- The company is doing well; it is making good margins on the fuel side of things and it does not want to rock the boat.
- We might uncover additional issues; how would ownership react?
- The management team of this company, like so many of our clients, is very lean and already works long hours to deal with existing issues. So the concept of adding potential headaches to their workload is more than they can deal with.
Look Closer
- Some of the different issues we identified with various clients, but who may or may not have wanted to address them, include:
- Lack of central purchasing control. If you have multiple stores, it is imperative that one person is in charge of all purchasing. We recently worked with a 10-store chain that allowed each manager to choose what products to carry, what promotions to run and how to allocate shelf space. We found many areas where the company was losing money. Some stores did not carry some necessary items, while others were overstocked with slow-moving items.
- Lack of monitoring of contracts and rebates. How are you tracking pricing contracts and rebates? While reviewing a client’s contracts with various suppliers, we found numerous products that were being delivered at higher-than-agreed-to costs, along with promised rebates that were either not being paid or were being paid at a lower-than-agreed-to dollar amount.
- Bonus programs that were written 20 years ago and are based on bad math. Bonuses should be based on increasing profitability, such as better margins, increased sales or lower employee turnover, not things that aren’t putting more money in your pocket, such as increased gross dollars because you added a new store. Bonuses are meant to be a reward for going above and beyond one’s basic job description, not just for showing up every day.
- Poor onboarding and training programs leading to less-than-stellar employees. Many clients just don’t understand the costs involved with employee turnover, such as higher unemployment costs, more overtime, other work needed to be done but isn’t because people are covering shifts, interviewing and training, and unhappy customers. This is an area that is woefully neglected by most companies in this industry.
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