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I am all about helping the PCB industry any way that I can, and I especially love it when someone comes up with a new way to help the PCB fabs. That’s why my conversation with Dick Saporito of RPS Savings Consultants, an expert in cost reduction, held such meaning.
Dan Beaulieu: Dick, good to catch up with you today. It has been a while. So, let’s get started with you. Would you share a little of your background?
Dick Saporito: My background is varied both in industry and in functions. I have worked most of my career in printed circuit board fabrication and contract manufacturing. I worked primarily in human resources/recruiting until ascending to SVP of HR and administration for Hadco Corporation. I ultimately managed several groups in addition to HR such as front engineering, IT and safety/environmental. I gained additional experience in financial services, medical device, and the IT solutions and services industry. I have experience leading the training, distribution and legal functions. I was a corporate officer in three different companies and had significant fiduciary responsibility.
Beaulieu: Yes, I remember you from those days when I was selling boards in New England. Back then, Hadco was the company to beat. You guys were tops. Now tell me a little bit about the history of your current company.
Saporito: Sure. RPS Consulting Associate was founded in 1998, originally as a recruiting and staffing firm that focused on the printed circuit board industry. I worked in that business until 2004 and mothballed it when I went back into corporate functions. I resumed my corporation and am now doing business as RPS Savings Consultants.
Beaulieu: And now?
Saporito: I am an independent owner and a senior executive advisor for one of the leading cost reduction companies in the U.S. that partners with solution provider experts in several areas. All my solutions partners have more 10 years of success in the cost reduction arena.
Beaulieu: What does the company do? What do you offer to your customers?
Saporito: We are a value-added resource that helps companies reduce costs, improve cash flow and operating efficiencies to be as profitable as possible. I take a lot of satisfaction on being able to make a difference and help clients year over year gain competitive advantage through direct channels and through partnerships to expand our client base across the United States and Canada. The long-term goal is to grow out more of the international business initially in Europe and Asia.
Beaulieu: So, this is a plan to help the companies save money?
Saporito: We have a proprietary data lake of $6 trillion in expense categories for over a million different organizations. We benchmark existing expense to what a company of similar size and geography would pay for that same product, material, or service. Essentially, every expense on the GL (general ledger) is looked at except rent and salaries. After we identify the client’s savings, we negotiate with every single vendor or service provider that company has and negotiate lower expense for the client. We then will monitor the client invoices and do a monthly compliance check to ensure the newly negotiated rates stay intact for three years and no hidden fees are applied. Savings on average are about 25% and we have yet to have a client who we could not find some savings for.
Beaulieu: This is interesting. Now this is for all companies, not just the PCB companies where we both come from, right?
Saporito: Yes, that’s right. We offer a complete program for costs savings across the board.
Beaulieu: That is something that is surely needed. Now let me ask you, does that include healthcare? I know that for the companies I work for, healthcare has quickly become their biggest expense.
Saporito: Yes, it’s a great point because, in most companies, healthcare is one of the larger costs that employers encounter. We offer healthcare solutions to employers so they can provide a better plan for employees at a better cost. Our solution is far different than how most companies are dealing with escalating medical costs. Companies often must shift costs to employees and/or dilute their healthcare benefits. Our solution is unique as we provide a better plan at a better cost. Our solutions partner utilizes tools like reference-based pricing for all medical procedures across national networks. Most insurance brokers do not present this option to clients because they stand to lose significant commissions. We also have facility agreements and can leverage significant savings of prescription drugs via manufacturer discounts, not pharmacy rebates which are a bit trumped up. We also have a small group product referred to as SMART Plans for those smaller employers who tend to get really whacked by healthcare costs that give them the ability for their plans to be repriced more like a larger firm. These are now available in most states.
Beaulieu: That would be useful to every company I know. Give me another example of how you help companies save money.
Saporito: Sure, here some other examples:
Shipping: Companies that have high-volume parcel shipping and LTL shipping are provided—at no cost—a software, which we install and do training; it optimizes their OMS, TMS, ERP and WMS seamlessly. It is a multi-carrier and multi-mode solution that gives instant data at the client’s fingertips to identify the best mode, dimensional packaging and carrier to use. On top of automating and making an efficient process flow, it finds available capacity and a rate shop feature which saves clients an average 15% of their ship spend while getting product faster to its destination. We all know the disruption that occurred in logistics and shipping in Q4 last year which resulted in delayed shipments of orders that could not be fulfilled on time. Shipping will be an issue as e-commerce growth continues to explode. Our proprietary rates with carriers can offset the carrier surcharges as well as the increase in general rates that were applied. We also have agreements with regional carriers and International carriers to be a complete solution offering.
