Reducing Operating Costs Through the Effective Utilization of a Management Control System

1. Background The client is a North American convenience store company experiencing low profitability and looking to improve its competitive position. The company launched a program to increase cost controls and implement a management control system to improve the consistency of performance across all locations . SPG’s Consulting Assignment SPG, Inc was engaged to work with regional management teams to implement work standards and best practices in the following areas : Store Management. Staffing and Task Scheduling. Pricing and Merchandising. Floor Layout/Maintenance. SPG - Business Analysis Findings The SPG analysis utilized a variety of participative tools and methods to identify the factors having the greatest impact on performance. Specifically, the analysis revealed that: Staffing was not aligned with transaction practice. Customer traffic patterns were not utilized to smooth the scheduling of non-customer facing activities. An opportunity existed to reduce “on-site” store management and increase spans of control through more effective staffing models. Best practices for work simplification was not shared for stocking, inventory management, back office and cleaning/maintenance tasks. There was a low utilization of vendor managed stock and consignment programs to reduce inventories. Results and Quantitative Benefits Working with the company’s region managers over a six-month period, consultants from SPG implemented best practice procedure and management tools across 250 locations to achieve significant positive changes. These improvements include the following: Designed and implemented a location resource-planning tool to better align staffing, task scheduling and customer traffic. Implemented a location merchandising and space optimization plan. Expanded vendor managed inventory program to reduce inventory levels and minimize out of stock. Increased spans of control and clarify roles and responsibility to improve utilization. Implemented best practices for back office, cash controls and shrinkage control. The financial improvements resulting from the implementation of these changes were significant. They included: A 5% increase in margin. A 20% to 30% reduction in labor by location and region. Reduced inventory levels. Reducing Operating Costs Through the Effective Utilization of a Management Control System • Schrudder Performance Group, Inc. Proprietary Information - 1602