Why slashing costs will only get you so far

Companies that are positive about cost management and see it as more than simply making savings are the ones will be in pole position to take advantage of economic recovery, according to a recent survey commissioned by Auditel and Management Today.

Taking part in a round table discussion on how companies can make savings, Chris Allison, MD of cost management specialist Auditel, said: ‘The major challenge will be moving from a simple cost reduction exercise to more strategic cost management. it’s not just a matter of looking at historical data, tendering that out and then getting a better result. Cost reduction is the first part of the process, but you need a strategy in place to make sure you monitor those costs on an ongoing base. You need the right tools and knowledge base.’

He added: ‘Most businesses focus purely on a cost reduction exercise. That means that they get the initial savings, but these are not monitored, and you start actually getting price increases. These costs go flooding back into the business and all their hard work comes to no avail.’

Maximising Opportunities – Auditel’s 18th National Conference

The 18th Auditel National Conference took place at the Marriott Forest of Arden in Birmingham on Friday 29th November in the presence of over 130 Auditel Consultants and over 60 suppliers.

Auditel Managing Director, Chris Allison reported: “This year’s theme is Maximising Opportunities; over the next year we aim to provide an even wider range of cost management services that give measurable results and provide clients with stability for the long term. Our tools have been refined to give even better management information and reinforce the high standard of service provided by Auditel’s specialists. Our network of over 200 consultants are able to build project teams that deliver results and quickly become a valued member of the client’s management team.”

During the black-tie dinner, a number of awards were presented to those franchisees who have distinguished themselves during 2013.

  • Franchisee of the Year – Sponsored by Incom, awarded to Alan Ford
  • Consultants’ Consultant – Sponsored by Focus, awarded to Stephen Heathcock
  • Outstanding Contribution and Dedication to the Network, Sponsored by Jumpstart, awarded to Judith and Peter Ashurst
  • Commercial Achievement Award, Sponsored by Acceptcards, awarded to Mike Andrews
  • Rising Star 2013, Sponsored by Bluefin Insurance Services, awarded to Eddie Finch
  • Rising Star 2013, Sponsored by Scottish & Southern Electricity , awarded to Jane Campbell
  • Newcomer of the Year – Sponsored by UKLED, awarded to Declan Quinn

Chris Allison summed up the Conference and another momentous year: “As a recent survey conducted by KPMG suggests, 95% of costs taken out during this recession are flooding back into businesses. Auditel is better equipped and better prepared to manage organisation’s business costs with their unique Total Cost of Purchase model.”



Cost Managing for Performance

When organisations need to reduce costs, staff cuts can often be the first solution. However, evidence suggests this can result in a reduction in business performance, falling service levels and damage to reputation, not to mention a demoralising effect on staff.

Seán Harnett argues that reducing the size of the workforce should be the last resort. The first course of action should always be to look under the bonnet of an organisation to see where costs can be reduced and efficiencies made.

Seán has given his expert advice to organisations wishing to sensibly and vigorously manage their business costs in an article published by the Little Island Business Magazine.

Read Cost Managing For Performance

Limerick Enterprise Development Partnership

Seán Harnett

There was considerable devastation in Limerick, following the announcement in 1999, that the Krups-Moulinex factory was to close after over thirty years in the City. Providing over 700 jobs and contributing approximately €20m per annum into the local economy, the impact of the closure was severe. It was widely acknowledged that an organisation of that size was going to be very difficult to replace. In response to this employment crisis the Limerick Enterprise Development Partnership (LEDP) was established, initiated by local business personalities,

Within a year, the Limerick Enterprise Development Partnership had purchased the facility and committed itself to establishing a Development Park on the site. The objective of the Park was to provide training, education and community development. Considerable progress has been made in achieving these objectives thanks to the dedication, commitment and co-operation of all involved. During its 14 years of operation, LEDP has achieved significant results, bringing investment and jobs into this part of the city, creating an education and training infrastructure and developing local services.

Based in County Cork, Seán Harnett joined Auditel’s growing Irish Cost Management Consultancy network last year. Seán was formerly a B2B Sales Account Manager, with a focus on manufacturing companies in the Medical, Bio Pharmaceutical, Engineering and Electronic Industries.

He says that his previous experience enables him to offer clients a valuable service. “It gave me a broad range of Sales Management know-how and an in-depth knowledge of how to work with large Multi-Nationals and SMEs. I have a detailed understanding of successfully delivering and implementing solutions to ensure the benefits are felt within the whole organisation.”

LEDP Financial Controller, Cathal Ryan, engaged Seán to examine their expenditure on Gas and Electricity. He says: “Thanks to Auditel, we have successfully identified and implemented significantly reduced rates and tariffs, as well as reductions in our capacity charges. The savings he has found have been welcome. But we also appreciate that he provides us with independent impartial advice to ensure that we are not overpaying for our essential services.

