Implementing Major Cost Control Strategies While Improving Effective Service Levels

•BackgroundBackgroundThe client, a major regional telecommunications

company, was in a period of flat earnings. In order to improve financial performance, a company-wide strategic initiative was undertaken to reduce operating costs.

 

In order to support this initiative, the service and internal operational logistics unit set about to find ways to reduce the cost of operations throughout their nine-state system. The initiative called for rationalizing the entire system with an eye toward streamlining, right sizing, and consolidating internal services and eliminating and/or transferring associated costs and headcount.

•SPG’s Consulting SPG’s Consulting AssignmentAssignment

SPG consultants were assigned to work with services management to reduce costs and improve service levels in the following areas:

Warehousing and distribution.Automotive maintenance and support.Facility design and construction.Property and facility maintenance and support.Food service.Mail delivery.Service contracting and procurement.Print services.

•SPG - Business Analysis SPG - Business Analysis FindingsFindings

The SPG analysis revealed opportunities to:

Realize an increase in line productivity by improving organizational effectiveness through strengthened supervisory control, defined roles d responsibilities, and established performance measurements.

Reduce service costs through a realigned management and organizational structure.

Redefine base service planning levels through improved management systems.

•Results and Quantitative Results and Quantitative BenefitsBenefits

SPG consultants and more than 400 client employees joined together in a two-year effort involving over 25 work teams. They achieved the following results:

 Designed and rolled out a regionalized

organization structure with clearly defined roles and responsibilities.

Recommended and implemented hundreds of operational and process improvements that standardized and consolidated work methods, created or enhanced mechanization, and broadened management spans of control.

Worked to change internal customer behavior through extensive communication programs and extensive internal customer contact to determine needs versus wants.

Developed a new organizational structure to support rationalized customer services.

Compiled internal services benchmarking information for goal setting.

Documented all improved processes and procedures for handoff to client.

The net result was a $66.1 million reduction in annualized expenses, exceeding the client’s objective by 42%. The savings can be summarized as follows:

Schrudder Performance Group, LLC. Proprietary Information - 1302

Other Savings $5.0 Million

Gross Budget Savings $14.0 Million

Services Department Budget Savings (Expense Dollars Only) $52.1 Million

Cost avoidance savingsEquivalent employee reduction Retained vacated floor space

Pension and benefit savingsCost of goods/services savingsOther budget savings

Services rationalizationOrganization rightsizingLease Savings