The Real Cost of your Operations: Something that Nobody is Ready to Talk About

The Real Cost of your Operations: Something that Nobody is Ready to Talk About

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The last couple of weeks I have been on the road and had the opportunity of discussing operational issues with several customers and industry leaders (CEOs, CFOs, COOs) in the Texas and Ohio area. Every one of them said that business was turning around but they have been severely impacted by service levels issues.

Initially I thought it was about Vantage Agora but then I realized that it was really about their own operations. I realized that there was something going on in the industry started digging around to find the real reason. When asked most of them told me it was better processes that resulted in their success but the process would keep breaking and that resulted in service level issues. But on closer look, it turned out to be how they had structured their team.

Here are the results of our findings: 

Most companies are running with a skeletal staff (Lean & Mean) since the downturn. So much so that now, any impact to this team like employee turnover/vacation/retraining has severely impacted delivery.

Since the team members have realized that they are running the show, they have become complacent or fatigued by overwork! The teams are so thin and since everyone is multi tasking, quality has taken a hit. This has resulted in big customer service issue costs.

While the cost of salary has not increased the non salary costs (Benefits, HR, Legal, infrastructure, etc.) have increased by over 25% in the last 10 years (Source USA Today October 19, 2012)

Solution:

Leaders of good innovative companies are more then ever are building backup plans for their operations teams by hiring operations companies outside their own organization. This has brought about a healthy sense of competition among the team members. At times we have been the company that has been brought in and we have been brought in even when our costs have been be more than the direct cost of their internal staff! These innovative leaders are growing their companies even in these choppy times by looking at the real cost to their operations along with customer service level  and not just direct labor cost like before.

There is no question that all of us can gain from this strategy.

If you want to know how we did this or how we can apply this learning to your organization please feel free to contact any one of our partners at Vantage Agora

About Vantage Agora:

Vantage Agora  (VA) is a global provider of back-office solutions, custom IT services and consulting services for companies in the insurance, finance, and healthcare sectors. As a SAS70 Type II audited company, Vantage Agora  utilizes advanced data processing and quality control systems on a secured network to ensure efficient, comprehensive management of back-office functions such as payroll, accounting, financial and administrative tasks. Founded in 2004,Vantage Agora  has offices in Cleveland and Dallas.

 

Harsha

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