Improve Operational Management through Smart Cost Reduction

Assumption

In an increasingly competitive and constantly changing market, the wise management of supplies becomes a very important lever to strengthen the competitiveness of manufacturing and service companies.

An intelligent and modern Supply Chain, oriented towards lateral thinking and interconnected with all other business functions, is a true cornerstone for any organization to remain competitive. SC plays an important role in supporting the company’s strategic direction and guiding it towards achieving enduring and stable competitive success.

Principle

Take your Operations to the Next Level

Our innovative solution has been designed to meet the needs of a wide range of sectors, including:

The analyzable expense items are as follows:
  • Direct purchase costs (production costs and industrial machinery production)
  • Insurance
  • Trademarks and patents
  • Couriers and transport
  • Document management
  • Maintenance, cleaning, and facility management
  • Postal expenses
  • Business travel
  • Office supplies and consumables
  • Electricity and gas
  • Packaging (primary and secondary)
  • Catering and meal vouchers
  • Surveillance and security
  • Telephone expenses
  • Office and marketing printed materials
  • Office machinery
  • Temporary work
  • Fleet
  • Waste disposal
  • Quality, safety, and environmental management

Analysis process

Introduction

No organization can afford to lose money on its ongoing expenses. Reducing these costs immediately translates into better financial outcomes.

Ours is a specialist approach. We are organized vertically, with teams of individuals working exclusively on specific and defined spending categories, doing so daily for all clients. We are continuously updated in real-time on the state of the art in each industry and have extensive knowledge of virtually all suppliers and the best optimization, analysis, and monitoring strategies.

We should not be viewed as brokers. We do not represent any company. Our sole interest is in optimizing our client. We should not be seen as a potential sword of Damocles hanging over those within your company who manage these expenses. We only do this, every day since 2003. They, as competent and good managers as they may be, are constantly overwhelmed by numerous other issues or activities that prevent them from giving the proper attention.

Our approach, in addition to being a solid and reliable support for achieving savings, is an excellent opportunity for training your resources and transferring know-how.

Description

Over time, we have continually refined our processes to:

  • Ensure fast and certain timelines for completing the work (positive impact on the finances as soon as possible).
  • Minimize the involvement of resources in the document collection and information sharing processes.
Beginning

Every analysis begins with a request for documents. Typically, we are referring to initial information such as existing contracts, copies of invoices for a deemed significant period, and accounting records. A brief technical interview is also conducted with the person currently managing the expense category. This allows us to gather information that may not be easily deduced from paper documentation. We mainly focus on qualitative aspects or specific issues that are not always clearly stated but are extremely important. The interview will also inquire about the motivation behind the choice of the current supplier, how long the relationship has been in place, whether there are suppliers they have dealt with in the past or have on a blacklist, etc.

Sampling, if necessary, may be requested in a subsequent phase.

Creation of the consumption model

The received documentation is tabulated into a consumption model that provides a detailed description of what has been purchased: what is bought, unit prices, volumes. The reference period is typically the calendar or fiscal year.

Investigation

We bring the consumption model to the market. In the initial phase, unless explicitly agreed upon with the company, we do not involve current suppliers. Some prefer to avoid potential tensions that could disrupt daily operations (depending, of course, on the type of expense category). The analysis is conducted along several lines:

  • Evaluation with the same consumption model (same types of purchases).
  • Suggestion of any changes in supply methods (new technologies, different transportation setups, redesign of packaging, etc.).
  • Presentation of opportunities to improve the quality of supply.

If necessary, we are capable of helping the company make significant expense cuts without compromising the quality of the service/product.

Presentation of savings

The analysis concludes its first phase when the savings report is presented. It highlights potential savings, strategies, and characteristics. The next step is the decision with the company on how to proceed:

  • Meet with alternative suppliers (always recommended to strengthen the following points).
  • Meet with current suppliers and attempt renegotiation if necessary.
  • Collect final offer bids.
  • Supplier selection.
  • Our assistance to the company in drafting the new supply contract and its implementation.
Post revision

The second phase of our work begins, and it is extremely important for several reasons:

  • Accurate reporting of achieved savings: based on unit savings margins (old price – new price x new volumes) and on the absolute savings achieved, weighted against the actual volumes of work in the old and new periods.

  • Companies are inherently dynamic and constantly evolving. During the post-review, we assess if there are significant deviations from the previous consumption model. The risk is that, for some reason, typically organizational or strategic changes, new spending directions have been activated that were not initially anticipated. At that point, we work to intervene quickly and optimize these new needs.

Timing

Our commitment is to complete the analysis shortly after receiving all the required documentation.

Contact the cost reduction experts