If you live in the Deep South and swim or drink water, you are likely depending on products from Allied Universal Corporation to control algae in swimming pools or disinfect drinking water. The private company is a leading manufacturer and distributor of bleach, chlorine and other chemicals.
Having grown from the garage of its founder in 1954 to seven domestic plants and two overseas facilities today, Allied Universal is an expert in chemical manufacturing and distribution. So it comes as no surprise that when the company decided to look at ways to reduce its operating expenses, it depended on an expert in cost containment – Expense Reduction Analysts (ERA).
"Being in the chemical industry, we know how important it is to have controls in place at every step of the process, from manufacturing to transportation to final delivery," said Michael Koven, CFO of Universal Manufacturing. "It was clear to me from the start that ERA operates under similar principles."
Allied Universal worked with consultant J.D. Heiden, who helped the company find significant savings in its small-package shipment costs and merchant card fees. To date, Heiden has found cost savings of 23% in these areas and helped Allied Universal find extra profits of more than $29,000 per year.
The company uses courier services to deliver contracts and other administrative paperwork between its headquarters office in Florida and its domestic manufacturing plants in Florida, Georgia, Mississippi and Arkansas, as well as to customers and company facilities in Central and South America and the Caribbean Basin.
Several years earlier, Allied Universal had tried using an alternate courier service. The attempt failed because of issues related to the rural locations of the facilities.
With the company's earlier experience in mind, a series of one-week trials for single-supplier service was set up during a Request for Proposal phase and the results were used to help make a recommendation.
"It's important that packages not just be delivered on time, but also be picked up during a specific time window," Heiden explained. "Not every vendor passed this reliability test," he pointed out.
Based on a combination of good pricing and proven performance, Heiden recommended that Allied Universal use its incumbent supplier to handle all courier services, domestic and international. Additionally, the supplier improved service with a web-based software system that enabled close tracking of packages and immediate notification of delivery exceptions on time-sensitive packages.
Heiden called upon the expertise of ERA's Kerry Johnson to analyze Allied Universal's merchant card fees. Johnson has successfully completed over 60 project reviews for clients ranging from small local merchants to national companies with bank card revenue exceeding $500 million.
By switching to another national merchant-card service-provider, ERA reduced Allied Universal's annual credit card fees significantly. The new arrangement offered a best≠in-class effective fee rate and lower fee margins applied to underlying interchange rates. "Kerry understands the complex infrastructure, platforms and reporting capabilities of the of top credit card processors and was able to identify a fee structure that benefitted my client," explained Heiden.
Allied Universal also has asked Heiden to analyze the $2.6 million spent on fuel costs associated with its dedicated fleet of tractors, trailers and tankers.
"Part of our competitive edge is built around our fleet, with state-of-the-art tractors and specialized fiberglass tankers" noted CFO Koven. "Our willingness to have J.D. evaluate Allied Universal's fleet is an indication of the confidence we have in him and the results ERA has already delivered."
| Cost Category | Client Spend | Extra Profits | Cost Savings |
|---|
| Courier | $85,000 | $21,200 | 25% | | Merchant Card Fees | $43,000 | $8,170 | 19% | | TOTAL | $128,000 | $29,370 | 23% |
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