NPI Financial - Blog» cost reduction strategies

The Big Debate: Software versus Human Expertise? Pros and Cons for Procurement Leaders

Jon Winsett — Fri, 04 Jun 2010 14:06:35 +0000

A lively debate is taking place between Spend Matters, Ariba and Forrester on Procurementleaders.com. The big question: will procurement software really improve performance, or is this just another software purchase with incremental but not game-changing value? What do you think?

http://blog.procurementleaders.com/procurement-blog/2010/6/4/the-big-debate-aribas-commerce-cloud-will-open-the-door-to-m.html

NPI Parnter John Haber published in Manufacturing.net re Supply Chain Disruptions

Jon Winsett — Tue, 01 Jun 2010 12:57:16 +0000

With the recent volcano eruption in Iceland, major manufacturers with global suppliers have had to halt operations as flights were grounded throughout Europe. Earlier this year, an earthquake in Chile ground supply chains in the area, halting major food source supplies.

Can disaster planning really help prevent these supply chain disruptions? Are the risks associated with lean inventories worth the cost when operations are halted until supplies are re-stocked? Natural disasters like this, and even the current BP oil leak, can prompt manufacturers to look more closely at their master operating plans.

Price Benchmarking Saves Money and Jobs in a Recession

Jon Winsett — Thu, 31 Dec 2009 17:14:23 +0000

In this volatile business environment, saving money often means cutting jobs. At NPI, we believe our proven price benchmarking strategies can allow you to cut costs without cutting jobs.

How does price benchmarking work and how can it benefit your business? Quite simply, it is the process of determining the fair market value for any product or service, and then ensuring that your contracts are in line with these levels. We find that many businesses are over paying based on telecom, transportation and technology industry price benchmarking levels. With appropriate strategies in place, your business can negotiate contracts with more favorable terms.

Our goal is to protect your business from overspending by providing a fresh set of eyes, market based perspective and industry knowledge that allows us to uncover cost savings previously overlooked. Effectively using our price benchmarking services to negotiate favorable contracts allows you to retain valuable human capital. With benchmarking tools, your business retains the employees needed to be able to innovate and succeed in the future.

The strategies we offer can result in savings returns in as little as 30 to 60 days. Savings from layoffs are often not seen for nine months or more. We know that our price benchmarking strategies for telecom, transportation and technology results in millions of dollars of savings annually. Don’t think that just because you have a long term contract that our strategies won’t be able to help you. Our tools allow you to approach a vendor with a fact based discussion showing areas of over spending. Discussions backed with price benchmarking facts can lead to contract savings for your business.

Maintain your ability to grow and succeed in these tough financial times. Contact NPI today to implement price benchmarking strategies that will lead to cost savings without the need for layoffs.

Bring Expenses under Control with Telecommunications Expense Management

Jon Winsett — Tue, 15 Dec 2009 17:16:41 +0000

IT and telecom expenses are typically among the largest for any organization. Effectively using telecommunications expense management tools can lead your business to significant costs savings. Here are some of the activities typically involved in telecommunications expense management initiative:

An evaluation of your telecom consumption. A typical menu of telecom services can include local, long distance and wireless phone, VPN, PBX, conferencing, email and data expenses. Getting a handle on these variables is what telecommunications expense management is all about.
Establishing business-wide telecom policies. Once you know your menu of telecom services, it is wise to establish policies for their use. Telecommunications expense management helps to ensure that all employees use the same carrier and equipment and can greatly reduce costs.
Creating a centralized telecom management team. Establishing a person, or group, that is dedicated to telecommunications expense management can facilitate cost savings for your business. Ensuring your telecom team knows your inventory, approved carriers, discounts and policies prevents individual departments and locations from impacting the telecom budget.
Identify unused or underutilized services. For many companies savings can quickly be obtained by closing unused accounts or eliminating costs related to non-essential services. With employee turnover and job reductions, many companies are paying for phone lines and services no one is using.
Contract review and renegotiation. A thorough review of your contracts and associated costs will often reveal several easy cost savings options. Renegotiating contracts with your carriers to obtain more favorable terms is an essential component of telecommunications expense management.

The New World of Spend Management

Jon Winsett — Sun, 15 Nov 2009 17:12:02 +0000

Ensuring the success and profitability of your business is a high stakes job, which means that keeping expenses in line and negotiating contracts with favorable terms is a battle which is only ever increasing. With the assistance of the spend management experts, these tasks become much easier.

