Freudenberg Ibérica was established in 1973 to commercialize, import and export products for the automotive industry and is one of four companies that the Freudenberg Group has in Spain. The roots of this giant industrial network were first developed in Germany in 1849, when Johann Karl Freudenberg founded the company. The strong branches are managed by more than 300 descendants of the founder, spanning industry sectors as diverse as automotive, chemical and energy, medicine and pharmaceutical, textiles, household products (manufactures and distributes brand Vileda). The group is present in 58 countries.
There are five production centres in Barcelona and Madrid, Spain with 700 people employees. Up to 180 work in the Freudenberg Ibérica plant in Parets del Vallès (Barcelona). The company, which has last year achieved a turnover of 22 million Euros, has significantly reduced the spending on the cost categories of transport and electricity thanks to Expense Reduction Analysts.
The first contacts between the company and the consultancy occurred late 2010. "Lluis Tarrés, the company’s CFO, was interested from the start to undertake a savings programme, but the company was then undergoing changes and it did not seem adequate to start any project," recalls Miquel Viure, Client Manager at Expense Reduction Analysts.
The collaboration finally began three years later, during the workshop organized annually by the consultancy at the ASSET Convention (Spanish Association of Corporate Finance) in Barcelona. At the end of the event, the two sides agreed that it was the right time to do a feasibility study. "The spending on electricity was Freudenberg’s main concern, but after delivering the report, we offered to investigate the transport category as well,” Viure explains.
This was logically, by the company’s very nature, a strategic category for Freudenberg Ibérica. "In a company like ours, this is an issue of great complexity that requires a complicated organization. There are expenses that you can monitor and others not so much, as it would require an increase in the company’s structure. Transport is one of the latter and outsourcing has been a good decision," says Tarrés.
Octavio Barceló, the Transport expert for the project, has proposed to integrate new suppliers who could offer a more specialized service for some types of shipping and therefore be more in line with actual customer needs, which in turn would enable the adjustment of prices. "This is where the largest amounts of savings have been secured, as in some cases, the company had contracted services exceeding the level actually needed”, says Barceló. On the other hand, the consultant also renegotiated with some suppliers to obtain improvements.
In the case of the category of energy (electricity) savings were also achieved thanks to power adjustment to the actual needs of the plant, and to negotiating the rates with different suppliers, after which the client decided to remain with the incumbent provider, though with far better conditions. “This supplier made a major effort and gave us 99% of what we expected. In fact, the price difference was very little and that is why we decided to stay with them, "explains Tarrés.
Regarding the collaboration with Expense Reduction Analysts, the CFO emphasizes the preparation of the analysts, but also the peace of mind brought by the feeling that the company had the final word about the recommendations, which was important to him. "We were behind the wheel, but they are the tool that enable us to have very good results thanks to people with great sector-specific knowledge. From the beginning they made it clear that nothing would be done if we did not want to and the service never would resent it. They have accomplished this while improving the price, which is fantastic, "he concludes.
"At Freudenberg Ibérica, they are satisfied with the results. And so much it so that we have proposed to add a new cost category with high technical content, "reports Viure. The Client Manager notes that "the relationship with the company has always been cordial, open and honest, which fhas made the work of our analysts easier and helped achieve significant savings."
"There are expenses that you can monitor and others not so much; they would require increasing the company’s structure and this was not possible in our case."
Lluis Tarrés, CFO of Freudenberg Ibérica
"In Freudenberg Ibérica they are satisfied with the results. Much it is so we have proposed adding new spending accounts with high technical content."
Miquel Viure, Client Manager of Expense Reduction Analysts