________
“I’m glad we asked for ERA’s assistance. We’re pleased with the savings found.”
~ Mike Dehlic Vice President-Operations
Universal Printing
Savings – Payroll Processing
Client — Engineering firm 200 employees
Spend — $38,000
Annual Savings — 28%
Hidden Savings — $10,500
Client — Manufacturer 1,300 employees
Spend — $150,000
Annual Savings — 45%
Hidden Savings — $67,500 a year
____________________________
Many companies rely on big industry players, but end up paying for features they do not use
Client — National insurance broker
Spend — $379,000
Annual Savings — 30%
Hidden Savings — $113,000 a year
____________________________
13%
17.8%
Savings – Printing Services
Client — Robotics manufacturer
Spend — $35,400
Annual Savings — 20%
Hidden Savings — $7,080 a year
Insurance broker was able to increase funding for marketing projects to help grow business
Savings – Records Management
Client — Architectural firm
Spend — $47,500
Annual Savings — 63%
Hidden Savings — $30,000 a year
Client — Healthcare system
Spend — $304,500
Annual Savings — 60%
Hidden Savings — $182,000 a year
____________________________
Consultants compare contract terms, security, delivery performance, storage costsand exit fees against industry benchmarks
Client — Sun Microstamping
Spend — $105,000
Annual Savings — 28%
Hidden Savings — $29,500 a year
____________________________
13%
17.8%
Savings - Small Package Freight
Client — Universal Printing & Manufacturing
Spend — $439,000
Annual Savings — 21%
Hidden Savings — $92,190 a year
“I know ERA will ensure we are getting the best value for our dollar.”
~ Michael Shirley, CFO Sun Microstamping
Savings - Telecommunications
Client — AFC Worldwide Express
Spend — $410,000
Annual Savings — 16%
Hidden Savings — $63,800 a year
____________________________
Client — Agricultural company
Spend — $187,000
Annual Savings — 25% year one; 12% every year thereafter
Hidden Savings — $47,000 year one; $21,600 every year thereafter
ERA immediately spotted overcharges and billing errors and secured retroactive adjustments of $25,000+ for agricultural company.
Savings – Temporary Labor
Client — Gourmet snacks producer
Spend — $2.3 million
Annual Savings — 15%
Hidden Savings — $350,000 a year
Client — HVAC manufacturer
Spend — $302,750
Annual Savings — 25%
Hidden Savings — $75,700 a year
____________________________
Industry experts evaluate providers on net billablerates, performance, serviceand payment terms
Savings – Waste Management
Client — National restaurant chain
Spend — $842,000
Annual Savings — 19%
Hidden Savings — $162,000
Client — Sun Microstamping Technologies
Spend — $38,000
Annual Savings — 37%
Hidden Savings — $14,000 a year
____________________________
Clients are often told theyare getting the best pricespossible. ERA industry knowledge and benchmark data counter these assertions.
Understanding your company
• What are your company’s objectives?
• Where is the company headed?
• What metrics measure success or failure?
• What are the obstacles to success?
Understanding your company
• What happens if you meet company objectives?
• What happens if you don’t?
• What do you think would help ensure meeting the company’s goals?
• How ERA can help you achieve your goals and objectives
• Ways ERA can help reduce your risk of failure and improve your chances of success
• If ERA reduces all non-core expenses by 20%, how would you use the extra funds?
Understanding your company
Working with ERA - Compensation
• Half of actual measured savingsfor 24 months after implementation
• 10% deposit of estimated savings paidupon recommendation and 10% upon implementation
No savings, no fee
Working with ERA
Our Client Engagement Letter serves to:
• Explain how a contingency fee project works
• Helps you and me define the parameters of a successful engagement
• Describes the terms andconditions of our relationship
Implementation
Gather data; meet with stakeholders;
analyze spend
ACTIVITYIssue RFPs;evaluate results
Select suppliers; implement recommendations; validate full implementation
DELIVERABLE Baseline Report Recommendation Report
Implementation
FEES None 10% of total savings 10% of total savings; balance to be paid over next 24 months
Baseline Report Recommendation
Report Review
TIMEFRAMEFrom startof project
30 days 60 days 95 days Monthly/Quarterly for 24 months
Continue monitoring price and quality; verify ongoing savings
If necessary: Make adjustments and correct supplier non-compliance
Balance of 24-month contract fees
Working with ERA – Process Timeline
Next steps
• Identify cost-savings opportunities
• Set date and general agenda for next meeting
• Sign Client Engagement Letter
• Meet with key stakeholders
• Collect data and information