Reduction of operating costs by 18.6% in a manufacturing plant
We conducted an audit of utility and raw material expenses. We found alternative suppliers in the EU and implemented a relief for the modernization of the technology line.
Metal-Tech from Łódź was paying increasingly high bills for energy and raw materials, which was eating up their margin. We went into the plant to find specific savings without laying off people or lowering the quality of goods.
The challenge
In December 2023, energy costs in the plant jumped by 43.2% compared to the previous year. The plant employs 34 workers and works in three shifts, which generated monthly expenses of 142,800 PLN for electricity and gas alone. Additionally, metal raw materials were being bought from intermediaries with a margin 13% higher than exchange prices. The board had to freeze the planned purchase of a new laser cutter because there was no cash for current bills. Simply put, the company was starting to lose liquidity.
Our approach
During the first 3 weeks of January, our team analyzed the purchasing history of the last 24 months. We examined exactly 842 invoices from 17 different suppliers. We count every penny, so we were looking not only for cheaper electricity but also for gaps in settlements with the tax office. We focused on the robotization relief, which the client had not previously used, even though they modernized part of the machine park in 2021. We also checked whether the prices of raw materials from suppliers in the Czech Republic and Germany were actually unattainable for a smaller company from Łódź.
The solution
We implemented a new purchasing system, bypassing 2 local intermediaries and ordering steel directly from a manufacturer in the Czech Republic. We changed the energy tariff and shifted the metal hardening process to night hours, where the rate per kWh is 27% lower. We prepared full documentation to deduct the robotization relief, which allowed for the recovery of tax from investments from three years ago. According to the letter of the law, we demonstrated that the 2021 line modernization qualifies for an additional write-off, which saved a significant sum in the annual budget.
Results
Within 5 months, Metal-Tech regained full financial liquidity and bought the planned laser cutter. Annual operating savings amounted to exactly 312,400 PLN, which allowed for an increase in the budget for salaries for key specialists.
Timeline
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January 2024Analysis of 842 invoices and verification of energy tariffs.
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February 2024Negotiations with new steel suppliers from the EU and signing contracts.
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March 2024Submission of documentation for the refund of overpaid tax (robotization relief).
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May 2024Finalization of the new production schedule and optimization of media consumption.
"I thought advisors only talked about strategy. Horyzont Finansowy went into our invoices and in two weeks showed where 300 thousand PLN per year was leaking. This is concrete results, not promises."