1. Implementing Major Cost Control Strategies While Improving Effective Service Levels BackgroundBackground The client, a major regional telecommunications company, was in a period of flat earnings. In order to improve financial performance, a company-wide strategic initiative was undertaken to reduce operating costs. In order to support this initiative, the service and internal operational logistics unit set about to find ways to reduce the cost of operations throughout their nine-state system. The initiative called for rationalizing the entire system with an eye toward streamlining, right sizing, and consolidating internal services and eliminating and/or transferring associated costs and headcount. SPG’s Consulting AssignmentSPG’s Consulting Assignment SPG consultants were assigned to work with services management to reduce costs and improve service levels in the following areas:  Warehousing and distribution.  Automotive maintenance and support.  Facility design and construction.  Property and facility maintenance and support.  Food service.  Mail delivery.  Service contracting and procurement.  Print services. SPG - Business Analysis FindingsSPG - Business Analysis Findings The SPG analysis revealed opportunities to:  Realize an increase in line productivity by improving organizational effectiveness through strengthened supervisory control, defined roles d responsibilities, and established performance measurements.  Reduce service costs through a realigned management and organizational structure.  Redefine base service planning levels through improved management systems. Results and Quantitative BenefitsResults and Quantitative Benefits SPG consultants and more than 400 client employees joined together in a two-year effort involving over 25 work teams. They achieved the following results:  Designed and rolled out a regionalized organization structure with clearly defined roles and responsibilities.  Recommended and implemented hundreds of operational and process improvements that standardized and consolidated work methods, created or enhanced mechanization, and broadened management spans of control.  Worked to change internal customer behavior through extensive communication programs and extensive internal customer contact to determine needs versus wants.  Developed a new organizational structure to support rationalized customer services.  Compiled internal services benchmarking information for goal setting.  Documented all improved processes and procedures for handoff to client. The net result was a $66.1 million reduction in annualized expenses, exceeding the client’s objective by 42%. The savings can be summarized as follows:  Schrudder Performance Group, LLC. Proprietary Information - 1302 Other Savings $5.0 Million Gross Budget Savings $14.0 Million Services Department Budget Savings (Expense Dollars Only) $52.1 Million Cost avoidance savings Equivalent employee reduction Retained vacated floor space Pension and benefit savings Cost of goods/services savings Other budget savings Services rationalization Organization rightsizing Lease Savings