HEALTH SYSTEM

BUSINESS

Regional U.S. health provider with 3 acute care hospitals, physicians enterprise, commercial lab, retail pharmacy and ambulance company.

REVENUE

$800 million

Situation

  • Increasing competition from new, non-traditional players
  • Affordable Care Act creating structural change to reimbursement rates
  • Population Health imperative raising expenses
  • Budget constraints hampering innovation and growth

Motivation

Previous initiatives not enough

  • Multiple efficiency efforts over previous 5 years had not generated sustainable improvements
  • Margin headwinds required transformational approach

Improvements

  • Implemented new Procure-to-Pay solution
  • Refined user demand across multiple product categories
  • Introduction of Lab Formulary to define/restrict available tests
  • Standardization of major process across 3 hospitals to internal “best in class” standard

Outcome

  • Fourfold increase in operating margin
  • Creation of Innovation Unit tasked with maintaining focus on continuous improvement
  • Greater organizational focus on accountability

B2B
ELECTRONICS

BUSINESS

U.S. sales and services division of a $60B+ Japanese conglomerate

REVENUE

~$850 million and ~500 employees

Situation

  • Rapid sales & share decline over prior 5 years in major product categories
  • Increased competition & margin pressure
  • Matrix org – U.S. vs global product lines
  • Consistently missing sales and
    budget forecasts
  • Dependence on subsidies from parent

Motivation

Prior top performer, seeking profitability

  • High and mounting losses
  • Need for better processes and execution and more constructive decision making and accountability with parent
  • Need to right-size and rationalize
    product lines

Improvements

  • Dramatically reduced SKUs
  • Systematically reduced vendor spend on trade shows, sponsorships, shipping, travel, etc.
  • Exited unprofitable business/market segments
  • Improved forecasting and reduced need for outsourced product reconfigurations
  • Found and enabled collection of >$3M/year in previously unbilled fees

Outcome

  • Improved operating income by >$45M ($19M in first year)
  • Achieved budget 1st time in 8 years
  • Implemented 88 tactical cost reduction and margin ideas
  • Eliminated fewer than 20 positions
  • Improved processes, execution and accountability

DIRECT
MARKETING

BUSINESS

A global direct marketing leader

REVENUE

$500 Million

Situation

  • Privately owned
  • Years of rapid growth tapering off
  • Recent increase in regulation
  • Move to more vertical integration
    and transition from founder to
    professional management
  • Launched improvement program to move from aspirational budgets to actionable ideas

Motivation

  • Declining returns to shareholders
  • Rapid growth had limited focus/ ability to improve productivity
  • Need to address skills and process gaps that developed with growth

Improvements

  • Changed online vendors and
    web strategy
  • Consolidated finance departments and simplified reporting with improved tools
  • Streamlined customer call handling
  • Improved marketing team coordination
  • Delayered and increased spans of control
  • Consolidated locations
  • Eliminated servers/moved to cloud

Outcome

  • $85 million increase in earnings delivered in one year
  • Clear view of line manager talent with stars identified below them
  • Improved ability to execute

HOME
HEALTHCARE

BUSINESS

Products and services to treat medical conditions at home

REVENUE

$1 billion+

Situation

  • Industry leader
  • Taken private by PE firm
  • Significant price compression through government reimbursement cuts
  • Difficult to grow EBIT in
    market conditions

Motivation

Top performer, looking to rebound

  • Cost reductions to preserve margin
  • Growth from new offerings
  • Simplify core processes

Improvements

  • Reduced service level FTEs by streamlining branch processes
  • Cut low ROI technology projects
  • Reduced procurement spend
    across 10+ categories
  • Modified invoicing system to bill for additional, allowable revenue

Outcome

  • Improved operating income by $40M+
  • Implemented 100+ tactical cost reduction and margin ideas
  • Reduced inventory spend
  • Deepened continuous improvement culture
  • Improved processes, execution and accountability

HEALTH
INSURANCE

BUSINESS

Large U.S. health insurer

SCOPE

~$6.5 billion of controllable, non-medical costs plus tactical revenue growth

Situation

  • Highly successful Medicare business
  • Reimbursement compression
  • Affordable Care Act and
    likely consolidation
  • Relatively new CEO seeking
    cultural change
  • “Productivity” a high priority
  • Seeking best tools and processes

