A Fortune 300 business information products and services company recently engaged PRP to review and implement cost reduction strategies in several multi-million dollar administrative expense categories. Total annualized savings to the client achieved through the first 18 months of engagement amount to $11 million, and PRP has set a target of $18 million in annualized savings through the first two years.

Company Profile

• Decentralized management structure
• Operate under national contracts
• Organization is comprised of 10 separate divisions; over 1800 office locations; over 35,000 employees
• A total of 10 separate billing centers
• Roughly 35% of their business entities participated in corporate programs
• Maintaining relationships is one of the client's key objectives and their number one priority

PRP Process/Strategy
PRP staff analysts visited each of the client's 10 separate divisional locations in order to guarantee the thorough evaluation of existing expenses, and to more effectively manage the introduction, implementation and monitoring of the tailored savings programs. As part of PRP's term-of-service engagement, analysts maintain responsibility for the accurate tracking and verification of resultant organization-wide savings.

In addition to preferred pricing structures, PRP negotiated modifications to contracts making vendors accountable for higher service standards and performance and more thorough coverage of divisional services needs. A centralized purchasing system was introduced while simultaneously accommodating a corporate objective of diversifying the available choices of national account vendors.

Improved communications performance related to divisional awareness of corporate programs, and the multi-lateral exchange of information within and between Corporate/Division functions to maximize the effectiveness of purchasing-related decisions.

PRP understands that the implementation of new methodologies and systems can have an impact on an organization's culture and climate. In making the commitment to deliver clients promised results, we are always careful to take into consideration the needs of those who experience the changes associated with such implementations. Contrary to the "plug it in and run" techniques generally practiced by our competitors, PRP actively supported corporate objectives relating to employee/business relationships through:

• formal training courses conducted for purchasing staffs focusing on industry philosophies, strategies and tactics and the art of negotiating
• cost-reduction seminars provided as a service to client's customers
• attention to and support for all divisional service requirements and issues

As an integral part of our service, PRP made every effort to discover new opportunities for reductions throughout the client's enterprise, and made sure to educate the client as to the potential benefits of implementing additional cost-savings programs in new or existing areas of administrative expense.

Results

• Improved internal contract compliancy rates from 35% to 75%
• Achieved between 20-40% rate reductions on all National Account programs
• Implemented a PRP-developed agent program delivering improved customer retention and increased company market share
• Identified, quantified and eliminated vendor overcharges
• Annualized savings to date across multiple administrative expense categories exceed $11 million

The following micro-cases illustrate in greater detail the process and results of PRP's performance in just two of the major expense categories in which PRP has provided services for this and other clients.


Challenge
PRP was commissioned with motivating the two existing office supply vendors to lower their rates and to commit to higher performance standards, having been made aware that a third vendor was going to be added to the corporate program.

Objectives

• Provide field offices with expanded options in corporate contracted vendors
• Establish aggressively competitive pricing from designated corporate vendors

PRP Process/Strategy
Through the leverage afforded by our established national office supply relationships, proprietary data-mining methodologies and internally developed pricing benchmarks, PRP demonstrated to selected vendors the additional business opportunities made available as a benefit of more competitive product and service pricing. These benefits included expanded national-account-priced products and access to an established large agent network.

Results
Together with the client, PRP negotiated preferred product and service pricing through three different vendors offering national office supply programs to the corporation, resulting in monthly savings of $1.2 million without the need to switch from preferred vendors or products.


Challenge
This client faced a number of issues related to their use of temporary and contract staffing vendors. Despite having established nine distinct but relatively competitive National Agreements with well-known providers, they lacked any proven methodologies or processes for reigning in "rogue spending" or even for ensuring contract compliance on the part of internal management. This led to poor expense visibility and created tremendous difficulties in benchmarking or validating service pricing.

Objectives

• Organize, analyze and trend all company-wide temporary staffing expenditures
• Identify rogue spending in the category by geography and functional group
• Reduce annual unit cost of temporary staffing
• Ensure all contract terms, pricing and service levels are in line with the market

PRP Process/Strategy
By capturing all contracts, invoices and other supporting documentation and organizing this information into PRP proprietary templates, it was possible to assess opportunities for improvements to existing client pricing terms. Proprietary RFP's ensured the client access to the appropriate vendors offering the most viable solutions to their needs. PRP then created a process and execution methodology for identifying rogue spending, increasing expense visibility and confirming management compliance. Finally, PRP negotiated all contract terms with the selected vendors on behalf of the client.

Results
The successful negotiation of more favorable "temp to perm" durations, provided client realized savings of 15 to 40% for all contract employees chosen for permanent hire. The negotiation of provider rates resulted in realized savings of between 23-35% over even the most competitive prices initially offered by an existing vendor. PRP designed and successfully implemented a background check program directed at identifying and tracking hundreds of temporary and contract employees hired on the basis of rogue activity which would otherwise have escaped management control. By providing an efficient methodology for capturing and analyzing temporary vendors' invoice data on an ongoing basis, PRP was able to provide client with real-time data on a monthly basis, a previously unavailable effective management tool.


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