Profit & Service Level Improvement Project (Distribution Co)
Although profitable, the revenues and profits of this Toronto, Ontario distributor were sporadic and inconsistent. We determined that there were human resource issues in terms of insufficient and poor selection in staffing, poor management training and that the cost/benefit was clearly in favor of additional headcount. Significant accounting mistakes, lost sales opportunities, increasing mis-picks & shortages, and rapidly increasing dated AR in credit card sales were the major results of insufficient staffing, aside from dramatic headcount turnover which had perpetuated these problems. In addition, purchasing & receiving issues in respect to incoming overages and shortages had a devastating impact on inventory, and a re-evaluation of inventory processes and procedures had to be re-developed and staff retrained to effectively use the technology at their disposal.
Despite increased salary costs, profitability increased by 18% year over year for the final two months of the project, primarily due to revenue increases as a result of improved service to the clients, which was a result of improved morale among the employee’s.