Raise your game
and reduce your costs!

L to R: ERA consultant Ian Thomas, Melinda Oborne, Financial Controller and Bob Mansfield, Warehouse Distribution Manager of Wilson Sporting Goods and, ERA consultant Henry Marlow.

Australia is a nation of sport lovers – we all know that. We can boast arguably the most successful Olympic Games ever, world champion swimmers, superb athletes, tennis players and team sports players, with a list as long as your arm. We also know it takes time and commitment to produce great champions - but let’s not forget it also takes great sports equipment to play the game.

ERA recently teamed up with Wilson Sporting Goods one of the world’s leading sports equipment companies. It develops and manufactures technically advanced products that improve the performance of active sports participants.

A subsidiary of Wilson USA based in Melbourne and servicing the Australian market, Wilson Sporting Goods appointed ERA initially to review their electricity costs and ERA consultant, Henry Marlow, was given the task.

“Wilson’s three year electricity contract was about to expire and Australia had recently de-regulated its electricity market. ERA performed the contract negotiations, achieving savings of 14% from the original quote," says Henry.

Wilson were so pleased with the results that their Financial Controller, Melinda Oborne, instructed ERA to apply their cost saving strategies to other areas of the business, which included fixed and mobile telecommunications, stationery, printing, merchant card fees, travel services as well as air and road freight.

“The past year has been very interesting and exciting to define each category with Melinda and complete the analysis," says Henry. “The cost in these categories was in excess of $1.5 million and ERA achieved an average saving of 21%"

An additional benefit to Wilson was ERA’s experience in road freight which ensured the objectives were achieved with excellent results.

Implementation for road freight is planned for May 2004. When the process change has stabilised, enhancements will be considered to further improve the savings.

“ERA was professional in its approach, providing us with regular updates during the process. It is also great that the relationship continues beyond implementation, adding confidence to the whole approach," commented Melinda.

With time and commitment ERA and Wilson Sporting Goods proved to be a winning combination.

ERA delivers 40% saving
on Toshiba’s Courier costs

Courier costs often fall into the out of sight, out of mind, category. You need one, you book one. However, it can be a major expense and one that should be reviewed regularly.

Toshiba International Corp, a leading supplier of high quality, advanced technology, engaged ERA to review their courier expenses on a local, interstate and international level.

Although the company was quite happy with the performance of the three courier companies it used, they were interested to see if they could cut costs.

Following a detailed analysis and investigation, ERA consultant Ian Kinnaird recommended that while retaining the services of these three companies, by adding a fourth company, as the second interstate courier company, they could save money.

By unbundling composite rates, changing insurance arrangements and introducing the fourth company, ERA helped Toshiba to realise a 40% reduction in their courier costs.

Mr Remy Reinker, Manager Finance and Administration for Toshiba International, said that the company was very pleased with the results.

Safeguard your company
now and save $$$

ERA consultant, Keith Ketheeswaran.

Corporate governance is now top of mind for many Australian companies, given its importance for the economic health of companies and society. But paradoxically for some it remains poorly understood.

Corporate governance is not a new concept. In the nineties both the OECD and the Cadbury Commission in the UK had held that corporate governance is the system by which corporations are directed and controlled. J. Wolfensohn, the Australian President of the World Bank, has also commented that corporate governance is about promoting corporate fairness, transparency and accountability. Indeed, any good system of corporate governance must spell out the rules and procedures for making decisions on corporate affairs, provide a structure for setting and attaining company objectives and monitoring corporate performance.

In the US, the Sarbanes-Oxley Act and the new self-regulatory organisation rules contain a myriad of provisions that significantly alter or enhance management and directors' responsibilities. In Australia too, the Federal Government’s Corporate Law Economic Reform Program (CLERP) is a significant step towards reforming corporate governance standards, particularly by strengthening obligations of key corporate governance stakeholders - boards, audit committees, management, shareholders, external auditors and regulators.

