Local company evens playing field between businesses and suppliers
Brett Collier, president of Integrity Cost Management (ICM), has been doing a lot of educating since starting the business in 2012. “For many small and mid-sized companies, [what we do] is a completely foreign concept. They ask, ‘Why would we bring someone else in to negotiate with our suppliers? We already do that. Will my suppliers be angry with me?’”
In a nutshell, ICM works to find cost savings relating to client purchases — savings that might just help retain jobs when a company is looking at all expenses.
“We’ve never had a client where we couldn’t find savings,” Collier remarks. “That doesn’t mean every client engagement is profitable [for us]. We might expend an inordinate amount of work effort relative to the savings. Our average savings for clients is 18%, on an annual basis.”
Collier says most business executives probably believe they are already running a tight ship and getting great pricing from their vendors. “But I ask if they’ve ever validated that. Until you have a third-party review, you don’t know for sure.”
By accessing a client’s historical purchasing data, including invoices and contracts in any of the more than 50 common cost categories, ICM works to identify savings potential. “Relative to their amount of spend, for example, is there an opportunity to combine their purchasing with others to garner a better volume price? That’s what we do. We help aggregate many companies together to help garner the best-of-class pricing,” he explains.
Typically, in the client-supplier relationship, the supplier has all the power, according to Collier. “We help balance that.”
ICM’s business model isn’t unique, but Collier says only a fraction of smaller Dane County businesses are familiar with the concept. The company only gets paid when savings are realized, so clients pay no upfront fees. “We take on all the risk before we get paid,” he says. “We could come back with 10 recommendations for the client … without an invoice, so it might take three months or longer before we get paid.”
ICM also doesn’t receive any remuneration from any of the suppliers they work with. The company earns its money by splitting the amount saved with the client for each month that savings are realized. So, if realized savings total $40,000 a year, the client’s fee would be $20,000 per year (or $20k/12 months = $1,666.67) for two years. During that time, ICM remains involved on the client’s behalf.
Collier is no stranger to the Madison area. His family ran the Heritage House Smorgasbord on East Washington Avenue for 30 years. He was vice president of human resources at Park Bank before moving to Florida for six years, where he learned all about the cost-management business with a national firm before returning to Wisconsin. ICM, based in DeForest, employs eight, including two colleagues who followed Collier north and helped start and fund the business while waiting for revenues to roll in.
The company has been turning a profit for about a year now and is currently working with about 30 clients. Collier says he expects to double the client count and revenue in 2014.
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