Summary
¦ Expense Reduction Analysts was called in by AW Champion to advise on its cost-cutting programme.
¦ ERA analyses 100 cost categories.
¦ The cost-cutting programme includes vendor vetting, to get the best deal from suppliers.
¦ ERA has saved AW Champion £45,000 on marketing print, merchant cards and stationery.
Merchant and importer AW Champion has continued to grow in recent years, but decided to undertake an ambitious cost-cutting programme to redirect more resources into attracting new business. And as part of the exercise, it called in specialist consultant Expense Reduction Analysts (ERA).
The cost strategy began with AW Champion financial controller Steve Bowden undertaking a detailed review of the company’s suppliers.
“We initially looked at specific areas such as print and stationery, before expanding our review to include a range of costs, from waste disposal to merchant cards,” he said. “We were happy with the level of service from suppliers, but we wanted to make sure we were getting the most competitive rates.”
Calling in a third party in ERA, he added, gave the company “a clear view of where real savings could be made”.
Bespoke process
“Our role, which we believe is unique in terms of the number of cost categories we address, is to devise a strategic programme for a company to plug cost gaps and help improve the effectiveness of their procurement,” said ERA consultant Paul Gannon. “The process is bespoke and tailored to the needs of the individual client, conducted in close partnership with their personnel. To be effective, we have to find solutions that fit the company and their business objectives.”
To achieve the latter, he added, the cost reduction process starts with in-depth consultation with “key stakeholders” at the client business.
A central aspect of the ERA process is vendor vetting, assessing the market to see if clients are getting the best deal from product and service suppliers and, indeed, using the right supplier.
“We have extensive data bases for benchmarking and comparing suppliers,” said Mr Gannon. “The client could do this themselves but it would be a very time-consuming process.”
ERA will also evaluate whether a company is making the most of alternative revenue streams, such as selling waste or by-products. Other areas it can address include logistics, banking, finance, insurance, property and office expenditure.
“And these main cost categories break down into around 100 sub-categories, so we really can go into microscopic detail,” said Mr Gannon.
Marketing print costs
Among areas ERA has tackled at Champion is marketing print costs. This alone has resulted in savings of £15,000; 30% of expenditure.
“The money saved has allowed us to redirect marketing spend in a more targeted way,” said marketing manager Mike Bird. “We focus more funds on attracting new business and extracting more business out of existing customers.”
Reviewing print suppliers on cost had another knock on, prompting a review of their environmental credentials at the same time, with Champion having them independently audited against The Timber Trade Federation’s Responsible Purchasing Policy.
The ERA review has also addressed Champion’s merchant card costs. They have been cut by 16%, taking the company’s savings, with the reduction on marketing print and, additionally, stationery, to almost £45,000.
Total savings
Over a whole cost reduction programme, ERA claims its process saves clients on average 19.7% of total expenditure.
“That’s nearly £20,000 for every £100,000,” said Mr Gannon. “And it’s critical to stress that this is without compromising quality or service. Our approach is to bring together like-minded companies and improve relationships throughout the supply chain. AW Champion has established good working relationships with its new suppliers [as a result] and improved the way it works with existing suppliers.”
He added that ERA continues to work with AW Champion on a flexible basis and other areas of expenditure are being reviewed.
? For more information visit www.expense-reduction.co.uk.
