Work through your team
Each month, without fail, the executive team at HP Products sits down and reviews the latest copy of its profit-and-loss statement. The numbers contained in this report are considered a vital piece of just about any decision that Shuel-Walker needs to make regarding the business.
“We have looked at maintenance for our trucks,” Shuel-Walker says. “We have looked at where we rent equipment, be it forklifts or material-handling equipment or trucks. We eliminated all of that. We looked at casual labor, and we eliminated that. We looked at our health care costs, and we adjusted our program to have a premium program and a health savings account. You look at the P&L and you go down the list and you address every one of the points. You need to get into the nitty-gritty details.”
One of the key things Shuel-Walker is looking for is variance.
“If your sales are down, look at your variance from where your expenses are this year compared to where they were last year,” Shuel-Walker says. “If any of those are up and your sales are down, I would hone in there first. Or look at your biggest expenses first and try to hone in on those things where you can get the biggest reduction in expense.”
The key role you can play in this process is to listen and take in what your department leaders are telling you.
“Listen first and act second,” Shuel-Walker says. “That means listening to your customers, listening to your leadership team and to your employees. I do not think I have all the answers. I rely on our employees, especially the management team, for their areas of expertise. Their input is invaluable to the organization’s success.”
While the P&L statement provides concrete data, the decisions are not always easy to make. Shuel-Walker says meetings are often brainstorming sessions held to hash out the best decision for the company.
“We talk about different ways of doing things,” Shuel-Walker says. “Ultimately, it is a team decision. We are a privately held company, so we have a lot of flexibility built into our world. We can try different initiatives, and if they work, great. If something does not work, we can take a half step back and say, ‘You know what, that is not working so well. Let’s try to do something different, or let’s try to push it this way. The goal is to brainstorm on the things we’re not doing well and enhance the things we are doing well.”
When a decision needs to be made, Shuel-Walker utilizes change agents to spearhead the implementation.
“You have to have somebody at the top driving the initiative,” Shuel-Walker says. “You have one change agent for each project. They are the ones held accountable and the ones to drive the change. Those people have to get their team together and drive those strategies.”
Change agents are typically chosen by selecting the person who has the most expertise for the action that needs to be taken.
“We just looked within our different people at where the different areas of expertise are,” Shuel-Walker says. “They would go and actually do the project, and we’d come back and meet again as an executive management team and go over what happened.”
Shuel-Walker followed the change agent strategy to reduce a glut of inventory in the company’s warehouses.
“Our inventory was over $15 million,” Shuel-Walker says. “We just looked at how we forecasted, and he was able to meet with those suppliers, reduce any slow-moving or dead stock and improve the turns through our economic order quantity to reduce our inventory by about $3 million. We still have the same fill rates, but we were able to reduce our inventory and improve our cash flow.”
By taking the approach that she wants participation and openly asking for feedback in meetings and through regular dialogue with her people, Shuel-Walker empowers her employees to play a role in the company’s future.
“A lot of it is just brainstorming,” Shuel-Walker says. “Brainstorm within your group to identify what’s working and what’s not working and change that.”
It was through this open dialogue that HP was able to reduce basically all of its overtime costs for its drivers.
“It was getting out of control,” Shuel-Walker says. “So we cut a deal with UPS where we were taking our smaller packages, maybe a one- or two-box order, and we started shipping those out UPS. We completely reduced our overtime to nothing in the driver section. We’re also able to service our customer better so they are able to get their product the next day.”