Best practice on governance now requires management and audit committees to establish a formal process for assessing:

1. internal procedures for determining, monitoring and assessing key risk areas
2. the effectiveness and independence of the external audit with particular consideration as to whether any non-audit services provided by the external auditor have not compromised auditor independence
3. key areas of the internal audit of the company.

In this environment, it is imperative that management, boards and audit committees don’t allow their additional responsibilities to either tie them up in unnecessary work or embroil them in administrative details.

“Now, more than ever, it is important for management and boards to work together and ensure that the concept of corporate governance is clearly understood and establishes a workable environment within which tasks can be prioritised," says ERA consultant, Keith Ketheeswaran.

This is where cost management consultants Expense Reduction Analysts (ERA) come to the fore with their Accounts Payable Recovery Audit and Contract Compliance Reviews.

Consolidation produces large savings,
with help from ERA

21% SAVINGS

With the paperless office still some years away, stationery remains a major cost for Australian businesses.

David Bremmer, executive director of The Victorian Bar, had wanted to consolidate stationery needs for some time in an effort to cut costs. He was familiar with ERA’s services and, when approached by ERA consultant, Ian Thomas, he welcomed the opportunity.

“ERA’s role was to guide us through the rationalisation process and get the job done faster and more efficiently than we could in-house due to the usual time constraints," said Mr Bremmer.

ERA reviewed The Victorian Bar’s suppliers in terms of cost and service delivery and identified future requirements based on current usage. A brief was prepared encompassing The Victorian Bar’s needs from a product quality, range, service, delivery price and budget standpoint, including an order form that consolidated the agreed items. The Victorian Bar was then presented with a short list of potential suppliers who could fulfil those needs.

“They decided to go with a single supplier, which is better than five suppliers each sharing a tiny portion of the business," said Ian. “Once the supplier was implemented, we monitored the relationship for an initial period. It soon became clear that staff stuck to the order form rather than ordering random items.

“Ordering stationery became easier and faster and The Victorian Bar has achieved a saving of 21%," he said.

Schindler Lifts happy
courier costs are 'going down'!

L-R: ERA Corporate Consultant Ian Kinnaird with Sharad Pathak, National Logistics Manager of Schindler Lifts Australia.

Schindler Lifts Australia, the local arm of Schindler, the international Elevator and Escalator Company, also engaged ERA to review their courier expenses - with a completely different outcome.

After discussions with key staff and a thorough analysis of the courier expenses, the first step was to reduce the number of courier companies being used which in turn led to more competitive rates.

ERA consultant Ian Kinnaird then identified areas of added value in terms of a better booking process and streamlining of the invoicing and accounts payable and internal cost allocation processes.

The outcome of the project for Schindler is that the number of national couriers has been reduced from nine to one resulting in a cost reduction of 26% on previous costs and the improvement of the booking system has resulted in greater visibility and traceability. The results of the financial streamlining are in the final stages and will be realised within the next few weeks.

“Courier saving was slipping away from our priority list," said Mr Sharak Pathak, National Logistics Manager of Schindler. “With ERA’s ‘no cost' approach, Ian made it possible. We are happy with this exercise, the process, the professional approach and, ultimately, the bottom line savings. Schindler now has the tools not just to monitor our courier costs but, more importantly, to control them."

ERA brings relief to financial
pressure on NSW club

SAVINGS OF $300,000

The New South Wales' Club Industry faces major challenges due to the new Poker Machine Tax to be phased in over the next few years. The situation is so serious that if clubs do not significantly increase their income and reduce their costs, many will go to the wall or have to severely curtail their community activities.

L to R: Steve Hambridge and Ray Bramman outside the Diggers Club.

Since the legislation was introduced, ERA has been assisting a number of service and sporting clubs, mainly in New South Wales, with great success.

