1. AN INTRODUCTION TO EXPENSE
REDUCTION ANALYSTS
Ted Leitch
Director – Central and Southeast Texas
TLEITCH@EXPENSEREDUCTION.COM
WWW.EXPENSEREDUCTION.COM
2. Who is ERA?
• A premier cost management consultancy which
identifies and implements effective cost reduction
strategies.
• We assist our clients in increasing their profitability
through cost reduction while meeting their quality
and operational requirements.
• We focus on non-core operating expenses (G&A).
Savings goes directly to the bottom-line.
• We work on a contingent fee basis.
Demonstrated Experience and Results
3. Our Profile
• Established in 1992.
• Over 700 consultants operating in more than 30
countries.
• Greater than 14,000 projects completed world-
wide.
• Average cost savings across all expense
categories is 19.7%.
Demonstrated Experience and Results
4. A Global
Cost Reduction
Consultancy
Argentina Australia Austria Belgium Brazil
Canada Chile Colombia Cyprus Ecuador
Finland France Germany Greece Hungary
Ireland Italy Jordan Korea Luxembourg
Mexico Morocco Netherlands New Zealand
Panama Portugal Spain Switzerland United
Kingdom United States Uruguay
7. Why ERA?
Best-In-Class Expertise
Independent and Objective
Transparent Process
Strong Implementation Focus
Contingency Fee Structure
We Implement. Not Just Recommend.
8. Cost reduction can be profitable
20% Cost Equivalent
Baseline
Column1 Reduction 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
20% cost reduction = 40% increase in Net Profit
$4M in expense savings = $40M revenue increase
9. Our Compensation
• Half of actual measured savings for 24 months
after implementation
• 10% deposit of estimated savings paid upon
acceptance of recommendation and 10% deposit paid
upon implementation
• Actual fee is billed monthly for the 24 months based
on actual realized savings less a credit for amortizing
the deposits
No Savings = No Fee
10. Client Case Studies - Examples
• Mortgage Company • Cable Manufacturer
• $1,000,000spend on small • $1,500,000 spend on ground
package freight and courier freight - costs reduced by
costs reduced by 16% 18.4% with incumbent vendor
with incumbent vendor
• Architectural Firm • Medical Charity
• $105,000spend on telecom
• $74,000 spend on office
supplies costs reduced by costs reduced by 51% with
55% with leading new incumbent vendor
vendor
• Book Distributor • Retailer
• $763,000
spend on
• $108,000spend on telecommunications costs
merchant card processing reduced by 30% with leading
costs reduced by 34% new vendor
with a new vendor
11. The ERA Process
Analyze Recommend Implement
Time
3 – 4 weeks/category 3 – 4 weeks/category 24 months
Define project scope and Confirm business Appoint supplier
sign agreement requirements
Facilitate/assist
Obtain financial data Prepare RFP implementation
Obtain incumbent Identify and meet Measure actual
supplier contracts relevant suppliers savings
Activities
Understand volumes and Manage bidding Ongoing monitoring of
activity process supplier relationship
and contract terms
Understand business Benchmark costs and
requirements with assist in supplier
stakeholders selection
Deliverable
Implementation
Baseline Recommendations
24 Month Savings
Report Report
Reviews
10% of Total Savings/
Fees
ERA
10% of
None Balance Over
Total Savings
24 Months
12. Critical Success Factors
High Level Project Sponsor
+
Communicate project goals to all key stakeholders
=
Project “buy-in” across the organization
Find Extra Profit
13. Thank you for your time and interest.
Ted Leitch
Director – Central and Southeast Texas
TLEITCH@EXPENSEREDUCTION.COM
WWW.EXPENSEREDUCTION.COM