Written by Eduardo Páez and Ricardo Valdés
Introduction
The key to ensuring the success of any company is to have the correct focus based on business realities, its context, and the market trends in which it participates. Making mistakes in its definition can bring catastrophic consequences for the continuity of the company.
Such was the case with our client, a company in the logistics sector, which, after a change in management, decided to completely modify its operating model. They migrated towards specialization with a few clients and suppliers, abandoning the focus on standard business processes and data-driven management, changing it to a reactive approach to day-to-day operations.
These decisions negatively impacted the sales trend and the profitability of the company, so they sought Delphus Consulting to help them rebuild the business.
Problem Statement and Background
The business approach had changed radically; it was decided to work with few clients and suppliers, reducing the base to a tenth of what it was. They focused on high-volume clients, excluding the more profitable medium and small ones.
This new approach sought to “simplify” processes and specialize the service, positioning themselves as a key logistics ally for clients, gradually developing the accounts. However, this over-dependence on a few clients brought significant risks, such as reduced negotiating power on rates and commercial terms, affecting business margins, vulnerability to client loss and/or volume reduction, and limited operational flexibility.
This way of operating neglected necessary business practices. Operational vices developed, which, along with staff turnover and underutilization of systems, resulted in a company working in silos, with little communication between areas and lacking operational discipline to ensure efficiency and consistency in operations and processes.
Furthermore, there was an underutilization of the company’s systems, and the tracking of the organization’s goals and objectives was not done properly. There was no adherence to processes, and they lacked basic metrics for operation and service.
The results were evident: business sales decreased by ~30% compared to the previous year, the productivity of the operational team decreased by approximately ~50%, they had minimal retention and attraction of new clients, and the gross margin fell along with the business profitability by around 5 percentage points.
The intervention needed was clear: to turn the business around, recover the previous growth trend, and increase it by utilizing all the capabilities and infrastructure that were being underused.
Solution Planning
This case required quick changes that would yield short-term results. To achieve this, the project focused on six key points aimed at aligning operational and commercial capabilities to have a direct impact on the income statement:
- Culture: Implementation of standard working methods for the Operations, Commercial, Customer Service, and Finance teams, aiming to create a culture of compliance and operational discipline across areas and towards the client.
- Change of Focus: Diversification of clients, suppliers, and services offered, along with the development of existing accounts.
- Organizational Alignment: Development of a monthly collaborative plan to serve as a guide for the commercial and operations teams to address the business’s latent needs.
- Key Indicators: Leveraging available tools like Salesforce and Power BI to generate dashboards and reports that enable comprehensive performance management and business decision-making.
- Management: Clear definition of meetings and management methods to achieve follow-up on sales objectives, profitability, and to identify process deviations and areas of opportunity.
- Organization: Redefinition of functions, key roles, interactions between areas, organizational structure, and compensation system to promote adherence to established business objectives.
Service Culture + Operational Discipline + Results Orientation
P&L Impact
Business Management
Operational Capabilities
Suppliers:
- Availability
- Service
- Reliability
Commercial Capabilities
- Clients:
- Collaboration
- Loyalty
- Contribution
Implementation
During the implementation of the proposed changes, a five-step methodology was addressed, which included day-to-day support with operations to build the transformation the business required through processes and management.
- Problem Identification: Collecting information on the processes and conducting interviews with the involved team.
- Course of Action Definition: Establishing clear objectives and an action plan with specific activities and responsible parties.
- Communication of Changes: Explaining the reasons for the changes and their benefits to all involved.
- Implementation Support: Ensuring the correct deployment, testing, and making necessary adjustments.
- Autonomy in Day-to-Day Operations: Achieving adoption of the changes by the team.
The definition of performance indicators and management routines was the foundation of all these changes, which allowed for:
- The performance measurement of the teams (operational discipline).
- Tracking of previously defined objectives.
- Improvement in decision-making.
- Effective communication within the organization.
Once the processes were implemented and the indicators defined, it was crucial to have standardized and reliable information to monitor and control the deployed changes. This was achieved by developing automated dashboards accessible to different areas of the organization to maintain effective communication.
For this monitoring, the ideal option is to use tools that allow data integration with current technological platforms, enabling real-time data updates and a comprehensive view of the business reality. In this case, Power BI and Salesforce dashboards were chosen, achieving standardized data visualization across the organization.
Finally, the aim was for the organization’s culture to have a results-oriented focus. Therefore, a reorganization of the structure was decided to delineate the responsibilities of different areas. Functions and compensation schemes for the teams were redefined, bringing about a way of operating based on collaboration and communication among all involved.
Results
The results were swift: sales in the first four months of the year increased by 16% compared to the previous year, productivity rose by approximately 50%, adherence to the collaborative plan increased month by month, and both gross and operating margins grew. Additionally, a culture of continuous improvement was developed thanks to the clarity of information and greater team synchronization.
Qualitative
Management
- Greater operational discipline in the team.
- Meetings to follow up on established goals.
Organization
- Communication and synchronization between areas.
- Adherence to common objectives among the different areas.
Tools
- Detection of opportunities with clear information.
- Development of management dashboards using technological tools.
- Correct use of systems with reliable information.
Process
- Processes focused on internal and external service.
- Definition of a clear service offering by processes.
Quantitative
Sales
- +16%
Productivity
- +50%
Service Level
Loading
- +11%
Unloading
- +20%
Conclusions
Without the proper focus and operational discipline, a business is constantly at risk. Regaining direction requires the commitment of all levels of the organization and establishing the foundations for collaboration with other areas, managing results, implementing a culture of operational discipline and compliance, making data-driven decisions, and adhering to processes to eradicate operational vices.
At Delphus Consulting, we help you identify, define, and solve the latent problems in your organization, enabling you to achieve your business objectives.