“A lot of them are doing it tough," said ERA consultant, Steve Hambridge. “In addition to the legislation, they are under increasing pressure from pubs and private companies. Service and sporting clubs exist to provide services to their members so they can’t cut luxuries such as subsidised lunches for seniors, outings or other community activities. Therefore, they must be profitable."

One of ERA’s recent successes was with the Cabra-Vale Diggers Club in Sydney’s south west, one of the top ten clubs in the state.

Ray Bramman, General Manager of the club, brought ERA in to examine a number of areas including electricity, contract security, hospitality consumables, office products and printing. Steve assembled a specialist team consisting of Gordon Rhodes (security) Nora Buckley (electricity, office products, printing and hospitality consumables) and Colin Manning (document imaging) to look at the various sectors.

As with all clubs, Steve and his team had to be sensitive to the culture of the club and to members' needs, keeping in mind that many members had little business experience. “We had to make sure everyone was happy," he said.

ERA also had to be sensitive to the existing suppliers and their sponsorship arrangements.

The results were excellent. A new power bill contract was negotiated at an optimum opportunity, to negate the effects of anticipated future costs; the existing suppliers of contract security and hospitality consumables were recontracted at a reduced rate, and office product supplies were put to tender and a new supplier contracted. Printing is still being reviewed. Mr Bramman was very happy with the results.

“With the cooperation of managers and staff, the ERA team has identified savings of over $300,000 per year, of which over $120,000 of annual savings have already been implemented," he said. Steve feels Ray should be commended for his proactive approach.

“Ray knew the club was going to be under financial pressure in the future and he preempted that by calling us in," said Steve. “He deserves a pat on the back for acting before it became a make or break situation."

Happy clients, happy suppliers
– ERA creates a win-win situation

Kelvin Gage, Managing Director of The Dominion Group.

37% SAVINGS

When ERA is instructed by a company to implement their cost saving skills, the client is obviously their top priority. However, depending on the best method to save the company money, sometimes the suppliers can also benefit.

Recently, this was the case with Starwood Hotels, which has a number of properties in Sydney’s CBD including the Sheraton on the Park, Westin, Hotel W and Sheraton Four Points Darling Harbour. They had their printing split between two suppliers: One for office and stationery collateral and the other for sales and marketing material. A major component for the hotels was the printing of tags used for check-in and car parking. With rapidly advancing technology, printing is an industry in a state of constant change. By taking advantage of these developments, companies can not only reduce the time and effort involved in managing printed material, but can also significantly reduce annual costs.

The task for ERA client manager, Gary Wilson was to look at opportunities to rationalise the current suppliers and standardise, where possible, the printed items, delivering a solution that could be rolled out on a national basis.

The process of establishing the current situation was complicated and involved meet-ing numerous personnel at many locations to establish exactly what was being printed.

The result was worth the wait for Starwood Hotels with savings of 37% identified on current spending. But it also benefited the supplier company, who became the sole supplier of Starwood’s printing needs. Kelvin Gage, Managing Director of The Dominion Group explains:

“We are very pleased to be providing the total print requirements for Starwood Hotels. The bidding process to win the account was very intense, but we were able to offer a complete package that satisfied Starwood’s needs, whilst saving money and improving efficiencies."

This was achieved through the rationalisation of the total print requirements with one supplier. The Dominion Group was able to standardise some of the printed pieces, particularly some of the tags which also proved very cost effective. In addition, the consolidation of the account provided the supplier with the opportunity to develop a totally new product line in the production of tags, which then led to capital investment to purchase a new plant.

“ERA consistently adds value to suppliers but it often goes unnoticed because the focus is on the client outcome," said Gary. “However, in this particular project, it was great to see the synergy that emerged between the client and supplier."

Bring in the experts to reduce telecommunications costs

ERA consultant, Graeme Cox.

ERA’s superb team of consultants are all experts in their field. Through their training and experience they are highly qualified to offer the very best advice in saving a company money and improving its efficiency.

