Presentation Of Phillips Consulting

Phillips ConsultingSpecialist Procurement Consultants


Cost Service

Objective


The Benefits of Cost Reduction

An Illustration


S a les R even u e£ 5 ,0 0 0 ,0 0 0

L ab ou r£ 1 ,1 0 0 ,0 0 0

M ateria ls£ 2 ,3 0 0 ,0 0 0

O verh ead s£ 1 ,2 0 0 ,0 0 0

C os t o f S a les£ 4 ,6 0 0 ,0 0 0

O p era tin g In com e£ 4 0 0 ,0 0 0

S a les R even u e£ 5 ,0 0 0 ,0 0 0

P ro fit M arg in8 %

S ales R even u e£ 5 ,0 0 0 ,0 0 0

In ven to ry£ 5 0 0 ,0 0 0

A cc ts R ece ivab le£ 3 0 0 ,0 0 0

C ash£ 3 0 0 ,0 0 0

C u rren t A sse ts£ 1 ,1 0 0 ,0 0 0

F ixed A sse ts£ 2 ,9 0 0 ,0 0 0

Tota l A sse ts£ 4 ,0 0 0 ,0 0 0

A sse t Tu rn over1 .2 5

R etu rn on In ves tm en t1 0 .0 %

Take a typical company:


What happens if we can reducematerial costs by just 5%?


S ales R even u e£ 5 ,0 0 0 ,0 0 0

L ab ou r£ 1 ,1 0 0 ,0 0 0

M ateria ls£ 2 ,1 8 5 ,0 0 0

(£ 2 ,3 0 0 ,0 0 0 )

O verh ead s£ 1 ,2 0 0 ,0 0 0

C os t o f S a les£ 4 ,4 8 5 ,0 0 0

(£ 4 ,6 0 0 ,0 0 0 )

O p era tin g In com e£ 5 1 5 ,0 0 0

(£ 4 0 0 ,0 0 0 )

S a les R even u e£ 5 ,0 0 0 ,0 0 0

P ro fit M arg in1 0 .3 %(8 % )

S a les R even u e£ 5 ,0 0 0 ,0 0 0

In ven to ry£ 4 7 5 ,0 0 0

(£ 5 0 0 ,0 0 0 )

A cc ts R ece ivab le£ 3 0 0 ,0 0 0

C ash£ 3 0 0 ,0 0 0

C u rren t A sse ts£ 1 ,0 7 5 ,0 0 0

(£ 1 ,1 0 0 ,0 0 0 )

F ixed A sse ts£ 2 ,9 0 0 ,0 0 0

Tota l A sse ts£ 3 ,9 7 5 ,0 0 0

(£ 4 ,0 0 0 ,0 0 0 )

A sse t Tu rn over1 .2 6

(1 .2 5 )

R etu rn on In ves tm en t1 3 .0 %

(1 0 .0 % )


If the same profit increase were tobe generated by increasing sales,

what level of sales increasewould be required?


28.8%6:1 ratio


At the existing 8% profit margin:

Profit increase = New sales x 0.08

£115,000 = New sales x 0.08

New sales = 115,000 = £1,437,5000.08


28.8% = 1,437,500 x 100 5,000,000

This represents a sales increase of 28.8%:


Why use the Phillips Consultingroute to cost saving?


Well, for a start,what do our clients say?


"Like all manufacturing businesses, continually driving costs down is a key way for us to stay ahead of the competition. Employing the services of Phillips Consulting has provided us with a significant boost by enabling us to rapidly reduce our material costs by more than £650,000 per annum."

- Allan Stamper, Managing Director, Crowcon Detection Instruments Ltd


"We are of course always seeking to improve our business and it seemed to me that the service offered by Phillips Consulting would give us an excellent way to health-check our purchasing arrangements. We were certainly very surprised by the outcome - savings of £285,000 per annum - with a 25% price reduction in one area!"

- Derek Flanagan, Manufacturing Manager, Varian Medical Systems UK Ltd


"The investigation was extremely thorough, spanning a whole range of areas such as cost and market analysis, value engineering, quality, Far East sourcing and supplier assessments. We were very impressed with the outcome - a cost reduction of over 23%. The project even came in under budget in terms of the number of consultancy days used! I would happily recommend this service to other companies"

- Jeremy Evans - Director of Manufacturing, B&W Loudspeakers Ltd

B&W Bowers & Wilkins


You can find further clientcomments on our website

at:www.phillipsconsulting.co.uk/client_comments.htm

http://www.phillipsconsulting.co.uk/client_comments.htm


Other reasons to use thePhillips Consulting

route to cost saving?


• Proven• Risk-free• Self-financing• Transparent• Focussed• Fast• Guaranteed results


• 13 years practicing successfully

Proven

• Millions of pounds saved• Satisfied clients include:


Solartron Metrology Ltd Trifast plcCaradon plc Humbrol LtdAEA Battery Systems Ltd Harkness Hall LtdAccess International Ltd Pall FiltrationB&W Loudspeakers Ltd Raymarine LtdAPV-Invensys Varian MedicalCrowcon Detection Palmer Environmental


• Highly experienced consultants• Board-level composure• Qualified engineers• Unrivalled expertise in negotiation

Risk-free


• Fees linked to performance• We pay for ourselves many times over• We have never had an “out of pocket” client

Self-financing


• Client involvement throughout assignment• You can stop our work at any time• There are no tantalizing mysteries

Transparent


• No distractions• No meetings to attend• No staff issues• No historical issues• No supplier relationship problems• Simply focussed expertise

Focussed


• Assignments usually completed in 3/4 months

• Savings often start flowing from month one• Delays cost money!

