Working with Broker Network as an Affiliate Partner, ProVantage can offer specialist Purchasing support for the Broker Members – and for the Members’ own insurance customers. This enables the Broker to be able to offer more to their Proposition than just the insurance package with the outcome and aim to increase retention and new-customer success rates by saving the end customer more than their Premiums amount to annually.
As a very broad-brush approach normally around 33% of an organisations’ spend is what we can influence. Roughly half or more will be salaries, add the fixed costs, (Community Charge, rates etc) and this usually leaves around a third that we can, given the opportunity, look to reduce the cost and improve the value of. Of this, I’d expect a minimum of 15-20%, particularly if it the areas in question hadn’t been formally reviewed for some time. So if we were looking at a starting point to be saving an insurance customer of yours more per year than their insurance premium was it gives a feel of just how achievable this would be.
Thus the minimum objective would always to be to save them well in excess of what the Premium happens to be, so encouraging them to stay with you at renewal time or as an additional incentive for prospective customers.
As a couple of Case Examples:
Camphill Village Trust
A residential charity spread over 9 Communities around England housing adults with learning difficulties. Having been given a straight spend dump across the piece I presented the figures back having tidied up into supplier spend, showing where there were common suppliers being used without departments realising, where there were different suppliers providing the same goods or service across the piece, where there were multiple repeat low-value purchases being made, where the actual ordering and invoicing processes could be improved and so on.
I then recommended a number of areas that I believed we could help them make cashable and non-cashable savings;
- Starting with Utilities, which covered mains gas and electric, LPG and heating oil and taking it as a whole we reduced costs by around 25%. In picking up each of the dozens and dozens of individual contracts as they rolled off we placed them on new conterminous ones to give us the leverage next time around to go out to market en-masse and make further savings.
- Fleet, placed for around 53 vehicles and returned a direct saving of £320K and much reduced their Corporate Liability which was a serious if unknown issue.
- Property Management (including Facilities Management) which is being rolled out geographically now and will save around 20% on the current, much less effective processes and incorporates security, front-of-house, electricians, plumbers, carpenters, Fire & Risk services
- Property Valuation which hadn’t been done for years which we saved around 20% on the initial quotes received, (and combined the work with a Property Condition Report which enabled the FM piece to be delivered),
- and more recently, Biomass District Heating Systems at 6 of their 9 Communities which will make them a conservative profit – clear profit – of £2.9M. Biomass is such a phenomenal deal for the moment through Ofgem incentives it’s worth highlighting to customers in its own right – farms, holiday sites, care homes, stately homes, schools, sports grounds, manufacturing etc, almost any market would benefit.
As an example of a private sector manufacturing client, we did a detailed piece for Whitworths Foods in Northants who had never had an internal central Purchasing department reviewing their indirect spend. Again I took the live spend dump and went back to their SMT with the areas I wanted to go after and by the end of the period I’d taken around £450K out of a spend of £4M on Fleet, Insurance, Fuel cards and FM. To help keep the savings embedded I also wrote them Purchasing Procedures and a Policy for all staff to follow going forward.
There is no cost to the Broker if we work with one of your Clients. Neither are there any fees to the Client; we cover our costs only by applying a 25% share of any NEW savings we identify and make for the Client. These are agreed by the Clients’ Finance people at the outset and if we don’t make a saving for them, there are no charges. Any savings share is only applied retrospectively and is spread across the Contract life so the Client is never having to find budget ahead of realising the savings first.