Managing Cost

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Managing Cost Optimizing Efficiencies

• Presenter
• Ken Gunn
• Caliber Consulting
• Operational and Organizational Internist

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FormatJump In!!!

• Free form discussion with limited slides except
  to guide flow and direction of dialogue

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Outline

• Expectations
• Who You are and Symptoms
• Where Does It Hurt? POP!
• Market Past, Present, Future
• Ongoing Consolidation
• The Additional Costs of Doing Business
• The New Opportunities

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Outline

• The Data Snowstorm Frostbite
• How Deep Is It?
• Where to StartThe Assessment
• People First!
• Pick Your Battles
• Change is a Bad Word!
• The Battle Plan
• The Victory and What is Next
• Part of Company Fabric
• Follow the Money -- Good customers and
  Suppliers!

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Who U R, Symptoms ( POPs) Expectations

• Company
• Business mix
• Overall sales volume
• Back office system(s)
• Other systems you utilize
• Current data integration
• POPs
• Expectations

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MarketP-P-F

• 1990 Lube marketersoil cos
• 2005 Lube marketersoil cos
• 2020 Lube marketersoil cos
• Implications

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Additional Costs

• People
• Technologynumbers of systemscan they plug and
  play?
• Geography
• A/R exposures/capital employed
• Market volatilitydoes the past help predict the
  future?
• Coupled with margin shrink!

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Opportunities

• You Hold The KeysTry One!

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New Opportunities

• Play the Aggregator
• Leverage Size

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New Opportunities

• Better access to technology with new size not
  scalable for smaller companies
• Be the Driving
• Hub

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Scale Up for Best Practices

• Customer Order Centers
• Web based tech support
• Ask Jeeves
• Web based ordering
• Data Integration
• Back OfficeASPin-house and out-house

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Scale Up for Best Practices

• Sales MgtACT and Goldmine or similar
• Routes versus go when they callcan you still
  afford the fuel costs?
• Customer inventory mgtdovetails to routes
• Cycle inventories for your company

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Scale Up for Best Practices

• FISHtoss it
• Slow means Sloworder when needed
• Sonar for bulk lubes
• Warehouse/truck scanning
• Commissions on net margin
• Tiered commissions and bonus
• for EFT

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Scale Up for Best Practices

• Equipment ROIsinclude everything
• Daily and weekly report quick analysiscosts and
  gross margins
• Month-end should be a yawnseen it already
• Contingency Planningthink New Orleans

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Where to Start

• Sponsors
• Owner and or exec team
• Resourcespeople and a budgetno mother may I
  every time within a specific scope

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Where to Start

• Team Facilitator/Coordinator
• Can be anyone
• Non-judgemental
• Good listener
• Handles conflict and strong willed people
• Time and due date oriented

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Where to Start

• Team MembersNo I in Team
• Can be anyone
• Part time and full time on team
• Team oriented
• Allocated time to participate
• New and old hands

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Where to Start
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Where to Start

• Contributing Participants
• Anyone that the data touches or impacts
• Includesemployees, customers and suppliers
• Solicit candid, open
• feedback to collect ideas
• and clarify POPs
• even small ones!

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Where to Start

• Communicate!!!
• Do not operate behind closed doors
• Promote activities and projects with the why that
  includes benefits--WIFM

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Pick Your Battles

• RememberChange is Scary

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Pick Your Battles

• The POP list
• Prioritize and Include Quick Hits as a Category
• Hit singles to start
• Get comfortable with processwork out kinks
• Reward the busy folks with help
• Target a naysayer

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Pick Your Battles

• Does not have to fix 100--small steps still get
  you toward your ultimate goal
• Recognize mistakes, talk about them, learn and
  move on

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Battle Plan

• Cost effective outsourcing with technology
  expertise, support and supplier/back office
  relationships

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My Change Pet Peeve The Data Snowstorm

• Sources of data streamslist
• Number of people involvedhow many people per X
  new gallons
• Error rates and rework
• Get numb to the problemco-dependent
• Recognize the onset of frostbite
• Stuck in a rutcant catch up
• Count the W2s
• Count the file cabinets

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Integrate

• Consolidate data so it is coming from as few
  sources as possible.
• Consider a service to translate and format data
  for integration such as a DTN or have your back
  office build the interfaces
• One source,
• one format,
• one interface

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Prices

• Entering prices manually
• ____(time) x __/hr ______
• Incorrectly entered prices lead to
• Correcting customer invoices
• Invoicing customers _at_ incorrect price AND
  not being able to correct
• Correcting Supplier invoices
• Losing Customers
• Buying from wrong rack

Room for Error?
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Supplier Invoices

• Eliminates entering and matching invoices
  manually
• Electronic processing facilitates
• Identifying missing paperwork invoices faster
• Eliminates looking for missing invoices
• Catch incorrect supplier invoices faster
• More accurate cash flow projection
• Catch incorrect supplier invoices faster
• More Accurate Cash Flow Projection

Hi! My name is Joe. I am a paperholic! Help me!
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Draft Notices (EFTs)

• Entering EFTs manually
• ____(time) __/hr ______
• Electronic processing facilitates
• Better Cash Planning
• More accurate payables
• Faster identification of problem invoices
• Customer may not be invoiced
• Payment on invoices that are not yours

Joes Filing System
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Value Justification
1. Increased Revenue ________ 2. Displaced
Costs ________ 3.Avoided Costs
________ 4. Redirected Costs ________ 5.
Intangible (Company Image) ________ 6.
Training and Turnover
________ TOTAL Benefits and/or Saving Sum of
Benefits COSTS (investment) Products
________ Services ________ Maintenance
________ TOTAL Costs (investment) Sum of
Costs TOTAL NET BENEFITS Benefits -
Costs Payback period
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Victory and What Next.

• There is no finish linejust battles you win!!

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Victory and What Next.

• Break thru paradigms! Make advancement (change) a
  positive!! part of your company fabric!

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Victory and What Next.

• Read the tea leaves continuously for
  opportunities!!

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Open Discussion Questions?
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• Contact info
• Ken Gunn
• Caliber1mt_at_aol.com
• 1-800-811-4866