Fast


If at the end of our agreed assignment period we have not been able to identify savings

exceeding the value of our fees, we will give you a complete refund

Our Unique Performance Guarantee

Guaranteed Results


What about fees?


Daily consultancy rateplus

Cost-reduction share


£350 per dayplus

25% of first year savings


Why do we think we can get results in your

business?


Typical Breakdown of a Purchasing Manager’s Time


Management Meetings



Management Meetings

Staff Issues



Management Meetings

Reporting

Staff Issues



Management Meetings

Placing Orders

Reporting

Staff Issues



Management Meetings

Travelling

Placing Orders

Reporting

Staff Issues



Management Meetings

Supplier Meetings Travelling

Placing Orders

Reporting

Staff Issues



Management Meetings

Developing Systems


Placing Orders

Reporting

Staff Issues



Management Meetings

Dealing with Colleagues

Developing Systems


Placing Orders

Reporting

Staff Issues



Management Meetings

Invoice Queries


Developing Systems


Placing Orders

Reporting

Staff Issues



Management MeetingsCost Reduction

Invoice Queries


Developing Systems


Placing Orders

Reporting

Staff Issues



Out of necessity, today’s purchasing manager is like a decathlete


We are sprinters!


• Our commercial ‘muscles’ are highly developed

• Our experience is intensified• Our goals are completely focussed• Our commitment is total


How do we go about achievingcost savings?


• 3/4 months duration, two days per week (35 working days)• Working alongside incumbent purchasing staff• Positioned as a member of the purchasing team to

suppliers

Typically:

• Totally focussed on detailed analysis, supplier selection, development and negotiation


Possible downsides?


You won’t be able to make savings

Our performance guarantee means that we have to refund our feesif we don’t make savings, so we simply wouldn’t take on a client if wedidn’t feel we could get results. In the final analysis, you don’t haveto worry about whether we can make savings - our expertise enablesus to carry all the risk.


You won’t be able to make savings Why pay consultants - we should do this!

Effectively, there is no cost to this service, as we guarantee tomake savings. Also, our specialist skills and the level of detailedanalysis that we complete, mean that we uncover savings thatotherwise would not be identified.

We work in a very co-operative and open way with your incumbentstaff who, even if a little wary at the beginning, will come to valueour service as a welcome boost in helping them achieve success.


You won’t be able to make savings Why pay consultants - we should do this anyway! We’re going to see what savings we can get first

We recently saved a client over £800,000. That’s equivalent to over£15,000 every week, over £66,000 every month! Delaying is very likelyto be the most expensive option you could consider.


You won’t be able to make savings Why pay consultants - we should do this anyway! We’re going to see what savings we can get first We don’t have time for this!

Although we prefer to work with your purchasing staff and we welcomeinvolvement, the amount of time they put in is totally governed by yourpreferences. We get on with the work ourselves and we work in acompletely self-contained manner.


You won’t be able to make savings Why pay consultants - we should do this anyway! We’re going to see what savings we can get first We don’t have time for this! Will you reduce quality, or increase our stock levels?

Your current quality and logistical arrangements are our starting point.We will only ever make recommendations that maintain or improveyour current arrangements. If you don’t like our recommendations,you are completely free to reject them. And, of course, if this meansyou don’t make savings, we don’t take our percentage.


You won’t be able to make savings Why pay consultants - we should do this anyway! We’re delay to see what savings we can get first We don’t have time for this! Will you reduce quality, or increase our stock levels? Do we pay you your share before we actually make savings?

Absolutely not! Our incentive payments come out of your positive cashflow. Only after savings have been implemented do you start to sharesome of your savings with us.


• This is a ‘win-win’ service

• If we can’t make significant savings, you pay nothing but you have the re-assurance of a thorough ‘health-check’ of your purchasing arrangements.

• If we do make significant savings, you get cash benefits direct to your bottom line

In Summary


£40,000 saved on

Cable Assemblies

£51,000 saved on Batteries

£23,000 saved on Integrated

Circuits

£103,000 saved on Injection

Mouldings

£80,000 saved on Electronic

Relays

£116,000 saved on Printing Costs

£100,000 saved on

PCB Assemblies

£79,000 saved on

Electronic Components


£87,000 saved on RFI

Shielding

£123,700 saved on

Turned Parts

£36,800 saved on Springs

£43,000 saved on

Labels

£69,000 saved on PCBs

£162,500 saved on

Fine Blankings

£31,000 saved on

Investments Castings

£55,000 saved on Wiring Looms

£132,000 saved on PVC Sheet


Thank you for taking the time to view this presentation.

Phillips Management Consultants LLP (T/A Phillips Consulting)Hydon HouseHigh StreetPartridge GreenWest Sussex RH13 8HRUnited Kingdom

Tel: +44 (0) 1403 711129Fax: +44 (0) 1403 711654

Email: [email protected]

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Presentation Of Phillips Consulting

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