A stagnant market, costly acquisition and declining sales prompted this library supplier to get a better read on operational issues and labor expenses in three core business areas. Margins were flat, the acquisition of a competitor did not deliver anticipated benefits, and labor costs were rising with no connection to outcomes.
The happy ending to this story? An available $2.1 million in annual labor savings, massive productivity gains, more-accurate planning, and improved customer service.
Our client is a provider of library and archival supplies, and library design services. Operating in a market that is shrinking, and seeing its core sales decline, the company acquired a competitor expecting to boost revenues and economies of scale. Although the client experienced sales growth, the acquisition and integration costs were high, and added complexity to their operation.
The company brought in the POWERS team in to examine and address its operational issues and labor expense at both of its facilities. Its leaders’ chief concern: Labor costs remained constant while revenues were dropping. And, they lacked an effective Management Operating System that would allow them to achieve the performance potential of their operations.
Our team conducted an in-depth analysis of the company’s manufacturing, distribution and customer service operations, and its management operating system. We identified numerous deficiencies that were hampering productivity, driving up labor costs, and hiding opportunities for improvement:
- Management tools were inadequate. Only one-third
of basic management operating system elements existed or worked, of which 43 percent needed to be upgraded. Without the necessary tools and information, frontline supervisors could not effectively manage their people.
- Supervisors were not managing the amount of work, and there was a lot of slack time. They did not realize that they spent 62 percent of their time on admini- strative tasks (mostly meetings), instead of actively supervising and problem-solving to meet schedule or satisfy customer needs.
- An atmosphere of complacency countered any pressure to identify operational weaknesses, address problems, or improve.
- Without critical visibility into variable work volumes or capacities, managers could not plan needed resources or work effectively.