Network Planning & Development Project

My company had already built 23 branches all over the country since 1980s. Due to our business expansion, it was easy to define where we wanted to build new branches. We also didn’t really care about the feasibility study. Usually we just did the market study and estimated how big the potential market in that area is.

This day, with fierce competition in operating lease business, it is possible to build a new branch of course, but we must act more carefully to estimate the initial investment, payback period of that branch, sales target, and many things else.

I think the company didn’t think or concern about this earlier because our CEOs background mostly from sales or operation. Usually they just see from the opportunity but didn’t go detail about the financing concern.

We highlight this concern in Business Process Reengineering [BPR] project. Network Planning & Development is one of the projects that still on going in my company.

The idea is if we have potential market in one area, we can’t just decide to build a branch there only based on market study. We must consider the financial study and make a feasibility study.

The global concept is like this:


So, the output or deliverables in this project are:

1. Branch Classification
   We made a branch classification matrix based on Unit in Operation numbers and percentage of sales dealing. We follow-up this classification to define the branch man power standard, office and building facilities, benefit and employee level for every branch class.


2. Man Power Standard
   Together with HR department, we made a Man Power Standard. Each branch has different class, therefore we define different standard for them. Example, a 90% sales dealing and a big branch can’t have junior administration head; it must have a senior and maybe an assistant too.
   With this, we also can make their career path, they can start from branch that has lower classification and then climb up to higher branch class.


3. Office Facilities Standard
   Building and office facilities will be varied depend on the branch classification.


4. Template of Feasibility Study
   Now, this is the difficult one. The effort to build this template has to make me learn again about Excel function in more advance way.
   
   Generally, I am proud of the project result, because right now, it is possible to make a financial projection to build a branch.
   The Feasibility templates will calculate:Profit and Loss Projection for 5 year; Cash Flow projection; Loan Payment Schedules; Sales target and Cost budgeting; Payback period [for op lease branch 5 year pp is not enough ^_^]; IRR; and NPV.

Knowledge Management Portal

Employee turn over rate in my company this year is nearly 25%, the usual turn over is 10%. The HR department is starting to feel overwhelm to recruit new candidates. [Poor ‘wally’ ;p]

As a ‘CEO Prompter’ like everybody said, I don’t have the accurate analysis of why this thing happen. Many factors have caused it; hijack from our competitor and not satisfied with the leadership maybe are the major reasons with the leave.

New employee needs to be taught about how this company works. They must learn the operating procedure, monthly performance report, department policies, job descriptions and many thing else.

Sometimes the transfer knowledge from the former employee is not completed. So, this new employee has to learn from the start. They must even build again some simple analysis or report template because they don’t know that it had been done before.

We suggest our CEOs to build a knowledge management portal in the intranet. So everyone from all over the branches can have an online learning portal about the procedure, policies, job descriptions, and even can download some work templates.

The idea of this portal is simple. We just design a user friendly intranet where user can browse everything they want to know. We put all the documents, templates, and procedures in the portal, so authorized user can download it. There will be no hassle, no repetitive work, and new employee can make a productive work immediately.

The follow-up idea for this KM portal is to make a ‘dashboard’ for everyone so they know the company performance and have a broad view outside their department.

Of course there is some concern about data security. What happen if the employee got hijack by our competitor and they brought all this knowledge?

But my answer is this; the competitor can have all the documents, policies, operating procedures, and even the employee; but in the service business ‘the brand image’, the work culture, and the system can’t be easily copied.

If we consider the risk and benefit, like my favorite CEO one said, “I worried more about calculating the wrong cost structure because our sales lack of knowledge, compare to that knowledge steal by our competitor”. Organization and its knowledge are always changing and evolving, so today solution is a tomorrow problem. Why we must worry?

Order Generation & Customer Analysis

“Nothing new under the sun” The quote reminds me of this project. My company had been a market leader in car operating lease since its establishment.

Our way of selling the services, which are: car for long term leasing, car rental, and driver services, is the proven way until recently. Today, our consultant for BPR brought a new idea about selling [not so new because many companies had already done this, ex: IBM]. They told us not to ‘selling boxes’ anymore, instead we must transform to ‘consultative selling’.

Selling boxes is to sell what we have to customer and pay little regard to what they need. Example: we have Toyota or Daihatsu brand, so that’s what we offer to customer. We don’t care about helping our customer reach the cost efficiency in their fleet management.

Consultative selling in the other hand is we observe the customer problems first, and then offer the right solution. We answer their problem using our expertise in fleet management.



The results for this method are our customer will have more efficient fleet cost, reduce lead time, transfer the transportation risk, and fewer headaches. [But more headaches and risk in us ^_^]
Of course we charge management fee for this ‘added value’ services, and we can create bigger profit for this services because the customer can’t compare the price to other competitor. If we still selling boxes, then the customer are always choose the cheaper one.

Our CEOs are very interested in this concept, so do our divisions head.
They don’t realize that this concept was already proposed by our former boss last year and the year before. [Maybe that’s why he quitted ^_^]

My conclusion is, for a concept or an idea to become acceptable, all depends on who is the ‘singer’. The consultant in this case, is the stranger with a briefcase; we have more trust in outside appearance than in the inside.

Maybe after this, I’ll work with Consultant, so my voice will be heard even tough I’m ‘singing’ the same song. ^_^!

Standard Costing & Pricing

Not every business has a standard price for their product or service, especially service business. They can’t just put price tags or price menu for all their services. One particular business that has a very customize pricing is 3PL [Third Party Logistics], this includes transportation and vehicle operating lease. This is happen because the cost for selling the service itself wide-ranging.

So, estimating how much we want to sell for our services depend on how much the cost [cost plus method]. Also, for some companies, they also decide by seeing who the customer is [cost to serve method].

Cost estimating and analysis is challenging for many companies including mine. We got a long term impact from the risk in doing wrong cost estimation. Operating Lease business is a long term contract and we feel the impact, if we are wrong in setting the price, in the end of the contract.

One of our BPR project is to make standard calculation for costing and pricing. So every branch will have the same method when they calculating the cost and the price. We made standard of how to calculate all the cost factors not on the pricing itself.

We also going to record the cost structure in our system [SAP], so every key person knows how much the budget for each customer. The objective for this is to control the margin. For example, if we set a maintenance cost for US$ 5000 a year, then we can compare it with the actual cost in that year.

This is an important project and very complex because we must combining ideas from the entire key person. Also, changing the culture and made people do the new calculating standard is even more challenging.

I just hope that our CEOs have a commitment to make every one doing this. We are just the CEO prompter; the one who assist with the concept and do the paper work; in the end, it is the CEO who must ‘sing’ the concept to everyone.