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| Following are case studies of
organizations that realized significant saving and performance improvements through
improved business controls with the help of BizControl Solutions principals. These
represent both “pain point” and general assessment engagements. The case studies
are grouped by Out-of-Control Incubator:Silo Organizations
CASE – The
Sales and Distribution departments of a large organization built and maintained separate
systems with the same data. The solution was to expand and share access to the sales
system to include distribution needs and eliminate the distribution system for a
savings of $750K annually.
CASE – An R&D organization
wanted immediate payment to be made to physicians performing clinical studies. Accounting
& Tax wanted all the important information on the payee prior to payment. This was a
constant struggle between the two departments. The solution was to utilize the lead time
available to the R&D department in choosing their physicians to provide sufficient
time for accumulation of required information. Cross referencing the two
departments’ databases on a weekly basis provided the adequate lead time needed to
ensure timely payments for the clinical study providers.
Restructuring/reorganization
CASE –
Reorganization resulted in both poor customer service and “continuous surprises”
of impaired assets which impacted this organization’s quarterly earnings.
An early warning filtering process was developed to ensure that a detailed
pre-restructuring/ reorganization process was performed jointly by the effected
organizations to identify exposures and to plan accordingly. In one instance, this
uncovered $2 million in obsolete inventory for immediate write-off.
CASE – A religious world
mission organization controlled all strategies and budgets centrally from its
headquarters. Area managers made all operational decisions affecting their assigned
geographies, but were out of the office the majority of the time. This absentee,
centralized control brought operations and decision-making to a halt. The solution was to
move the managers out into their geographies, and give the managers strategy and spending
authority. This, along with associated operational efficiencies at headquarters,
allowed the department to survive a surprise 25 percent budget cut while maintaining
mission services.
Downsizing
CASE – Loss of
knowledge, talent, and experience through personnel leaving placed a large time drain on
the smaller, inexperienced downsized organization. The solution was to implement both a
monthly cross-training day and a department archive in electronic format to capture
complex transactions history. As part of the exit interview, detailed checklists ensured
position responsibilities were defined and shared with new individuals assuming the
responsibilities. This process became the standard against which both future downsizing
and acquisitions were measured. Savings were $500K in training costs avoided.
CASE – A large South American
company experienced a 400% year-over-year increase in receivables while sales increased
200% in the same period. The cause was that the credit department was severely downsized
during the last two budget cutbacks. As a result, regional sales managers were approving
credit since the company knew they could not have salespeople approve credit.
The problem was that personnel were responsible for tasks
they were not trained for and did not spend a lot of time doing. Compensating controls
were implemented which had a prioritization placed on whose credit was approved by an
expanded finance department. No sales were allowed to accounts 60 days or more past due,
and salespeople’s commissions were paid in three parts—upon order, upon
shipment, and upon full payment. Following year sales were up 150% and receivables
decreased by 90%.
Mergers/Acquisitions/Divestitures
CASE – A turnover of
key personnel was plaguing a company that was aggressively growing through acquisitions.
While due diligence was performed with each acquisition, the company only looked for
significant items greater than $500K. Data showed that for the post-acquisition period of
36 months, the company was struggling with “unfavorable surprises” that were
well below the $500K limit. Yet two, three, or four “small items” were quickly
adding up to major unfavorable surprises.
To counteract this trend, a MAD process
including pre-deal interviews, checklists, and action plans was executed by a SWAT team.
The composition of the SWAT team was multi-functional. Each member’s time on the SWAT
team was for only two deals—with the first deal providing training for the leaders of
the second deal’s SWAT team. This significantly reduced surprises and ensured
sufficient handoffs and resolution of issues before they were ignored or forgotten. In
addition, the SWAT team’s presence significantly improved the granularity of the due
diligence efforts. Before this new approach, surprises averaged $10 to $15 million per
deal. This was reduced to $1 to $3 million average surprise per deal.
New
Information Technology Systems
CASE – A
company installed a new, state-of-the art, integrated computer system. Over one year
later, the CEO discovered that projected saving were not being realized. Upon a detailed
analysis, it was determined that the old, outdated systems that the new system was to
replace were still being operated because ...
1. The capability of the new system did not satisfy the
needs of individual departments.
2. The departmental training on the new system was limited
due to budget cutbacks.
3. Once the system was operational, the consultants who
installed the system were no longer available.
The solutions was to jointly train employees in using the
new system while looking for opportunities to eliminate processes and tasks driven by the
legacy systems. Once ownership was accepted for the new system and the new system’s
capabilities were discovered by the organization, the old systems rapidly were
discontinued with approximately $9 million in savings.
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