“Auditel are able to deal with suppliers on our behalf and have undertaken an energy management service in order to ensure that, we are not only benefitting from the best procurement rates and tariffs but we are also being assisted to make us more efficient, thus boosting our financial performance and reducing our carbon footprint.

“The relationship with Auditel has been beneficial to the LEDP. We would have no hesitation in recommending their services to other businesses and organisations.”

Seán adds: “Many businesses lack the time, resource and analytical tools to understand fully how their bills are calculated. If your business is one of them, why not book an Auditel Health Check to find out how much time and money your business could save? Auditel’s flexible fee structure gives clients’ choice and the ability to manage cost and strategy for the long term.

“It’s going to be a long, cold winter ahead so first let’s try and reduce your energy costs and help to stop bills soaring!”

Read their Testimonial here

Mean, Lean and Green Energy Management

The cost of energy affects every organisation from charities and the voluntary sector through to manufacturing and leisure businesses.  Management of this essential business cost is a minefield for those without access to the right skills and expertise.

Chris Allison, Managing Director of Auditel, a cost management consultancy, argues that organisations should be turning to professional consultants for energy management advice.  He suggests that many organisations could witness typical savings in excess of 30% on their energy costs, not to mention improved procurement processes and business efficiencies.

Auditel has pioneered effective energy management providing clients with solutions to all of their needs, from procurement of services and management of consumption through to complex energy management programmes using the latest renewable sources.

According to Allison: Energy is costing businesses hundreds of millions pounds annually and squeezing profitability for enterprises of every size. They need to find a way to sensibly and vigorously manage these costs.  As cost management experts we combine skilled people with state of the art analytical tools, industry knowledge,  buying power and detailed process in order to get the best results for our clients.

Mean, lean and green describes very clearly and simply the three step Auditel energy management process.

Allison explains: We call step one mean because its all about setting the price in order to achieve a return on investment. Energy tariffs and procurement can be extremely complex.  We examine and benchmark energy procurement to identify areas of improvement then manage the whole process on our clients behalf.

Stage two is the lean phase. Having the right energy management strategy in place can have a significant impact on organisational performance. Our specialists analyse  consumption and review  energy requirements before providing and implementing a detailed strategy that meets the energy needs of the client.

Finally comes the green phase. Renewable energy is not only environmentally friendly, but it can also be a potential revenue source.  Our experts can advise on every aspect of this complex topic from funding options through to selling excess energy back to the supplier.”

Organisations continually need to examine their energy costs on a regular basis. With typical energy savings of 25% being achieved by implementing an energy management strategy, it is surely time to consider outsourcing to a professional consultant?

A Cut Too Far – Cost Management For The Retail Sector

The Irish retail sector is well accustomed to conducting cost reduction exercises since the world imploded in the autumn of 2008. In troubled times, when organisations need to reduce costs, a staff cull can often be the first solution. However, evidence suggests this can result in a reduction in business performance, falling service levels and damage to reputation, not to mention a demoralising effect on staff. Declan Quinn, a Cost Management Consultant of Auditel (Ireland) Limited, explains why.

Quinn believes that reducing the size of the workforce should be the last resort and argues that the first course of action should always be to look under the bonnet of an organisation to see where costs can be reduced and efficiencies made. So, what are the options available to members of Retail Excellence Ireland?

Beyond staff costs, it is also a fact that all organisation need to spend money on essential business services in order to exist. Premises-related costs, fixed and mobile communications, IT, utilities and finance such as insurance and banking charges are just a selection of essential overheads. Without these services, most retail business would find it very difficult to operate.

According to Quinn, essential business services are costing Ireland’s retail sector hundreds of millions Euros annually and squeezing profitability for organisations of every size. Given the vast level of expenditure involved, organisations need to find a way to sensibly and vigorously manage cost. Clearly, this involves identifying suppliers and service providers and assessing their respective offerings in terms of performance, price and service levels offered.

Whilst this may, at a first glance, seem blatantly obvious, many organisations believe they ‘have people who look after that’. Unfortunately, according to research under taken by Deloitte in March 2013, the biggest barrier to effective internal cost reduction cited by respondents was a ‘lack of understanding.’

It is often the case that department managers, whose experience lies elsewhere within the organisation, are routinely left with the responsibility. Is it right to make an assumption that these individuals hold the necessary skills to enable them to implement an effective and sustainable cost management programme? Surely, the answer is of course no. As a consequence, many opt for the apparent ‘cheapest supplier’ option adopting a purely headline cost model. This may appear to be a logical approach, but it is fundamentally flawed as it fails to take into account a wide range of additional factors that contribute to what Auditel term as the total cost of purchase. The bottom line appears to be that many retailers are spending more money than they need to on essential costs and implementing woefully poor cost management strategies.

