Finding Extra Profit With ERA

67 %
33 %
Information about Finding Extra Profit With ERA
Finance

Published on February 5, 2009

Author: ebschmidt

Source: slideshare.net

Description

How Expense Reduction Analysts manage to save 20% of non-core business cost

Turning Overhead Expenses… into Profits Eb Schmidt, Senior Consultant Expense Reduction Analysts (413)441-5718 [email_address]

The World is Flat…. The Pressure is ON! World forces are driving prices lower Customers commoditizing ALL products YOUR competition is keeping ALL expenses as low as possible to gain pricing advantage WHAT ARE YOUR SAVINGS GOALS??

World forces are driving prices lower

Customers commoditizing ALL products

YOUR competition is keeping ALL expenses as low as possible to gain pricing advantage

WHAT ARE YOUR SAVINGS GOALS??

CFO’s see the challenge … 67% of CFOs believe managing indirect expenses is an important strategy for improving their business 50% said, “lowering costs from suppliers” is one of their biggest challenges in expense management Yet … only 41% of companies use aggregated data to negotiate with suppliers, and 78% believe they are not getting the best prices Source: CFO Magazine

67% of CFOs believe managing indirect expenses is an important strategy for improving their business

50% said, “lowering costs from suppliers” is one of their biggest challenges in expense management

Yet … only 41% of companies use aggregated data to negotiate with suppliers, and 78% believe they are not getting the best prices

Trends Within Mid-Sized Companies Typical firm applies strategic sourcing to only 1/3 of spending Insufficient sourcing costs U.S. firms $134 billion per year Source: Aberdeen Group. Tim A. Minahan, "Sourcing in the Mid-Market: The Supply Management Echo Boom". 2006 Lack a formal sourcing or procurement organization Uncertain how to begin strategic sourcing initiative 0% 20% 40% 60% 80% 100% 38% 50%

Typical firm applies strategic sourcing to only 1/3 of spending

Insufficient sourcing costs U.S. firms $134 billion per year

Lowering Non-core Costs Can be VERY Profitable… A 20% cost reduction = 40% increase in Net Profit $4M in expense savings = $40M in revenue Column1 Today 20% Cost Reduction Equivalent In 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 After tax (40%) $ 6 $ 8 $ 8 Business Value = 6 P/E $ 36 $ 48 $ 48

Where We Commonly Find Hidden Profits… Expense Category Ave Savings General Business Insurance 21% Freight 18% Office Supplies 35% Small Package Freight 20% Temporary Labor 20% Packaging 21% Merchant Card Fees 33% Factory Consumables 22% Telecommunications 26% Waste Management 29%

Process Overview Analyze 3-4 weeks per category Recommend 4-6 weeks per category Implement and Monitor On-going Complete analysis of your business and requirements PROCESS: Select and manage supplies and prepare recommendations Implement solutions, measure and monitor ongoing Activities: Define scope Obtain data Understand data Know business requirements Look for new Suppliers Go To Market (RFP) Analyze the data Make recommendation Negotiate Supply Agreement Implement recommendation Monitor immediately and then ongoing every quarter

Analyze 3-4 weeks per category

Recommend 4-6 weeks per category

Implement and Monitor

On-going

Define scope

Obtain data

Understand data

Know business requirements

Look for new Suppliers

Go To Market (RFP)

Analyze the data

Make recommendation

Negotiate Supply Agreement

Implement recommendation

Monitor immediately and then ongoing every quarter

Best Practices Analyze the data Know where to apply the discounts Benchmarking Know what to target Category knowledge Engage with a subject expert

Analyze the data

Know where to apply the discounts

Benchmarking

Know what to target

Category knowledge

Engage with a subject expert

Best Practices Match your service to your needs Use the right products/services Negotiate well Have the “right” person negotiating on your behalf Post implementation audit Ensure you are getting the pricing and your usage matches the profile you negotiated

Match your service to your needs

Use the right products/services

Negotiate well

Have the “right” person negotiating on your behalf

Post implementation audit

Ensure you are getting the pricing and your usage matches the profile you negotiated

This Process Yields Predictable Results Our statistics* show: Savings in 90% of projects An average cost savings of 20% Realize 101% of predicted savings *Based on over 10,000 Worldwide ERA projects over 14 years

Our statistics* show:

Savings in 90% of projects

An average cost savings of 20%

Realize 101% of predicted savings

Broad Industry Experience

ERA at a Glance… International Cost Reduction Consultancy Established in 1992 Global headquarters in London, England U.S. headquarters Carlsbad, CA Operating in over 28 countries 600+ Cost Containment Specialists Over $3B in expense under review $310 mm savings realized Simple Guarantee: No Savings, No Fee!

International Cost Reduction Consultancy

Established in 1992

Global headquarters in London, England

U.S. headquarters Carlsbad, CA

Operating in over 28 countries

600+ Cost Containment Specialists

Over $3B in expense under review

$310 mm savings realized

Simple Guarantee: No Savings, No Fee!

ERA Compensation Half of actual measured savings for 18 months after implementation 10% deposit of estimated savings paid upon acceptance and upon implementation ERA share equates to 15% of actual savings over 5 years Bottom line – if you don’t save money, then it costs you nothing!

Half of actual measured savings for 18 months after implementation

10% deposit of estimated savings paid upon acceptance and upon implementation

ERA share equates to 15% of actual savings over 5 years

When you combine industry expertise and knowledge with best practices you can achieve sustainable cost reduction and Find The Hidden Profits. Thank You For The Opportunity.

When you combine industry expertise and knowledge with best practices you can achieve sustainable cost reduction and

Find The Hidden Profits.

Add a comment

Related presentations

Related pages

Extra Profit Blog - expensereduction.com

Expense Reduction Analysts (ERA) ... Extra Profit Blog. ... Like finding some forgotten cash in your pocket, ...
Read more

Commercial real-estate lending: Finding economic profit in ...

Commercial real-estate lending: Finding economic profit in a ... that can mean salvaging an extra €70 million to €105 ... a new era of regulation and ...
Read more

How to Calculate Economic Profit: Definition & Formula ...

It's often the extra profit left over after considering the next best alternative ... How to Calculate Economic Profit: ... Finding Travel Grants for ...
Read more

HR can be a profit centre in the cognitive era | Martin ...

HR can be a profit centre in the cognitive era Martin Oest. ... Finding purpose every day Joe ... The example of the extra teaching assistant to help ...
Read more

ERA: Insurance - en.expensereduction.com

Extra Profit Blog; Press Releases; Publications; ... Why ERA? The Opportunity; ... Finding the right insurance package
Read more

ERA: Case Studies - en.expensereduction.com

Extra Profit Blog; Press Releases; Publications; ... Why ERA? The Opportunity; ... Finding savings whilst remaining focussed on people.
Read more

Warring States period - Wikipedia

The Warring States period ... The Warring States period was an era of intensive warfare, as well as bureaucratic and military reforms and consolidation; ...
Read more

Synergy entity’s pricing breached rules: ERA | Business News

Synergy entity’s pricing breached rules: ERA. ... three requests for extra time. The ERA found Vinalco had ... finding the ERA ...
Read more

ERA - opening up a world of broadcast learning resources ...

The ERA Licensing Scheme provides a single point ... when terms and conditions link with the ERA Licence. As a not for profit ... finding ways to make ...
Read more

Flight into Egypt - Wikipedia

The flight into Egypt is a biblical event described in the Gospel of Matthew ... Extra-biblical accounts. Russian icon of the Flight into Egypt; ...
Read more