One such consultant is Graeme Cox. A lawyer by training, Graeme has a long background of professional involvement in the applications of technology to the business environment. His professional experience includes two years as a lecturer at Monash University, Melbourne, followed by four years consulting in the development of techniques for the electronic consolidation of legislation. Graeme has been working specifically in the area of telecommunications since 1996, concentrating on finding ways for his clients to reduce their direct telecommunications costs and to achieve business efficiencies through the use of telecommunications technologies.

“Telecommunications is just another aspect of businesses utilizing technology to improve the efficiency and effectiveness of their internal and external communications," says Graeme.

There are four main types of telecommunication costs for a business - network, equipment, operational and administrative costs. Associated with these is a range of other factors including training and technical support and the purchase of software upgrades. This all becomes the total cost of ownership of telecommunications. Most businesses concentrate only on the network costs, being essentially the call charges and rental charges billed monthly by a carrier, but ERA takes all costs into account.

Graeme explains, “The first thing that ERA does for its clients is to profile all of the costs associated with telecommunications, to identify the opportunities for reduction of telecommunications costs. Using the profile information as well as benchmarking information available to ERA, we then assess how the call charges being paid by the business compare to the charges being paid by other like businesses."

In many cases, the profiling and benchmarking activities will indicate that a market review of call charges is warranted. ERA follows a number of steps which experience has shown will produce the best results for its clients.

“We carefully select carriers for participation in the market review. We then provide the selected carriers with the information which in ERA’s experience will enable them to put forward the most appropriate pricing," says Graeme.

“Carriers' proposals are then tested and explored in a managed process of information exchange and discussions to make certain that they totally understand the needs of the business and are able to put forward the best range of pricing and services," he concludes.

ERA then works with the client for a period, generally 24 months, to help ensure a successful implementation, during which time the carrier invoicing is scrutinised each month for accuracy.

“Our primary focus is the reduction of direct telecommunications costs. However, there are five other areas of significant importance to businesses. These are increased revenue, increased efficiency, improved customer satisfaction, access to new markets and the provision of new services. These are all areas where the continuous roll-out of new telecommunications technologies can provide businesses with opportunities not previously possible," says Graeme.

Overall, ERA’s processes are aimed at delivering the best possible outcomes for its clients, whether through the delivery of savings through cost reductions, helping clients to identify where services can be rationalised, or giving its clients the opportunity to benefit through the application of new technologies.

ERA offers accounts payable recovery
audit and contract compliance reviews

NO RECLAIMS, NO SERVICE FEE

Board committees and management may find ERA’s innovative Accounts Payable Recovery Audit and Contract Compliance Reviews useful adjuncts to their efforts for reviewing internal control structures as part of implementing corporate governance best practice.

Both the Recovery Audit and the Contract Compliance Review provide targeted assessments of relevant systems, including past accounts and procurement transactions, to ensure that suppliers and even customers are conforming to their trading terms and conditions.

By analysing data, isolating and verifying errors, preparing back-up paperwork, contacting suppliers and recovering funds, ERA can discover overcharging, double billing, under-claimed rebates, tax credits and allowances, contract printing errors, suppliers rebate errors, settlement discounts and non-claimed penalties.

This ‘no reclaims, no service fee' provides clients with many benefits including:

• Recovery of funds that would not otherwise have been recovered.
• Independent ‘health check' of systems.
• Review of the circumstances surrounding the errors, how they occurred and most importantly recommendations on how such errors can be prevented in the future.
• No financial risk – ERA is only remunerated in proportion to amounts recovered.
• ERA does the work, is self-sufficient and is not a drain on client resources.
• Informative reports on expenditure profile and ERA’s insightful analysis
• Assurance that internal systems are working well and that suppliers are billing in line with agreed rates.

The next few months will be very important to Boards and management as they come to terms with the renewed emphasis on corporate governance. The stakes have increased and changes will have to occur. The key will be in effectively managing the process and getting ERA to help is only a phone call away.