The appointment of an outsourced provider of cost management services is becoming an increasingly popular option and one adopted by many members of Retail Excellence Ireland. Companies including Eddie Rockets, Maxi Zoo and La Croissanterie have engaged with outsourced cost management consultancies like Auditel to review the total cost of procuring goods and services. Cost management companies like Auditel can use their independence and experience in the market place to help them make intelligent effective purchasing decisions and implement professional cost management strategies.

Auditing and benchmarking procedures are an important aspect of cost management consultancy. Best practice should include a comprehensive, in-depth review of current essential service expenditure with key performance data being identified. Advanced analytical tools that are specially designed for cost management are also essential as they enable the fast and accurate analysis, monitoring, benchmarking and management all areas of expenditure.
The key to maintaining best value purchasing and supplier management is to be consistent.  It’s not just a one-off exercise and should be considered as an ongoing activity to realise maximum benefits.

Cost managing for performance may well also be the answer to realising untapped profitability.  For example, if we take an organisation that has a gross profit margin of 25 per cent. It engages with a cost management consultant identifying €100,000 of potential savings across essential business expenditure areas. In order to generate this additional profit through sales it would have to increase turnover by €400,000.

Retailers continually need to examine costs on all fronts. However, a forward thinking business can go a long way to countering the potential problems that can occur by embracing and adopting a robust and professional approach to the fast growing discipline of professional cost management consultancy.

Energy Management

Energy Management is a crucial part of any organisation and more and more are really getting up to speed with this area as a means to reducing their spend. Like any account, be it big or small, it needs to be managed carefully. From tendering, to measuring, establishing results and reporting. The problem some face is that the resources within their organisation are not easily available to carry out such ongoing activity. They also are not up to speed with current industry practice and developments. That is where Auditel can help. We can be your outsourced energy management consultants.

From Energy Audits to tendering and account management you can have it all with no full time salary additions or extra drain on present resource. Our ongoing training and market knowledge ensures you get the latest technology in helping you to reduce your emissions, carbon footprint and your costs.

You Can Cut Your Oil Heating Costs

Are there any real guarantees in this world? Well, I’ll let you decide on that one. But, I do know that if you’re spending €10,000 or more annually on oil heating – we should talk.

Businesses across Ireland are switching from oil to biomass for one very good reason. Typically, you will save upwards of two thirds of your current cost of oil. And, with the Auditel cost management approach, we can help you work through an ESCO (Energy Services Company) to give 100% certainty over your heating costs for the next three years. During this period, the ESCO will install and maintain all required physical plant, provide total energy cost stability and do this with no capital outlay on your part.

After an initial no cost meeting we can present to you a simple, one page business case outlining current costs, projected costs, savings and project payback time.

Given the ever increasing costs of oil heat, is there any reason not to explore this impressive and sustainable cost saving measure? Contact us to book your free Business Health Check

When did you last tender your energy contracts??

When did you last tender your energy contracts?  Ok, so you have never tendered them. We can tender these for you and achieve anywhere from 8 to 12% reduction in rate and we will analyse your capacity charges to make sure you are not paying for capacity that you do not need. If we find something we can share the saving. If you are on competitive rates and we do not find a saving, our tender analysis will be free to you.

What have you got to lose?

Well if you do not tender you stand to lose on what you would have saved by having mus tender.

Auditel are doing this every day for our clients and we are achieving these types of savings.

The 12 Days of Christmas are getting More Expensive!

‘Buying your true love the items from the classic Christmas song “The 12 Days of Christmas” will be more expensive than ever this year.’ So reports America’s PNC Wealth Management Organisation. They tracked the prices of every item in the Christmas song,

Buying all 364 quirky gift items from the “drummers drumming” to the “partridge in a pear tree”, would set you back $107,300 this year – the most since PNC began compiling their numbers in 1984.

Apparently, the culprits are our feathered friends. “The geese and the seven swans” were up the most. Purchasing the “seven swans-a-swimming” is the most expensive gift at $7,000. Getting your true love the “five golden rings” won’t be cheap either. The price for these went up 16 percent to $750.

Nobody has published a similar survey in the UK, so far. No doubt, like the continuing increase in business costs, the same scenario will apply. So, if you’re at all concerned about your budgets for next year, it could be wise to invite the UK’s premier independent cost management consultancy, Auditel to take a look.

We might have a challenge with the “seven swans-a-swimming”, but for tackling any items in your outgoings, we’re confident we can do the business.