Accounts Payable: A free software to automate payables frees up finance teams. We also outsource, if desired by the company, or free up their staff for more value-added activities than payments processing. There is no cost to the client. The service provides a rebate just for paying your bills. It can become a significant amount of money a company would get back for using this solution which includes a virtual card to reduce bank fees and prevent fraud.
Fund Recovery: Certain companies may be entitled to money that has been escheated to my solution partner and other public firms for unclaimed assets. Additionally, my partner can also recover class action funds that a client may be entitled to.
Beaulieu: Can you give me an example of how you saved a company money and how much they saved?
Saporito: Sure, several come to mind. We saved a small manufacturer $300,000 on all their expenses. We have identified another $5 million in healthcare expenses for a large services and solutions company. We recovered over $750,000 in unclaimed assets for a large, diversified corporation. And we saved $130,000 for a small doctor’s office.
Beaulieu: What kind of companies are you working with?
Saporito: We work with any company that has at least $500,000 in revenue in any industry, including nonprofits or education.
Beaulieu: Why do you feel the time is right for this kind of service?
Saporito: I wanted something that was the kind of business that could thrive in any economic cycle. Most companies pay a lot of attention to driving revenue—as they should. Very few companies can do what we do on a macro level because we have the one thing that they don’t: data from over a million companies. Even if a company were to undertake benchmarking, it is an enormous amount of work to do on your own. Just alleviating the time and hassle to negotiate with vendors is a significant relief for companies. We feel we can take this burden off employers and let them focus on running their company.
Beaulieu: Sounds almost too good to be true. Now, a company hires to you help them save money. What happens then? Take me through the process.
Saporito: The process begins with us having a dialogue and discussion of our capabilities. We then will ask the client to provide us with a GL so we can understand what they currently are paying for each and every expense on their books. We then benchmark the expenses for similar-sized companies. We come back with the client with our savings plan for them. Once they agree to move forward, we begin to negotiate immediately on all their expenses, and they should start seeing those expenses reduced 30–60 days after we initiate the agreement. One thing that is very key here is we do not change vendors, recognizing that relationships can be very sticky. We can be flexible as well and exclude someone’s brother who provides a service from the analysis if a founder wanted him excluded. For some of our specialized services, like shipping and healthcare, there may be a vendor change.
Beaulieu: And how do you earn your money?
Saporito: We only earn money on what we can save the client. Essentially, we could go through a whole benchmarking exercise and go back to the client and for whatever reason if they did not want to go forward, at the very least the client would know where they are overspending and would owe us nothing. It’s truly a pay-per-performance model. Fortunately, this rarely happens.
Beaulieu: Let’s talk about success rate.
Saporito: Of course. Once a client has agreed to meet, we successfully have a conversion rate of 82%. See above for examples.
Beaulieu: Tell me how this can work, in detail with PCB shops of all sizes.
Saporito: We work with all companies in any business. Virtually any expense a board shop has can be evaluated. Having worked in the industry what comes to mind are things like process materials, packaging, telecom, hazardous waste, payroll processing, transportation, utilities, hardware, software licenses, and insurances. The solution can help any size board company with a minimum revenue requirement of $500,000, which I doubt anyone is in that arena today.
I could see some benefit to the board shops for specialized services like healthcare, where savings would mean a lot for them. We see savings of about 23% on average but some companies have had savings of over 60% while maintaining the same benefit level. For shipping, they would have to be a higher volume parcel or have a good LTL business. For companies over $100 million in revenue, unclaimed assets may be viable. For accounts payable, there would have to be about $10 million in payables and a good number of vendors, suppliers, and service providers being paid by ACH or check.
Beaulieu: Are there other companies that do what you do?
Saporito: Yes, most competitors are single vertical competitors. Some reach out to me to be able to partner with them. There are a few that have a good number of verticals, but none have the type of technology platform we have.
Beaulieu: To wrap up, do you have any final thoughts?
Saporito: This is an exciting business and I know how margins tend to be lower in the board industry. I have to say it was the best industry to be a part of and working for Hadco for 16 years was probably the best experience outside of what I am doing today. I would love to help the industry that I loved so much not just survive but thrive.
Beaulieu: Thanks for taking the time to talk to me today. I appreciate it. And good luck with your venture.
Saporito: Thanks for having me Dan. I appreciate it.