Financial Training Helped Employees Reduce Waste, Saving the Company over $5 million in One Year

The Problem: For over 90 years, a family owned and operated food business followed the same established operating procedures. After the business was sold, the new owners decided to make changes to the operation. Employees that had worked there for years had a hard time adjusting to these changes and did not understand how to help the new company increase profit and cash flow (metrics to which employee performance bonuses were now tied). We were brought in to teach these employees basic finance and business concepts to help them understand how their business was changing and help them learn how to improve the metrics on which their bonuses were based.

The Solution: Through our Stratactics Game (a game designed to teach business skills such as how innovation happens and how to think outside the box) we helped the group understand their company’s niche and how their market has changed since the company was established. This helped people better understand the new owners’ strategic objectives and how the employees play a role in achieving them. Next, using our Process Map activity, we broke down all of the costs involved in creating their products (using smaller numbers to show how every $100 is spent in the production and selling process). This helped illustrate the most expensive production costs – areas these employees control. The team discovered that $68 of every $100 went into raw materials and packaging, which helped everyone realize the need to prevent all forms of waste. The group was then broken into teams to identify areas of cost savings and ways to improve production lines.

The Result: These activities helped everyone understand the connection between operations (i.e., their job) and finance (i.e., how it influences the bottom line), identify where most of their key costs are, and helped them focus on saving in areas of high cost. The company ended up investing in highly sophisticated production line feeders to help reduce waste. This combined with the new financial focus saved the company over $5 million in the first year.


Teaching Employees to Manage Profit and Cash Flow Saved $15 million per Year Over a 3 Year Period

The Problem: A $300 million division of a company that manufactured alumina was sold to an investment bank whose objective was to improve operations over a 3-5 year period and then resell the company. The previous owners had managed the business to a return on asset measure. The new owners wanted to hold the team accountable to profit and cash flow measures; however, the team did not know how to manage the business to those metrics.

The Solution: We were brought in to help the team understand how to manage the company to improve profitability and cash flow and get them engaged in helping the new owners improve the overall operation. We delivered our standard Financial Training program to help the team understand financial basics. We then added our Process Map activity to brake down their costs and help them identify key areas of waste in their process. After identifying areas of improvement, the teams presented proposals to their plant manager suggesting how to improve their process, reduce waste and use utilities more efficiently in their location. In addition, teams learned every aspect of the business and how much cash was tied up in each aspect of the production process. This helped them think strategically about how they can make improvements and increase cash flow.

The Result: After our Financial Training, the team learned how to manage profit and cash flow and was able to change behavior in how the business was managed. Our program and process facilitated out-of-the-box thinking that helped the team improve revenue streams while reducing the costs of handling and storing materials. Following our program, the company saved over $15 million per year over a three-year period. The team also dramatically increased their bonuses making both the team and the company better off.