Motivation

A Top-5 Initiative to

  • Generate significant savings
  • Build internal capabilities to generate
    on-going improvements

Improvements

  • Pushed “informational” calls to
    web and mobile
  • Cut low ROI projects to fund strategic IT
  • Reduced internal mail to cut mail expense by 3%
  • Restructured broker commissions
  • Realigned call center nursing support
  • Renegotiated large procurement spends
  • Eliminated operational redundancies
  • Created central code review to reduce rework
  • Improved management of
    associate productivity

Outcome

  • Over $200 million in annual incremental operating income
  • Significant portions of process and system incorporated into
    ongoing initiatives

INTERNET
MARKETING

BUSINESS

Offer low cost web advertising services to small and medium businesses

REVENUE

$400 million

Situation

  • First mover in industry
  • Public company
  • Founders recently left company, transition difficult
  • Significant revenue and net income decline

Motivation

Prior top performer, looking for cash

  • Running low on cash
  • Need to stem losses quickly
  • Need to launch products that work

Improvements

  • Consolidated and outsourced
    data centers
  • Cut low ROI technology projects
  • Focused sales organization on profitable accounts and improved pricing
  • Reduced procurement spend across Top 30 spend categories

Outcome

  • Improved operating income by $41M
  • Implemented 218 tactical cost reduction and margin ideas
  • Updated workforce to match changing business needs
  • Revamped IT delivery and product organization

MEDICAL DEVICES

BUSINESS

Long-standing manufacturer of proprietary, high-margin physical therapy equipment

REVENUE

$1 billion

Situation

  • Recently expanded into low-margin commodity products with
    additional facilities
  • Rolled up independent distributors into a proprietary sales force
  • Significant negative earnings trend
    to negative
  • Running out of cash

Motivation

Urgent Need to

  • Return to profitability
  • Secure new financing

Improvements

  • Identified fully loaded profitability of products, orders and channels
  • Matched value to price (e.g., minimum order size without shipping fee)
  • Shifted commodity products to
    on-line ordering
  • Rationalized products
  • Automated AP/AR processes
  • Updated sales practices and incentives

Outcome

  • 1,500 basis-point improvement to Operating Margins (from negative 10% to positive 5%)
  • Upgraded processes and system
  • Grew revenues
  • Secured new bank financing
  • Downscaled business lines with lower returns
  • Unified pricing system to eliminate unprofitable discounting and generate more revenue

MORTGAGE
CALL CENTER

BUSINESS

Among the largest mortgage
servicers in the US

SCOPE

12,000 employees

Situation

  • Massive losses/growth in
    delinquent loans
  • Significant litigation
  • Under regulatory microscope
  • 14 locations
  • IT: green screen mixed with 4 web apps; 5+ seconds for reps to switch
    between systems

Motivation

Returned to profitable growth

  • Desire to survive and prosper in
    industry consolidation
  • New management team looking to shine
  • Organization operated in silos

Improvements

  • Consolidate into low cost locations
  • Speed up IT system responsiveness
  • Keep current systems but put behind a uniform interface
  • Streamline call scripts
  • Automate escrow and rate
    change notifications
  • Pro-actively call customers to solve predicted issues and/or cross-sell other products

Outcome

  • 50% reduction in costs with minor investment—productivity doubled
  • Dramatically improved customer experience
  • Line manager responsibility tripled to run all consumer call centers

RESORTS

BUSINESS

100 year-old resort company with operations including hotels, restaurants, recreational activities, events and residential and commercial real estate

Situation

  • Highly seasonal business
  • Limited local talent
  • Expensive operating environment
  • History of limited profitability
  • Aging facilities
  • Significant CapEx growth
  • New COO

Motivation

  • Desire for significant cultural change
  • Need for maintenance capital
  • “Don’t lose the magic”

Improvements

  • New services driving margins + free
    social media
  • Value adjustments to pricing and
    resort fees
  • Food cost reduction that improved
    the menu
  • Improvements to CapEx scoping
    and execution
  • High return energy and
    efficiency upgrades
  • Recruited large landscape services provider: higher skills at lower and
    semi-variable cost
  • Streamlined HR and finance processes

Outcome

  • Moved from loss position to positive
  • Invested in growing visitor days
  • Significantly improved facilities
  • Upgraded talent

Vici