The following Profit Improvement Process (PIP) examples are drawn from actual cases for companies and departments. These are all projects that were prepared during 2-day PIP training sessions or Power Idea Sessions. They come from a number of different companies in a variety of businesses from manufacturing to service and the principles can be applied to almost any type of organization.
These are real results. Many of the ideas were brand new to the company. But some of these ideas had been around for some time but nobody could or would champion them to make them happen. PIP made them happen. They cover everything including expense reduction, loss & quality improvement, and revenue improvement. Contributors came from all levels of the organization but most were NOT from top management but rather from middle management and below.
One key is that not only do people throughout the organization come up with these ideas; they invest in them to make sure they happen. Buy-in for change is critical.
Company and Department Cost Reduction and Profit Improvement Examples
A $110+ million dollar company had been operating a Cost Reduction Program for ten years achieving $1 million savings per year on average. They added the Profit Improvement Process model and training to achieve the following results:
A $20 million company manufacturing and distributing a variety of products was losing money. We assisted with Profit Improvement on a campaign basis and realized over $900,000 in increased annualized profits. Projects included expense reduction, loss and quality improvement, and revenue rationalization. In some cases profit from revenue was improved by stopping unprofitable sales. First year savings were about $400,000 and the rest came in the next year.
An $800,000,000 service company was experiencing significant business pressure and needed increased profits to satisfy its stakeholders. We installed a PIP over a period of about 6 months. We trained 250 of the 2,500 staff. We also trained their trainers to carry on the process and left after about 70 consulting days.
A total of 4,426 profit improvement ideas were generated just during training. Within the first 9 months over $5,500,000 in profits were added to the bottom line and over $110,000,000 in potential profit projects were being evaluated in the idea pipeline.
A $10,000,000 high technology manufacturing company was not generating a profit. We introduced Power Idea Session tools and generated over $1,900,000 in increased profits over a two-year period from the Power Idea Session projects. Much of the profits came from the reduction of losses and quality problems in manufacturing.
A small supplier to the Jewelry market was experiencing intense price pressure and competition from China. It looked like he would have to close. We conducted a 5 hour Power Idea Session to see how he could create a market niche that would survive. Over 60 promising ideas were created and two projects were developed that the client felt would allow him to compete profitably.
The accounting department for a small company was unable to get its work done in a timely manner, had serious errors, and was suffering from severe staff turnover. We ran PI Sessions to find the root causes of the problems, identify solutions, and put them into action. Within less than a year, the end-of-month reporting time had been cut from 30 to 45 days to 5 days or less, the error rate in AP and AR had been cut by over 90%, turnover had been almost stopped, and the overall working conditions were substantially improved. The estimated profit impact was $75,000 due to the above improvements that cut costs and allowed better cash management. In addition to happier employees, management, vendors, and clients were also much happier.
Transaction Processing Department:
A transaction processing department for a large company was experiencing major problems across a wide range of issues. These problems were impacting both the quality of service and costs. We conducted a Power Idea Session focused on understanding the issues at hand. Within two days we had identified over 400 issues facing the department management. We analyzed and prioritized those issues into 12 manageable projects that when completed achieved 90% of the goals. Costs were reduced by over $300,000 and quality improved rapidly. In addition, management went from crisis management and fire fighting to a more comfortable and sustainable mode of project management.
These are a sample of Profit Improvement projects and processes that have been performed using the powerful methods inherent to the Profit Improvement Process.
All these increased profits came from the people within the companies. The Power Idea Sessions brought the ideas to light and the Profit Improvement Process enabled innovation to occur. The people were then able to make these changes happen. Top management led the charge but it was the staff that made it happen.
Read our e-book Achieving World Class Profit Improvement for some of the details of how it is done.
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