Client Situation
The operating performance of a privately held livestock production company had significantly declined over three years in which management had lost focus on managing the fundamentals of the business. The company had discontinued using industry benchmark data and KPIs to drive its operations and the company’s performance had fallen to the bottom 25 percent, as compared to its peer group. It became essential that the company improve its core operations through identifying and focusing on key performance indicators that would drive profitability.
Solution
The company hired a E78 Partner to lead the effort to bring the company back to operating excellence. An effective KPI reporting system was developed and designed for benchmarking against industry peers in order to drive performance. Using third party benchmarking data, opportunities were identified to improve profitability. This gave credibility to the established targets since the third-party benchmarking data illustrated the level of performance improvement that was possible to be achieved. Nine functional areas in the livestock production chain were given four major KPI targets to focus on. These KPI’s were chosen after determining they offered the best potential return on investment. This allowed efforts to be concentrated on specific areas and avoided diversion of management’s attention to lower priority targets. Each functional area also developed specific action plans designed to meet the newly established KPI targets. Once those were achieved and sustainable, additional KPI’s were added to continue the company’s operating performance improvement.
Results
- Tracking and communicating the results became a company imperative. A weekly scorecard was published, which tracked progress on reaching the KPI operating performance targets. Senior management discussed the progress at their weekly meetings. Monthly “Results Reviews” were initiated in which senior management, along with the next two levels of management, reviewed the progress of the KPI operating performance initiatives and developed course corrections as needed.
- Functional areas reported on the specific progress they had made executing the actions plans and defined course corrections
- The goal of including the three levels of management was to develop a company culture focused on operating excellence. As a result of these efforts, the company improved its operating performance from the bottom 25%, as compared to its peer group, to the top 10% based on third party benchmarking.
