Scrooge specialist lowers overheads
Sunday 06 March 1994
But then again, he would say that. Mr Shale has staked his business career in a venture whose sole aim is to reduce corporate overheads.
Mr Shale is clambering aboard a bandwagon. Recession taught companies that cutting costs could make the difference between business survival and receivership.
Most companies, suitably equipped with a miserly finance director, can internally reduce costs, but a number of outfits like Oxford Resources act as consultants to do it for them.
'Suppliers sell the same item to different customers at quite different prices,' says Mr Shale. 'More than that, separate departments of a single organisation will frequently pay different sums for the same product.
'In addition, even the most efficient companies get their sums wrong occasionally. Some will not notice if they are overcharged on an invoice and will go ahead and pay it regardless.
'Some suppliers will invoice twice for the same order and finance departments will pay the bill twice. There are even occasions when an invoice is sent just once but the bill ends up being paid in duplicate.' According to Mr Shale, inefficiencies creep in largely because buyers are preoccupied with more high- profile tasks. But because purchasing is Oxford's sole responsibility, it can concentrate on that single function.
Most of the cost efficiencies come through hard negotiating. Oxford acquires leverage by researching the markets in which its clients operate. It also achieves savings by taking advantage of special deals and incentives.
By chopping and changing it can exploit promotions. This strategy is particularly lucrative when playing telecoms suppliers off against one another.
He and his team concentrate on areas where there are no recognised experts. Rent, rates, service charges, telecommunications, insurances, stationery, photocopier contracts, printing, storeroom supplies and the like are meat and drink to Oxford.
Mr Shale attracts business by agreeing terms that are strictly linked to the amount of money he saves clients. If he does not manage to cut costs he earns no fee.
Mr Shale's greatest success was a 92 per cent reduction on an invoice for a printing contract. Average returns are more modest.
'Given a reasonable spread of opportunities we aim to save a minimum of 15 per cent before we take our slice of commission,' he says. 'We hope to save more like 25 per cent.'
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