Lennox designs, manufactures and markets a wide range of products for heating, ventilation, air conditioning and cooling i.e. all equipment to optimise interiors. The company is listed on the New York Stock Exchange and operates worldwide.
The headquarters for Northern Europe are based in Nijkerk, from which sales and services are organised for the Netherlands, Belgium, Luxembourg, Germany and England.
Lennox Benelux was approached by Kees de Dreu, an expert at Expense Reduction Analysts, who after a few meetings, was commissioned as Project Manager. Five cost categories were initially considered: Telecommunications, temporary staff, printers, logistics and credit checks. For the categories of printers and logistics, it soon became clear that Lennox had taken the right measures. However, savings could be found in the other three categories.
Kees de Dreu thoroughly investigated the telecommunication category. After extensive research, some savings opportunities were identified: first, the mobile phone data subscriptions could be reduced from 75€ to 15€. This was not related to a change of supplier, but simply to the fact that employees did not need expensive subscriptions with advanced options they would not use. Secondly, an examination of the accounts showed that there were quite a few unnecessary subscriptions that could be cancelled. Thirdly, when calls are placed using ‘carrier preselect’, it is possible to benefit from better rates. Finally, there was great room for improvement in the level of phone calls placed from the office landlines to mobile phone. With some technical interventions, these costs could be reduced by 60%, without changing the provider.
Altogether savings on the telecommunications category reached 45%.
Expense Reduction Analysts expert Victor van Embden was put in charge of the temporary staff cost category. Lennox works with two temp agencies, one of which is providing multilingual candidates. Once the conversion rate was adjusted savings of 2.5% were found for both agencies.
The credit check category was investigated by Expense Reduction Analysts expert Simon Postma.
Credit control for Lennox was housed ad hoc with several agencies; what made it even more complex was the fact that there were credits to review from both the Benelux countries and Germany or England.
“There were great improvements to be made, not only with regards to costs but also to the efficiency in business operations” said Postma. He searched for an integrated system; there are only a few major suppliers in this area, which Postma invited for a meeting. Finally there were 14.5% savings achieved.
Lennox itself had requested two tenders before Expense Reduction Analysts was commissioned and these offers served as benchmark for the savings. Postma showed that significant improvements could be made on these new offers. Perhaps even more important for the company is that the understanding of the diversification of risk in the portfolio has greatly improved. Potential losses are more predictable and credit policy can be used accurately as we now know which customers pay always early or late. If ever the Lennox sales force wonders whether it is a good idea to work with such and such customer, they just need to look at the system to make an informed decision.
Dick Dibbits, Supply Chain Manager at Lennox says: “We are very pleased with the result.
The consultants have done their research thoroughly and cooperation was excellent. Moreover, they are honest; they told us about a specific ongoing contract: If you change the contract now, you will save in the short term. But if you keep the expensive contract and only switch afterwards, you will save much more in the long run. The latter choice is more favourable for us but Expense Reduction Analysts does not earn anything in the short term, though they deserve to. They have nevertheless discussed all options with us very openly, which is brilliant. Not everyone would do the same.”
“The consultants are honest. They discuss the options most favourable to us in the long-term, thought they themselves are missing on earnings. There are certainly other organisations out there that would not do the same.”
Dick Dibbits, Supply Chain Manager at Lennox