Filtertek designs, develops, and manufactures custom filtration and fluid control devices. They supply a worldwide market of distributors as well as business to business. Filtertek was acquired by Esco, Inc.
Met with former CFO (who subsequently was promoted to President) and new CFO and senior managers to improve the cash flow and reduce costs and increase their bottom line. National Cost Reduction Corporation’s assignment was to complete a full review of all general and administrative non-labor expense categories. Within each category NCRC was asked to do an evaluation and full review of the suppliers pricing structure to Filtertek. These prices were benchmarked to the leading suppliers in each expense industry.
National Cost Reduction Corporation Approach
After reviewing Filtertek’s worksheet, NCRC developed a Free Analysis and Free Forecast of Savings. Using paid invoices, NCRC benchmarked current prices and worked with existing suppliers and alternative suppliers to reduce these costs. This benchmark was on an “apples to apples” basis providing equal or better service levels. At the conclusion of this 8-week negotiation, NCRC submitted to Filtertek their Findings and Recommendations Analysis Report which included a detailed spreadsheet by SKU (approximately 40 pages) and the written documentation of each conversation with a supplier decision maker.
Savings to Filtertek were just over $71,000 annually. As a 5 year ROI, Filtertek would reduce costs by $355,000. NCRC was responsible for communication and negotiation with each supplier with Filtertek making all final decisions. This allowed Filtertek senior managers to concentrate on other key business growth issues.