The NPI spend management team is a hands-on group of experienced negotiators that specialize in the fields of telecom, transportation and information technology. Each member of our team has years of experience in the industry they support. Knowing firsthand what vendors are willing to compromise on, means we can quickly lead your business to cost-savings and spend management success.

The goal is simple: provide assistance with the re-structuring of contracts to achieve fair market pricing and favorable terms. Our partnership approach to spend management begins with an in depth analysis of business practices, and continues through an ongoing dedication to finding new ways to reduce expenses and improve operations. Our spend management service includes market analysis, vendor audits, price benchmarking and assistance with contract negotiations.

But where to turn your focus? NPI focuses on transportation, telecom and IT – areas with the most volatile expenses any business faces. We also look to uncover opportunities for cost savings and more favorable contract terms which result in both long and short term gains for the bottom line.

From small parcel shipping and international freight and logistics, to IT infrastructure and telecommunications expense management, choose a team which has the experience, knowledge and commitment to find spend management solutions that will benefit your business.

Can an Expense Reduction Analysis really Benefit Your Bottom Line?

Jon Winsett — Sun, 01 Nov 2009 17:10:15 +0000

When it comes to trimming margins and increasing profitability, expense reduction analysis is a proven key to success. Nearly all businesses are looking for ways to cut costs and do more with less. Today’s challenging business environment makes it necessary to closely examine each budget item and vendor contract for possible cost savings. With an effective expense reduction analysis, your business will save money without sacrificing jobs or the ability to function effectively.

However completing an internal analysis can be a lengthy and complicated process. A typical analysis will begin with an evaluation of current vendor agreements, with an eye toward pricing, terms and conditions. The goal of these reviews is to determine how your current contracts compare to industry benchmarks in each of these areas.

Besides contract review, another important component of expense reduction analysis is a vendor invoice audit. A thorough review of invoices can reveal opportunities for savings related to overcharges, misallocated fees and other billing errors. Many companies are surprised at the savings associated with correcting billing errors and other erroneous charges.

No expense reduction analysis is complete without a review of the competition. Taking time to investigate lower cost providers, as well as the industry norm for service rates, can lead to significant savings. Determining if you have received the best possible contract rates and terms makes it easier to know where cost savings can be achieved.

Once a thorough review has been performed, it is necessary to take the resulting information and turn it into viable cost savings. This is where NPI fits in. We execute a thorough expense reduction analysis with speed and easy. Our process of determining where cost control measures can be implemented, and our assistance with contract renegotiations, make it possible to see incremental savings in a short time. At NPI, we partner with clients to conduct a complete the analysis, and then develop a plan for cost savings implementation.

Contact NPI for more information about our expense reduction analysis services.

Establishing Strategies for Supply Chain Cost Reduction

Jon Winsett — Sat, 31 Oct 2009 17:05:08 +0000

Making smart decisions about supply chain cost reductions can mean the difference between an effective strategy that garners results over the long term, and one where short term gains are outweighed by long term problems. How will your organization know if it’s making the right decisions and implementing the best strategies for long term success?

Organizations striving to achieve cost reductions can realize positive results by thoroughly and continuously analyzing the strengths and weaknesses of their supplier mix, identifying areas of consolidation, and determining its impact on capital and operating costs. Organizational focus on supply chain cost reduction needs to be a series of ongoing initiatives, as opposed to one time ventures. A regular review of vendor relationships and contracts will help to ensure rates and terms remain favorable over the long term.

At a tactical level, these cost reduction initiatives should include a monthly review of invoices. The monetary gains associated with monitoring invoices for billing errors are approximately 3-5% of gross spend. Over the course of a year, catching errors of this nature can lead to thousands, sometimes millions of dollars in savings. This is an area of cost savings often overlooked, as businesses assume that once their contracts show favorable rates and terms, the work is done.

Some companies seek to reduce employee numbers as part of their supply chain cost reduction strategy. While job reductions can play a role in cost savings, it is important to recognize that cutting too deeply can lead to new problems. When employee counts fall too low, it can become increasingly difficult to implement needed supply chain cost reduction strategies. History shows that the short term gains associated with job cuts can lead to long term efficiency problems.

Establishing an effective supply chain cost reduction strategy can mean the difference between long term success or failure. Companies around the world rely on NPI to help them achieve successful supply chain cost reductions that balance efficiency with savings. Our expertise with implementing these supply chain cost reductions will ensure your business is poised for growth, while still enjoying the benefits of reduced expenses.