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Case Studies

Case Type Company Type
#1 Finance Manufacturer
#2 Database Design Utility
#3 Plant Operations Manufacturer
#4 System Design Manufacturer & Distributor
#5 Operational Restructuring Graphics Design

#1 Case: Finance          Company: Manufacturer

Company Situation: A small manufacturing and distribution company (<$5MM sales) had average accounts receivable days of over 70 days with 30% over 120 days. Company desperately needed the cash to pay for raw material inventory as sales increased. Production backlog was close to three weeks.

Management Consultant Process: We worked with management to change credit policy by developing strict protocols in approving and increasing credit for new and existing customers. Together we instituted daily follow-up procedures and created daily cash flow, receivable and payable tracking & analysis. Designed a data tracking and call-back procedure that allowed employees to stay on top of immediate calls. Instituted a new policy to begin calling customers before receivables were past due as a gentle reminder.

Conclusion: In less than 2 months, Accounts Receivable days were reduced to 35 days and receivables over 120 days old were reduced to 3% of total. This threw off significant amounts of cash allowing the company to increase purchasing and thus reduce delays in fulfilling new orders.

#2 Case: Database Design          Company Type: Utility

Company Situation: Company was using a DOS based system to generate individual client natural gas usage analysis, including graphs and recommendations for gas savings. Graphs were calculated incorrectly (e.g. showing energy usage to heat a pool when the customer did not own a pool) and the output was unappealing to customers. In addition, data input was awkward and slow and required a large number of clerical staff to process the reports.

Management Consultant Process: We worked with the project team to design and developed a Microsoft Access based software program that allowed the clerks to view and input on a computer screen that looked exactly like the form the customer filled out. We worked with engineers to re-write all of the energy usage and savings algorithms to be a more accurate representation of customer's actual usage. We then designed color graphical output with reporting recommendations based upon customer surveys.

Example: If the customer reported that their water heater was not wrapped the report automatically created a red colored recommendation that told them how much money they could save if they wrapped the water heater. If they reported a wrapped water heater the report created a green colored paragraph congratulating them on their energy savings. We also designed and translated a Spanish version that would print if the customer check the Spanish language box.

Company Results: Client was able to process over 40,000 surveys in less than four months, customer calls demanding explanation of the errors were virtually eliminated. Data input time was cut by over 40%. Customer perceptions of the company quality were dramatically increased.

#3 Case: Plant Operations          Company: Manufacturer

Company Situation: A manufacturer and distributor of pet products had over three weeks of production backlog, primarily due to the chronic breakdowns of the production equipment and the long delays in return to production. Key production equipment was often out of order for over 24 hours at a time.

Management Consultant Process: Our Solution Consultants worked on the line with the production crew (primarily in Spanish) to determine key equipment failures and related components. It became clear that the company had over economized and was not stocking sufficient machine parts to meet critical needs. In addition, critical maintenance procedures had not been effectively communicated to the production team, nor were adequate processes put in place. We worked with the production team and management to developed maintenance procedures and intervals, designed checklists and monitored crew performance of maintenance tasks. We also developed a parts list and minimum inventory and restocking levels for each part and created a monitoring system and parts inventory tracking.

Company Results: Within 30 days production backlog had been eliminated and finished goods inventory levels were developed to sufficient levels to allow for next day shipping of all new orders, dramatically increasing sales and cash flow. Production downtime was virtually eliminated.

#4 Case: System Design          Company: Manufacturer & Distributor

Company Situation: A fine jewelry manufacturer and distributor had multiple problems with the creation of design specification sheets, including an average production time of .75 person hours per design per customer and chronic inaccuracy with the use of MS Word and MS Excel to generate the sheets. This created linear delays in the generation of product quotes and the design of specification sheets. When a customer ordered an average of 180 SKUs it took over two weeks to generate all of the specification sheets. Even then, there were typos and other calculation errors that let to disenchanted clients and lost profits.

At the same time, sales staff were limited in their ability (and insurance coverage) to carry a full product line (over 1,000,000 possible styles) when calling upon customers. Salespeople were regularly robbed as they carried hundreds of thousands of dollars in fine jewelry on customer calls.

Management Consultant Process: Collected all existing forms and reports and held brainstorming sessions with staff to determine needs and current work flow. Designed and developed Microsoft Access based database program to automate process and reporting. Redesigned reports to better reflect purpose and to improve formatting.

Company Results: Client can now input and process a 180 SKU order in 20 minutes (versus two weeks) without any errors in price calculation as all math is performed automatically. Management can design new styles and calculate the pricing automatically with the new system. Once they are done they can print an internal specification sheet (including photograph) that is available to all staff.

Client's customers have faster turnaround, more accurate pricing and specification sheets that are customized to their specific format and include a photograph of the product.

Salespeople can now take a complete product line on the road in the form of a laptop. They can select specific parameters when searching for styles (e.g. that month's birthstone, within a specific price range or only rings or bracelets) then see each product on screen complete with a pricing grid showing all the possible price combinations given the customer's stone quality and metal parameters. Once the customer has selected the exact configuration they want, a click of a button adds the item to the customer's order form. At the end of the sales call a push of the print button generates a complete sales order ready for the customer's signature. Each night the salesperson uploads the day's sales information and downloads any new styles. Product can go into production immediately.

#5 Case: Operational Restructuring          Company: Graphics Design

Company Situation: High quality graphics design firm (<$5MM in revenue) was run completely on paper and was not tracking design time by project. Management had no idea of the actual costs to complete each project. Invoicing and other accounting tasks were backlogged over a month creating a cash flow strain on the company.

Clients often changed project specifications mid-stream without any staff member submitting the project for requote resulting in reduced profitability for the entire firm.

Management Consultant Process: Through a series of brainstorming sessions and individual interviews, we determined the steps in each type of graphics design project. As the client was Macintosh based, we researched and reviewed appropriate accounting software to find a product that would meet the client's needs, including time and project tracking.

Installed new accounting software and worked closely with bookkeeper to set up accounts and input year-to-date data. We then instituted a time tracking program on the design floor to work in conjunction with accounting program. We also designed and instituted a paper based project tracking system with key decision criteria for process rework. Each project folder included tracking sheet requiring key signatures at critical junctions and, in the event of change orders from the client, a project rebid.

Company Results: Invoicing now occurs upon project completion resulting in significant cash flow improvements. All project changes are submitted for rebid increasing gross revenues by an average of twenty percent. Through accurate time and project cost tracking, management better estimates future project costs and thus improved net margins.

Administrative time and errors were dramatically reduced as invoices are no longer generated in a word processing program and check generation and reconciliation are no longer done manually.

Management has an accurate picture of the company's financial position at all times, including specialized reporting to track individual projects.

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