Case Study - Oil & Fuel Refinery Above the Standard Procurement Group, Inc.®, www.ATSPG.com

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Case Study - Oil & Fuel RefineryNovemeber 7, 2012

We called in this company and found they needed to reduce costs, but could not afford to let their people go. Being a distributor and manu-facturer in this global economy, they needed to figure out how they

could remain competitive, maintain quality, and provide excellent service. Also, they had some internal processes for procurement and best practice, but did not know where to begin with this and the need for cost reduction.

They shared with us about what they desired to do, but they did not have the staff, resources, and expertise to find new suppliers, negotiate Net terms, and reduce costs of these needed products to fulfill client orders.

The most important things we presented on the phone and in person to help them feel comfortable were:

� Introducing ourselves; � Asking them if an agenda where we shared about us and then, heard about

their challenges and needs would be okay (permission is important); � Providing a little history about ourselves and our mission of helping organiza-

tions improve their bottom line through cost reduction projects of the goods and services already being purchased without receiving any compensation until we perform; and

� Sharing our full services offering as we are a full procurement and financial services firm.

After sharing for a few minutes, we asked both the CEO and the Controller to share about themselves, their company, their challenges, and their goals. This is the most critical part of where ATS listened and took notes so that we under-stood their situation. After hearing and reviewing, we reviewed the PowerPoint we customized for them and we shared the potential of being able to reduce their costs, presented, agreed to the game plan, signed the mutual agreement, set up the process according to their needs, and went to work.

Company Name

Oil & Fuel/Refin-ery Supplier

Industry

Manufacturer and Distributor (Oil and Fuel Equipment and Supplies)

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Case Study - Oil & Fuel RefineryNovemeber 7, 2012

Initial Need(s)/Project(s)Reduce Costs

Additional Project(s) ConductedFrom the initial assessment and supplier analysis, Above the Standard Procure-ment Group® (ATS) found the company had many areas they could reduce costs in without jeopardizing quality. We also found many ways they could reduce time expended (another form of cost) by centralizing, standardizing, providing pro-curement training, and developing internal best practice leadership and direction (from executive management down). Below are some of the several cost reduc-tion projects we conducted for them:

Area Annual Spend % Reduce Dollar Reduction

Ceramic Fiber Modules $ 1,473,000 17% $ 250,410

High Temperature Fabrics

$ 3,420,000 18% $ 615,600

Raw Materials $ 488,000 41% $ 200,080

Refractory Bricks $ 3,287,000 23% $ 756,010

Insulation $ 4,555,000 12% $ 546,600

Steel $ 23,200,000 34% $ 7,888,000

� Centralized purchasingo Created Standard Operating Procedureso Implemented Change Management for Warehousing, Logistics, and

Manufacturing (minimize inventory where too much and increase where not enough on hand – mirrored customer demand, jobs, project management, inventory, and forecasted sales)

o Instituted best practice of products, product categorization, labeling, inventory systems, etc.;

We also found many ways

they could reduce time expended (another form of cost) by centralizing, standardizing, providing procurement training, and developing internal best practice leadership and direction (from executive management down)

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Case Study - Oil & Fuel RefineryNovemeber 7, 2012

� Re-engineered warehouses for:o Increased productivity;o Real time inventory and Just in time inventory;o Human capital output effectiveness.o Supplier Management Systems compliance, organization, and

systemization; and

Outcome(s)ATS was able to reduce costs by $15.2M over one year, empower this client to increase quality, reduce time spent with finance and administration for suppli-ers, increase supplier sourcing, centralize procurement, establish best in practice warehousing, logistics, inventory, bid processes, supplier management, and com-pliance.

The company did not have to let any workers go! Management was grateful for the actions we implemented for them so they did not impact the local economy. We increased effectiveness by improving communications by implementing best practices. We instituted many new techniques and methodologies into the orga-nization for greater accountability with company resources. We empowered the staff to be more active with holding people accountable for action items, which led to an increase in results.