Confidential and Proprietary©2009 Ed Kerbs KERBS

Best Practices In Cost Savings and Expense Reduction:

Ed KerbsFebruary 2010

Set up a Cost Savings Office (CSO). Put governance and structure around

savings and reporting. Gain credibility and avoid issues by

prioritizing a justified & sanctioned savings portfolio.

Confidential and Proprietary©2009 Ed Kerbs KERBS

Cost Saver Best Practice

Three Common Tools To Deliver Savings:

1) Negotiations• Internal & External • Domestic & International • Tangible ($’s) & Intangible (Something else)• RFP, RFI, SOW, Contracts

2) Demand Management & Business Process Reengineering• Spend Rationalization• Vendor Consolidation• Process Enhancement and Re-Engineering • Insource / Outsource – Nearshore, Onshore & Offshore

3) Audit• Forensic accounting• Auditing inventory, contracts, invoices • Performance - SLA’s

Taking full advantage of these 3 proven tools can feed a thriving savings pipeline. First set up a Cost Savings Office. Savings pipelines need structure and governance.

Confidential and Proprietary©2009 Ed Kerbs KERBS

How To Set Up A Cost Savings Office:“Sponsorship, Governance & House Rules”

• Cost Savings Office Structure – Day 1 Basics • Gain executive sponsor and formalize charter, scope and goals• Can be stand alone, or as part of Vendor Management Office (VMO)• Can be integrated with Purchasing, Procurement, Sourcing, Supply Chain• Build Team: Legal, Finance, IT, Sourcing, User Business, Vendor…. • Vendor’s and Firm’s best and brightest must partner in cost savings• Set up governance checkpoints with management (quarterly?) • Initiate and sync reporting cadence with management checkpoints• Implement scorecards and reporting beginning with current reporting year cycle• Gather ongoing efforts and new leads• All leads go into a pipeline that becomes the centerpiece of governance

Best Practice – Building Pipeline Set expectations and educate around savings, gain management commitment Meet with many people and become fluent around the Firm’s organization structure & culture You are a profit center for the Firm. Insist on proper tools and support.

Confidential and Proprietary©2009 Ed Kerbs KERBS

How To Set Up A Cost Savings Office:“Sponsorship, Governance & House Rules”• Cost Savings Office First 100 days – achievable and realistic

• Get low hanging fruit, quick win, “in the bank” & “under a spotlight” in 60-90 days, pay for your salary and team’s (stretch) if possible in savings.

• Set expectations and educate around savings, gain management commitment for longer term CSO commitment

• Suggest priority but let management prioritize savings portfolio via governance• “Save spurs reward” nice culture shift everybody can like • Build trust around CFT, honor your word, date for a date• Busy, savvy, saving experts

• Automate data gathering & reporting on spend & savings • See that accurate, precise measurement systems are in place & understood • Insure reporting is professional featuring “textbook” quality • Insure socialization and visibility at the right levels of management• Commit to realistic and achievable deliverables and do not over commit on either

savings amounts, savings delivery dates or reporting dates

Best Practice – Building Pipeline

Elevate all relevant contributors to “rock star” status via top down praise and $’s if possible. Management involvement, formally & informally, surprise visits, lunches, comp days etc.

Confidential and Proprietary©2009 Ed Kerbs KERBS

How To Set Up A Cost Savings Office:You have seen a 4 page excerpt of a 10 page presentation

• I give four presentations covering cost savings• Delivering Precise Reporting In Cost Savings – 8 pages - accurate/precise savings financials

• How To Set Up a Cost Savings Office – 10 pages, day 1-100, pipeline structure & governance

• 3 Ways To Mine For Cost Savings – 23 pages, 3 effective & proven methods to mine for savings

• Vendor Management Office (VMO) -15 pages, maps VMO goals, function & KPIs

• Contact me any time• Ed Kerbs

• 847-323-9986

• ekerbs@aol.com

• LinkedIn Profile http://www.linkedin.com/in/edkerbs

Contact Ed Kerbs I am a procurement executive with a background in IT and the financial industry. I am different in that I build and

manage teams that save money via Cost Savings Offices (CSOs). I am expert and highly experienced in mining for savings by looking at contracts, invoices, inventory & business process (6 Sigma Black Belt) to determine ways to reduce expense.