initial presentation 2010
TRANSCRIPT
1. Why focus on overhead?
2. Who is Expense Reduction Analysts (ERA)?
3. How can we help you?
4. Some key clients
5. How does the ERA process work?
6. Our typical cost categories
7. Where do we go from here?
Agenda
• Current economic conditions are presenting challenges for all companies in all industries
• Expense reduction is easier than increasing sales
• Saving One-Dollar of expense has the same impact of raising revenue by $15 to $20 in most companies
• Expense reduction improves your ability to compete
• Expense reduction can be an alternative to headcount reductions
Why Focus on Overhead?
• Established in 1992
• Over 14,000 projects completed world-wide in more than 30 countries
• Average cost savings across all expense categories is 19.7%.
• Focus on non-core operating expenses; savings goes directly to the bottom-line
• No savings – absolutely no fee
• Work on a no-risk, contingent fee basis; fee is derived from the measured savings that the client receives
Demonstrated Experience and Results
Who is ERA?
• What are your top initiatives this year?
• What seem to be the obstacles to achieving them?
• What metrics measure success or failure?
• How will achieving them impact your business?
• What do you need to achieve them?
• How might savings from your non-core cost categories help you achieve your initiatives?
How Can We Help You?
Broad Industry Experience
Some Key Clients
Column1
Current20% Cost
Reduction
Increase
Sales
Revenue $ 100 $ 100 $ 140
Direct operating costs $ 35 $ 35 $ 49
Labor costs $ 35 $ 35 $ 49
Non-core indirect costs $ 20 $ 16 $ 28
Net profit $ 10 $ 14 $ 14
Alternative Approaches to Higher Profits
20% cost reduction or 40% increase in sales revenue both yield a 40% increase in Net Profit
How We Do It
Analyze6-8 weeks
per category
Define Options
6-8 weeks
per category
Implement& Monitor24 months per category
Complete analysis of business and requirements
Process: Select and manage suppliers with recommendations
Implement solutions, measure and monitor ongoing
Activities: • Define scope• Obtain data• Understand data• Know requirements• Benchmark to database
• Identify Potential Suppliers
• Benchmark to database• Test the Market (RFP)• Analyze the data
• Negotiate Supply Agreement• Implement recommendation• Monitor supplier compliance for 24-months
Deliverables: • Baseline Report • Recommendation Report
• Implement & Compliance review
How We Do It
No savings = No fee
Expense Reduction Analysts Our Clients
• Operate with integrity and respect for our client’s personnel and supplier relationships
• Analyze the client’s current costs and service environment
• Identify and help implement hard-dollar savings options for our clients utilizing our:
• proprietary process
• expert resources
• benchmark pricing data
• Provide post-implementation support services throughout the review period
• Provide timely access to information.
• Allow ERA to present a successful recommendation and earn a share of the savings during the subsequent Review Period.
• Have the sole right to select which of the successful recommendations is the best fit.
• Implement within 30 days, if ERA delivers a successful Recommendation Report.
• Do not solicit any offers from suppliers or duplicate ERA’s work, and refer all unsolicited inquiries or offers from suppliers to ERA
A successful recommendation is:
1. A lower cost solution from an incumbent supplier(s); and/or
2. A lower cost solution with savings above an agreed to minimum, from a non-incumbent supplier who provides equal or greater products/service/quality; and/or
3. A solution from a non-incumbent supplier that our client elects to implement even though it does not meet the criteria above; and/or
4. Provides savings realized from approved changes in methodologies or process
Working Together
Logistics
• Small Package Freight
• Domestic Freight
• International Freight
Insurance
• General/Worker’s Comp
• Health
Services
• Equipment Maintenance
• Janitorial Services
• Payroll Processing
• Printing
• Records Management
• Temporary Labor
• Uniforms
• Waste Management
Supplies
• Chemical
• Cleaning
• Food Services
• Lab and Medical
• MRO/Factory
Consumables
• Packaging and Shipping
• Printing
• Stationery and Office
Telecommunications
• Data
• Mobile
• Voice
Merchant Card Fees
Leasing
Expense Categories
Our Process Yields Predictable Results
• Savings can be achieved in 90% of projects
• Worldwide, we have completed over 14,000
expense reduction projects in 30 countries
• Our average savings have been 20% for our
clients
• We will continue to audit those category expenses
for the next 24 months to verify those savings
Best Practices (Summary)
• Gather and analyze the data
• Know the category/industry and market pricing
• Reduce supplier risk
• Go to market, then analyze results
• Negotiate well
• Implement quickly
• Monitor afterwards
What to Expect IF You Outsource
• What you should expect
• Deep category expertise and experience
• Detailed analysis with clear baseline pricing
• Access to aggregated (benchmark) pricing data
• Transparent earnings - disclose any commissions/incentives
• Implementation support
• On-going auditing of results
• Compensation based on delivered success
• The result should be:
• Much faster completion (by capturing lost savings)
• Much more savings (from using experts & benchmark pricing)
Effective Expense ReductionRequires:
1. Detailed spend analysis
2. Benchmark pricing information
3. Category expertise
4. Time and resources
5. Auditing of the results
THANK YOU