Beyond the Numbers: Finding Hidden Savings in Your Operating Costs

Manufacturing Minute

• 20 min

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Your financial statements can show that margins are shrinking, costs are rising, and cash flow is tightening, but they don’t always explain why or what to do next. In this episode of the Manufacturing Minute, host Megan Meador, audit and assurance partner and manufacturing and distribution practice leader at Brown Edwards, talks with Dan O’Connor, consulting partner with the ERA Group, about what’s happening operationally beneath those numbers. Dan explains the 80/20 rule of operating expenses and why “tail spend” often goes overlooked. This 20% of spend is spread across most of a company’s suppliers, in categories like freight, packaging, insurance, technology, and telecom. He and Megan discuss the cost of “set it and forget it” vendor contracts and how benchmarking against other organizations reveals whether a company is paying what it should. They also cover ERA Group’s data-driven approach, which starts with 12 months of accounts payable data, and why companies should review supplier relationships before cutting headcount. Dan closes with three questions every manufacturer facing margin pressure should ask, and explains how to find savings without sacrificing quality or service.