Pipe products in a warehouse

Not just a pipe dream: pipe products manufacturer finds a truckload of savings in freight costs

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Manufacturing

Project information:

Industry: Manufacturing
Category: Freight

 

The client

For over 60 years, our client has been a leading supplier of quality piping products, mechanical instrumentation and specialty valving solutions in Australia and New Zealand. They service clients nationwide to provide product engineered solutions across various fields including instrumentation, valves, piping and designing specialist solutions for unique markets.

 

The challenge

Our client was heavily reliant upon numerous freight companies to transport its many varied product lines to customers across the country. These freight charges had become significant and annual increases were eroding profit margins. A thorough competitive review of freight charges had never been conducted and the company suspected it had ‘lost touch’ with market rates and was simply paying too much.

Management was aware it didn’t have the expertise or resources to properly investigate, the time to invest, or the negotiation skills required to hammer out a better deal if it was revealed its suspicions about being overcharged were correct. However, the knowledge that any savings would improve profit margins literally overnight, could not be ignored.

The solution

Expense Reduction Analysts was engaged to undertake a comprehensive analysis of the company’s internal systems and freight dealings with numerous suppliers.

The task was slow and difficult at first because of the high number of stakeholders and the anticipated resistance to change by some. However, once stakeholder trust and buy-in were achieved, the results were fast and significant.

The analysis conducted by Expense Reduction Analysts revealed there were more than 100 freight companies being used on a regular basis at a cost of over $1,000,000 a year. Expense Reduction Analysts’ cost reduction review was so successful that the number of freight suppliers was streamlined to 3 just major regular suppliers.

 

The result

Expense Reduction Analysts identified annual savings of approximately 24% overall and as much as 28% for express road freight. Given the company’s annual spend on freight exceeded $1,000,000, this equated to a significant improvement on the company’s bottom line.

“I have been more than impressed by the team at Expense Reduction Analysts, so much so that I’ve extended their contract a further 12 months. ERA first came into our organisation to review our insurance charges and promised not to charge us if they could not find any savings. They reviewed, they didn’t find, and they didn’t charge us a cent—just as they had promised.”

Group Financial Controller

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