The problem
Where the time was going
A long-established office-furniture manufacturer, with more than $7.4 billion in sales, dozens of plants, and over 22,000 employees, saw earnings fall almost 17 percent year over year even as revenue rose. Softer sales among its largest customers led the decline, alongside pricing pressure, acquisition costs, a one-time charge, and the cost of new product ramp-ups.
To turn that around, the company set corporate and growth strategies and launched a set of initiatives. One of them, Value Stream, carried an ambitious primary goal: eliminate redundancy and reduce selling, general, and administrative expenses by $133 million a year, over three years. To pursue that responsibly, the company needed a way to test changes before committing to them.
What we modeled
Mapping the process, then testing the fix
The plan was to build a value-stream as-is map, make it the company standard, and then benchmark every proposed process, service, and technology change against it before any money was spent. Working through a five-phase project method, the company and ProcessModel began designing and developing the model.
The method moves from setting project goals, to building and validating the as-is model, to analyzing it and developing alternatives. The intent throughout was to understand the real impact of a change in the model first, rather than discover it after the fact on the floor.
The result
The proof, and the payoff
At the time of writing the engagement had completed phase two of five and was moving into phase three, so the headline figure is a target the modeling is built to support, not a booked saving. The value of the work so far is a validated, shared map of how the value stream actually runs.
As later phases are reached, the model is expected to highlight where the company can raise revenue and move toward its goal of cutting expenses by $133 million a year. The aim is steadily greater value, from the point of customer engagement through to customer satisfaction.
Part of our work in services.