Installation in Back Office Support for Retail Operations to Reduce Labor Costs
In the 12 months prior to project start, UFA had been hit by a “perfect storm” that dramatically impacted top-level revenue. Farmers across Alberta were plagued by drought, causing a 27% sales decline. Despite this sales decline, operating expenses rose 24% year over the year. The business environment had changed, but the organization was slow to shift its cost structure.
This was the impetus for a project at the UFA head offices, concentrating on the General & Administrative departments that supported the retail platform. Project work spanned Finance, IT, Merchandising, Supply Chain, Human Resources, Corporate Strategy and Communications departments.
The challenge was to define how work got done across inter-linked departments, ensure work met mutually agreed upon deadlines, and then determine what levels of staffing were required to meet required activity levels in each department. Prior to project start, leaders and employees had a lack of understanding of output requirements or overall capacity in each work area.
The project focused on matching required activity levels with appropriate staffing and building zero-based budgets for outside services in order to build requirements from the ground up. The net result was 25% reduction in labor spend and 29% reduction in outside services spend. Evaluated savings and cashflow show an annualized ROI of 4.8:1.
By area, the major initiatives and resulting savings included:
Merchandising / Supply Chain
- 42% labor reduction realized with a 25% improvement in service indicators (as measured using fill rate % and zero-on shelf indicators) by focusing on root causes of delayed shipments from distribution center.
- 28% labor reduction realized by consolidating payroll runs for hourly/ salaried employees to eliminate redundant process steps.
- 24% labor reduction realized by focusing on correcting root causes of errors in accounts receivable and payable, building a more effective collection process that put priority on contacting high risk customers first and balancing workload amongst personnel in the department.
There was a 10% labor reduction realized by re-evaluating existing outsource vs. in source balance and transferring activities in order to eliminate reduced workload positions.
The Client Experience:
“UFA has greatly appreciated the efforts you and your team have made to help us learn and benefit from the “Carpedia methodology”. Carpedia has been intensely committed to help us evaluate, change and measure our behaviors, processes and work flows. UFA both appreciates and thanks you for your determination to have us succeed, your unwavering commitment to the deliverables, your patience and your candid professionalism. We are better for having made the difficult and beneficial journey.”
Chief Merchandising Officer & Vice President, UFA Co-operative Ltd.