Case Studies
Organizational Efficiency:
Global Services Company
Global Services Company
Challenge
Company’s European branch-based business had 8 VP’s running autonomous, regional operations. Significant duplication existed between the European corporate structure and regional country structures.
Approach
NexGen’s unique Workout toolkit (WO!) was used in a series of two to three day fast paced, collaborative sessions using multiple inputs and a diverse group of participants to design an optimal organization. The toolkit’s sophisticated data modeling allowed NexGen to quickly assess the redundancy and gaps in core vs. non core activities and develop a cohesive organization structure using de-layering of management, consolidation of roles and increasing spans of control, the organization aligned with benchmark metrics.
Results
NexGen Advisors created a more efficient structure by developing Centers of Excellence (COEs) to create standard enterprise
wide processes, efficiently support the transactional needs of the business, and reduce headcount. NexGen also redesigned and
consolidated work activities and roles, broadened the spans of control to allow for de-layering, helped President evaluate and
deploy senior staff in the new structure, and created an administrative hub to manage all non-core transactional work resulting in the following key improvements:
1. Two redundant management layers were eliminated
2. An eighty-country regional structure replaced a two-region corporate structure
3. COE’s and administrative hubs were developed for functional infrastructure (Procurement, IT, Finance, Risk, HR)
4. Councils were created to drive cross regional collaboration, efficiency and best practices
5. Outsourcing was leveraged on transactional activities to allow internal resources to focus on the core business and growth.
wide processes, efficiently support the transactional needs of the business, and reduce headcount. NexGen also redesigned and
consolidated work activities and roles, broadened the spans of control to allow for de-layering, helped President evaluate and
deploy senior staff in the new structure, and created an administrative hub to manage all non-core transactional work resulting in the following key improvements:
1. Two redundant management layers were eliminated
2. An eighty-country regional structure replaced a two-region corporate structure
3. COE’s and administrative hubs were developed for functional infrastructure (Procurement, IT, Finance, Risk, HR)
4. Councils were created to drive cross regional collaboration, efficiency and best practices
5. Outsourcing was leveraged on transactional activities to allow internal resources to focus on the core business and growth.
Business Process Improvement:
U.S. Based Branch Services Company
U.S. Based Branch Services Company
Challenge
The direct mail marketing costs of this Services company were increasing exponentially without a corresponding increase in sales. Sales were remaining flat and decreasing in some areas of the country. The challenge was to determine what level of direct mail marketing units and funding were necessary to maintain or increase the sales volume.
Approach
NexGen Advisors used the Six Sigma Methodology to determine the zip codes that were receiving direct mail marketing but had never purchased any services. The second step was to understand why cancellation rates were so high and if it was tied to customer dissatisfaction.
Results
The analysis showed that there were hundreds of zip codes with buy rates = 0%. It also illustrated that any zip code with a buy rate less than 1% was not profitable. The recommendation was to not send direct mail marketing materials to any zip code with a buy rate < 1% resulting in a savings of over $1.9 MM annually with no negative impact on sales.
The second analysis required detailed analysis to pinpoint why 25% of the cancellations were happening after the first service of a six-service program. Further inspection proved that it was not related to customer dissatisfaction, but was instead due to the customer utilizing a low introductory offer for the first service ($30), then cancelling without penalty, the five remaining higher cost services ($150 each). The company was losing money on the first service with a cost to produce of $133.
The recommendation was to develop a “one service only” program at a lower cost without the need to buy the remaining five services and to institute penalties for customers cancelling their six-service program after the first service if they took advantage of the low introductory offer. This resulted in a savings of $7.0 MM annually.
The second analysis required detailed analysis to pinpoint why 25% of the cancellations were happening after the first service of a six-service program. Further inspection proved that it was not related to customer dissatisfaction, but was instead due to the customer utilizing a low introductory offer for the first service ($30), then cancelling without penalty, the five remaining higher cost services ($150 each). The company was losing money on the first service with a cost to produce of $133.
The recommendation was to develop a “one service only” program at a lower cost without the need to buy the remaining five services and to institute penalties for customers cancelling their six-service program after the first service if they took advantage of the low introductory offer. This resulted in a savings of $7.0 MM annually.
Business Process Outsourcing:
Global Car Rental Company
Global Car Rental Company
Challenge
The back-office costs for information technology, finance and accounting, property management, procurement and human resources presented significant operational problems. The company was faced with a dysfunctional environment that duplicated services, relied heavily on manual processing and stagnating business processes. The challenge was to determine if outsourcing the business processes would deliver both savings and process improvement the company was seeking.
Approach
NexGen Advisors created an approach that followed two paths. First, RFP’s were prepared for each process, and then pre-determined qualified vendors were offered a second RFP to prepare a ‘bundled’ solution that included more than one business process.
Results
After consideration, a solution resulted that best mapped to the company’s needs. A bundled solution was rejected. No service provider was able to adapt to the challenges posed by the company. Property, information technology and procurement were outsourced. Finance and human resources evolved into different solutions. The former elected first to internally improve business processes and possibly examine outsourcing in the future. The later, because of transformational needs elected to adopt a point solution approach. Immediately outsource mature processes while adopting business process improvement activities for the remaining HR functions.
Lean Manufacturing:
US Technology Company
US Technology Company
Challenge
A U.S. manufacturing company that produces electronic parts was suffering from long lead times and manufacturing quality problems. These two issues were driving lost customers and low margins due to high manufacturing costs.
Approach
NexGen used Lean Manufacturing process improvement tools to understand and improve the manufacturing quality and cycle time issues. By mapping the value stream, critical steps could be identified for cycle time reduction. Transitioning the production line into a flow based pull system would ensure that the process operated at the pace of the customer demand. Lastly, to improve the quality issues, visual management tools and method sheets would be utilized to reduce defects hindering production.
Results
Utilizing value stream mapping, the team worked with the production group to understand the critical steps for delivery of a successful product. After the evaluation and mapping session, non-value added steps in the process were calculated to comprise of 25% of the overall product cycle time. Secondarily, the production line operated on a batch and queue production process. Transitioning the line into a single piece flow pull system ensured that the process operated at the rate of production needed to meet customer demand. As a result of the production line change, the line improved its agility and flexibility to the varied customer demand, and reduced the cycle time in delivery of product. This reduction improved the relationship with the current customers, by ensuring timely delivery, and added ‘capacity’ which, in turn, allowed additional customer base growth of 6%.
Quality issues which were generated in the production process cost the company an estimated $26M annually. These issues were being driven by variability in the ‘in line’ inspection process. Developing operational method sheets built production ‘step’ quality measures into the process and ensured that bad product did not pass through to the next production step causing rework. Using visual management process control techniques, mismatched sub-components issues were eliminated. Through these improvements, along with the transition to single piece flow processing, the production line quality cost was reduced by $20M, with further analysis and improvements still to be realized.
Quality issues which were generated in the production process cost the company an estimated $26M annually. These issues were being driven by variability in the ‘in line’ inspection process. Developing operational method sheets built production ‘step’ quality measures into the process and ensured that bad product did not pass through to the next production step causing rework. Using visual management process control techniques, mismatched sub-components issues were eliminated. Through these improvements, along with the transition to single piece flow processing, the production line quality cost was reduced by $20M, with further analysis and improvements still to be realized.