Strategic Restructuring to Drive Operational Efficiency
Allied Building Products is one of the largest building supplies companies in North America, with over $2B in revenue across interior and exterior building product channels. The company has experienced significant growth over recent years though both organic growth and acquisitions, becoming one of the dominant players in the industry.
The motivation behind starting an engagement with Carpedia was to augment the work completed by Allied’s internal improvement team and further streamline internal processes that had become layered and cumbersome.
Being highly successful for decades meant that operational change wasn’t a necessity for Allied, but it was the direction given by the executive team. The challenge laid out was to further reduce the SG&A expenses that supported 180 retail locations, while simultaneously improving service to the field.
Specific opportunities included:
- Multiple handoffs across departments with largest opportunity between branches and administrative positions.
- Highly vertical corporate structure leading to low manager to employee ratios.
- Multiple “rubber stamps” identified in several support processes such as hiring new employees, events, and new vendor onboarding.
- Processes were embedded with multiple checks and corrective actions that led to low accountability.
- Over servicing by ancillary areas such as IT and HR with no visible backlog.
The project at Allied was broken out in to 3 stages with a total potential benefit of $18M in annualized improvements: Short-term results – within 6 months, Mid-term results – 2-3 years, Long-term results – 5 years.
Within the short-term stage, the project generated an ROI of 5.3:1 annualized and savings of approximately $6M.
With the initial part of the mid-term stage, the project is set to generate an additional $7.7M in improvements through scalability gains across retail stores and overhead departments, creating an ROI of approximately 12:1 annualized. Long-term results are on track.
Specific improvements that were implemented include:
- 85 total processes were streamlined or eliminated across order flow and fulfillment streams due to redundant or unnecessary actions being taken by staff.
- Combined administrative positions to reduce handoffs by 66%.
- Realigned risk strategy in the credit department led to a more horizontal organizational structure.
- Realigned the purchasing team to create greater accountability.
- Combined pricing teams to minimize redundancies.
- Removed 51% of reports in circulation through consolidation and elimination of redundant or conflicting reports.
- Staffing plans created to ensure appropriate crewing as business grows or contracts.
- The improvements realized in the project are to be sustained through a continuous cycle of measurement and active management.
The Client Experience:
“Your team, working side by side the internal Novo Project team delivered the results we were expecting and we continue to build upon these results using the methodology and cultural shift your team has left behind.”
President, Allied Building Products