Expense Reduction Analysts

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  • Why all the focus on reducing operating expenses?Relentless competitive pressures has driven many companies in a wide range of industries to adopt a low-cost country sourcing strategy – emerging countries such as China, Thailand, Vietnam, India, Ukraine, Romania, Bulgaria, Mexico, BrazilThe increased global competition, outsourcing, and offshoring has made it harder for companies to sustain inter-brand differentiationCurrent economic conditions are presenting challenges for most companies
  • This table highlights the profit-making possibilities of reducing your non-core indirect cost by 20%. While every dollar saved is equivalent to a new dollar of profit, additional dollars of income are not. Applicable expenses must be deducted from the sales dollar to determine the remaining profit.To have the same effect on your firm’s business value, you would have to increase your sales by 40%The January 19, 2009 issue of fortune Magazine has an article entitled “How to Manage Your Business in a Recession” which sites McKinsey Research saying that they have found that in a typical S&P 1500 company, a price cut of 5% would have to generate increased sales volume of 19% in order to pay for itself – and that almost never happens.
  • Expense Reduction Analysts

    1. 1. Working Together To Find Hidden Savings! Cost Reduction Solutions from Industry Experts …without disruption To Your Company’s services or budgets. Jim Massengale | Director Expense Reduction Analysts, Georgia 137 B Commerce Avenue LaGrange, Georgia 30241 T 888-557-5057 ext 111 M 706-594-5241 jmassengale@expensereduction.com www.expensereduction.com
    2. 2. About Expense Reduction Analysts • World’s leading global consultancy focused on reducing G&A/non-core operating expense • Network of more than 700 consultants worldwide (30+ countries), 250+ in the USA • Proprietary benchmark data (Procurion ) fromTM more than 14,000 cost-reduction projects • Find average savings of 20% in G&A/non-core expenses (Process/Contract/Price) • Contingency fee based outsource resource. Copyright Expense Reduction Analysts 2009 2
    3. 3. About Expense Reduction Analysts We bring clients our: 1. Industry and purchasing knowledge in G&A categories. 2. Current industry benchmark pricing from already completed projects in our Procurion database 3. Help with implementation of projects for optimized, sustained savings by monitoring results over 24 months 4. Time to work on strategic cost categories and/or the mission of the core business or service Copyright Expense Reduction Analysts 2009 3
    4. 4. Just a few of our clients… Copyright Expense Reduction Analysts 2009 4
    5. 5. Understanding Your Company: • Company’s History • Current Goals and Objectives – both market based and financial • Measurements for Success – Sales, Margin, Profit • Long term Goals Copyright Expense Reduction Analysts 2009 5
    6. 6. Questions… What trend is Your Company seeing in their G&A/non- core expense categories? What monthly bill(s) does Your Company dislike paying the most in their G&A/non-core expense categories? Copyright Expense Reduction Analysts 2009 6
    7. 7. Expense Categories to Consider Chemicals Merchant Card Processing and Banking Fees Cleaning Office, Stationery, Printing Employment Services Supplies Equipment Maintenance Packaging Factory/MRO Consumables Payroll Processing Fleet Management Print Services Food Services Records Management Freight: FTL, LTL, Intn’l, Small Telecommunications: Data, Package Mobile, Voice Information Technology: Temporary Labor Hardware, Network, Software Travel Insurance: Business, Worker’s Compensation, Property & Uniforms, Linens and Casualty, Health Laundry Janitorial Services Utilities Laboratory and Medical Supplies Waste Management Leasing Many others . . . Medical Supplies Copyright Expense Reduction Analysts 2009 7
    8. 8. The Process Yields Predictable Results Our statistics* show: Savings in 90% of projects engaged An average cost savings of 20% Realized 101% of predicted savings *Based on over 14,000 Worldwide ERA projects saving our clients $1.7 billion. Copyright Expense Reduction Analysts 2009 8
    9. 9. ERA vs. Internal Projects ERA will Find Greater Initial Savings ERA will Monitor the Vendors for 24 Months This is NOT a One Time Event This is a 24 Month G&A Cost Cutting Relationship Copyright Expense Reduction Analysts 2009 9
    10. 10. Lowering Non-core Costs Can be VERY PROFITABLE… 20% Cost Equivalent Today In Growth Column1 Reduction Revenue $ 100 $ 100 $ 130 Direct operating costs $ 35 $ 35 $ 46 Labor costs $ 40 $ 40 $ 52 Non-core indirect costs $ 15 $ 12 $ 19 Net profit $ 10 $ 13 $ 13 A 20% cost reduction = 30% Net Profit Increase, or A 30% increase in revenue = 30% Net Profit Increase Copyright Expense Reduction Analysts 2009 10
    11. 11. Where ERA Brings Value To Our Clients: CLIENT ROI (Return on Investment) ERA Time Invested Our results are 100% measurable. Our clients can see where every penny was saved and where we brought value to the process of expense reduction. Copyright Expense Reduction Analysts 2009 11
    12. 12. Time requirements from Your Company team: After the initial meeting, you will have already spent 20-25% of the time needed to implement a category project with ERA. We do all the “heavy lifting”. Point us in the direction of your General Ledger and accounts payable invoices, and we will do the rest. We would need a stakeholder meeting, baseline meeting and recommendation meeting over the next 3-4 months (total: 4-6 hours). From project launch through implementation will take 90-180 days depending on the category. ERA does 95% of the work in the “background”. Copyright Expense Reduction Analysts 2009 12
    13. 13. Working with ERA Our Client Engagement Letter serves to: • Explain how a contingency fee project works • Helps define the parameters of a successful engagement • Describes the terms and conditions of our relationship Copyright Expense Reduction Analysts 2009 13
    14. 14. Next steps… Contact me at: jmassengale@expensereduction.com Copyright Expense Reduction Analysts 2009 14

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