Deloitte’s latest study of over 150 senior executives at Fortune 1000 corporations found ‘that companies are still missing the mark when implementing cost management strategies. Last year, nearly half of their cost saving initiatives failed to achieve their goals. The respondents cited lack of understanding as the biggest barrier to effective cost reduction ’.
Chris Allison, Managing Director of Auditel, the UK’s leading specialist cost management consultancy, comments: “In our discussions with over 3,600 clients, we have found this to be an accurate reflection of the overall situation. The failure to achieve satisfactory results and a lack of understanding of what is involved means that organisations are spending far too much on their business costs.
“Outsourcing this mission-critical task to specialist consultants has considerable benefits. We regularly deliver results that not only meet, but exceed clients’ expectations. Yet many organisations still choose to divert in-house resources from their strategic roles, to carry out time-consuming cost-cutting exercises, that achieve little more than short-term savings.”
Case Study: The Newcastle Business Village
The Newcastle Business Village is an innovative business centre northeast of the city. It offers flexible business space, physical and virtual offices, hot-desking, business support, workshops and storage facilities to small and medium-sized businesses. The Village’s Managing Director, Mark Reid, first came across Auditel at a networking event and was immediately taken with their proposition.
“My previous experience of working with many utility brokers had been very poor. Their business model meant the more we paid, the better it suited them. So, what I wanted this time was not just a service that would work, but also to deal with somebody I could trust. That’s what sold the Auditel proposition to me.”
Auditel’s initial intention was to review the gas and electricity costs and to achieve their reduction by ensuring that the Village was on the most appropriate contract. However, they had already signed a 24-month contract for their energy supplies. Convinced that savings could be delivered in the meantime, Auditel offered to carry out a comprehensive energy management review to reduce their energy consumption. This would consist of a free site survey, a review of existing plant and equipment, an evaluation of historic and current energy expenditure and preparation of a detailed report and recommendations.
The review revealed that the building’s previous incarnation as an electronics manufacturing plant had left it with a legacy of air conditioning and filtering units, boilers and water-heating equipment. This meant that the Village was vastly over-specified for its current use. Immediately, Auditel were able to negotiate a reduction in Available Capacity at the site from 750kW to 250kW, saving several hundred pounds per month. Reconfiguring the air-conditioning system, installing new boilers and thermostatic radiator valves, and decommissioning redundant air handing and chilling units would save a further £53,000 per year. This would give a payback period of around 1.8 years on the necessary capital investment.
Mark says: “The savings Auditel have found are very impressive. If they can see an opportunity for more savings or efficiencies in other areas, they have got carte blanche to investigate them. Apart from the obvious benefit of having their expertise to find and implement savings, what I really value is the level of trust between us. I know they are working in our best interests and are very much part of my team!”
Case Study: The Mediterranean Shipping Company
The Mediterranean Shipping Company is the second largest shipping company in the world, offering its customers a fully integrated containerised service. Savings realised on their electricity cost were nearly £35,000.
Case Study: Mears Group
The Mears Group, which employs more than 10,000 people in over 80 offices, maintains and improves homes as well as caring for the people living in them. Savings were achieved of over a quarter of a million pounds per annum on telecommunications, in addition to savings on electricity and gas, including rebates of £67,000.
As Allison explains: “A major strength of our approach is that clients gain access to a whole network of specialist consultants. Their wide-ranging industry knowledge ensures that they receive expert advice across over more than eighty areas of expenditure at all times. Organisations can concentrate on their core activities and gain peace of mind as we continue to keep a watching brief on their behalf.
If you’re not quite sure that you’ve got all your essential costs under control, why not book your Auditel Business Health Check and find out?”