Kevin Fallows

Kevin Fallows

“We don’t need to meet our suppliers again; they’ve already told us we get the best pricing”

COO, London law firm – 140 employees

Two minutes read.

I’m never surprised when a Finance Director tells me that they have someone who looks after general overhead costs and already has things “under control”. It’s completely understandable for a Finance Director to trust their purchasing staff to be doing a thorough and diligent job when it comes to ensuring that they get best value for money. Why wouldn’t they?

So when I was asked by the FD of a London law firm to look at their overhead costs and the COO confidently informed me that his suppliers had reassured him he was receiving the “best pricing” so he didn’t need to meet them again, it intrigued me. Surely it’s up to the client to decide what is the best pricing, not the supplier. And what actually does best pricing mean? Best value or lowest price?

The easy fixes had already been addressed but the indirect costs needed to be forensically analysed and continually managed to achieve worthwhile and ongoing additional savings and efficiencies. But this can often be difficult for office managers and IT managers to implement.

Often, boring old general overhead costs like call charges, document/data storage, mobiles, PMI, cleaning, postage, stationery, couriers etc. etc. are not seen as a priority and often there isn’t direct ownership by a specific member of purchasing staff so savings opportunities slip through the net unnoticed and unchecked.

In 30 years working as a cost reduction and procurement consultant with a 99% success rate achieving overhead savings for numerous clients, I can safely say that few office, admin, finance and IT staff have the time or knowledge of market rates, or even the inclination sometimes, to drill down into the detail of billing reports to look at costs, usage, trends, patterns, errors and wastage to definitively confirm that yes, everything is “under control”.

But whichever way you look at it, overspending on indirect costs is simply a waste of hard-earned profits. And at Watermill Lane Associates, we find it all the time.

As it happened, this law firm wasn’t receiving best value or best pricing, and I was able to negotiate a further £35,221 savings with their incumbent suppliers to get them to a reasonable, competitive level, so this does prove a point; if you haven’t drilled down into the detail of what products and services you actually use and how often you purchase them, how can you know if you’re receiving ‘best pricing’? Even if your supplier tells you so.

If you’d like to learn more about how we help our clients review their overheads and make savings on our self-funding no savings, no charge guarantee, please get in touch.

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