Inside the Work: Key Activities from the Month

Interested in having the resources to do more? Discover how you can spend more time achieving your goals and reaching your full potential with ERA Group.

ERA Group is a network of 1,000+ specialists worldwide. We always have local expertise on your doorstep. ERA’s large network and depth of industry knowledge ensures our consultants deliver Value through Insight to your business.

Whether you would like to set up an initial meeting, gain more valuable insight into your industry or start the cost optimization process, we can help you achieve your business mission and enable you to spend more time focusing on new initiatives and innovation, helping your business succeed.

As we approach the second quarter, our focus shifts to compiling reports and data for the Q1 reporting, across various sectors.

Below is an overview of key deliverables and activities from the past month.

School Catering & Budget Tracking

For our school clients, attention and preparations start to turn towards Q1 food and catering reports that provide valuable insights into the financial performance for their food purchases.

Since these schools operate on a calendar-year budget, this initial report serves as a critical first insight into how they are tracking against budget, including the full-year latest estimates (LE). This reporting helps us identify trends, and highlights areas requiring attention.

It is a critical input to helping manage costs.

Aged Care Facility Quarterly Reporting (Q30)

We are currently finalising the Quarter 30 report for an aged care facility client for presentation. This report details quarterly savings, analyses purchasing trends, identifies anomalies such as price variations against contract terms, and provides recommendations and suggestions for corrective actions.

Our in-person presentations of these reports foster some interesting in-depth discussions, helping enable strategic decision-making and feeding into internal reporting. Despite having conducted these reports for 30 quarters now, we continue to uncover opportunities for cost savings.

Once the report has been presented to the finance team, we also take the time to talk to the Head Chef and update him on where things are at.

Tender Document Preparation for Aged Care Facility

In response to changes in supplier arrangements, the same aged care facility has requested a comprehensive market review of all the food categories to identify further potential cost savings on food supplies. Given the evolving market conditions and the time elapsed since the last market approach, now is an opportune moment for this review. As such, we are starting the preparation of tender documents to send out to selected suppliers.

New Industrial Consumables Category Projects

A newly engaged client has tasked us with finding savings for two industrial categories as part of a broader cost management initiative. The starting point is to review their 12-month general ledger data to identify all the relevant suppliers—an exercise that offers some pretty interesting high-level insights as a starting point.

With more than 300 suppliers involved, the data collection process will be extensive, requiring the extraction of critical details from an awful lot of PDF invoices into Excel initially, and then into Power BI. Despite the daunting workload, this starting point is essential to ensure a comprehensive cost analysis.

The Importance of Monitoring in Cost Management

Going back to the monitoring phase that has made up most of the work in the past month, this phase of a project is as crucial—if not more so—than the analysis and tendering phases. It’s here where we make sure that all the hard work done previously comes to fruition and is sustainable. At ERA Group, the monitoring phase continues for up to 3-years. It is also where additional insights and any benchmarking really starts to come into play.

Going back to the monitoring phase that made up the bulk of the work in the past month, the monitoring phase of a project is as crucial—if not more so—than the analysis and tendering phases.

Ongoing monitoring ensures that clients are getting the agreed pricing and services, while sorting any issues that may arise between the client and suppliers. Some examples of issues that have arisen in the past are:

The supplier uploaded an incorrect price file that was only identified during a quarterly review, which could otherwise have gone unnoticed.
Contracted items inadvertently dropped from the basket of contract items and charged at significantly higher non-contract rates, leading to substantial overpayments over time.

Mistakes do happen despite the best intentions of all parties.

ERA Group’s Performance-Based Fee Structure

It is also during this quarterly reporting phases that ERA Group’s actual fee is determined. While at the start of the project the fee structure is agreed to as a percentage of savings, the actual payments start to be calculated based on the actual savings calculated during the quarterly reporting period.

Unlike traditional consulting models, our approach involves payments spread over the life of the project. This ensures minimal impact on client’s cash flow while being self-funded through realised savings. Of course, if there are no savings, there are no fees, and the project never gets to this stage.

I look forward to sharing further updates as we progress through data collection, analysis, implementation and onto the monitoring phases in the coming months.

Back