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Engaging Employees in Cost-Control Efforts

April 17th 2017

One company has saved more than $1 million to date and simultaneously increased productivity by soliciting employees’ ideas for working smarter.

The employee suggestion box may be as obsolete as the rotary telephone, but employees on the front lines remain an invaluable source of ideas for improvements that can help companies work smarter, faster, and leaner. No one is closer to the everyday waste and inefficiencies that can affect productivity, profitability, and customer relationships. Tapping into the collective wisdom of your workforce can make a real difference in trimming both operational and budget fat.

One company that has seen the impact firsthand is Chicago-based technology manufacturer MBX Systems. A campaign to solicit employee suggestions for reining in excess costs has yielded more than $1 million in savings over the last few years, including pruning $750,000 in expenses and increasing net profits 23 percent in the first year alone. It also has driven significant productivity gains.

Case in point: a new “Super Cell” manufacturing setup proposed by MBX production personnel that is saving $18,000-plus in annual labor costs by quintupling the number of custom computer servers that can be configured, tested, and inspected simultaneously by each technician.

A single operator working in a “Super Cell” now can concurrently manage software installation, testing, and final configuration of 40 servers compared to the previous eight, thanks to a super-sized workspace equipped with new automation technology, along with enough room to accommodate rolling racks containing 40 systems. Additional time is saved by eliminating the need to physically move servers between separate configuration and testing work areas. Multiple Super Cells also can be linked together to control up to 640 systems at once.

The arrangement has not only dramatically increased individual operator efficiency but also expedited completion of larger customer orders and quadrupled the company’s build capacity from 5,000 to 25,000 systems a month per shift.

Strategies for Success

In addition, the campaign has helped promote the kind of free exchange of ideas that can be instrumental in building a committed workforce, given the level of job satisfaction that occurs when employees know their voices are being heard. Here are some of the strategies MBX used to launch and sustain the effort.

1. Find a way to grab attention. A little cleverness goes a long way in encouraging employees to participate. To that end, MBX’s campaign was rolled out at an annual meeting under the name, “Net Driver,” with an appeal to “drive net” and “drive to the finish line” utilizing a play-on-words NASCAR theme.

Support materials used to spotlight the initiative ranged from race car-shaped tins of mints to a NASCAR-style hat for CFO and chief program cheerleader Len Petty. (Petty’s shared last name with NASCAR legend Richard Petty was one of the inspirations for the program name.) Also included in the mix was a large stock of mugs imprinted with the Net Driver insignia that would be used to recognize employees who contributed ideas to the cause.

2. Involve every department. Savings suggestions can come from anywhere, so ideas should be solicited on a companywide basis. Beyond the Super Cell concept put forward by the production team, for example, supply chain managers initiated a new demand planning process that has added more than $500,000 to the bottom line to date by increasing early pay discounts and vendor rebates for system components.

Likewise, HR employees proposed and implemented streamlined payroll processes that eliminated 130 hours of clerical work a year. Finance and accounting teams recommended new pricing mechanisms that helped determine the breakeven point of cost and volume of goods on a micro and macro level for each customer, enabling better job pricing, as well as 25 percent faster quote development.

Manufacturing staff created a video training library for new production employees that eliminated an estimated 280 hours of human training annually. Warehouse personnel negotiated reduced inbound freight rates with key suppliers and purchased a new tool that significantly reduced pallet banding time. An account manager raised $70,000 by finding a customer with a need for older-model server hardware that had been left for scrap. In all, dozens of ideas have been submitted and implemented, each from a different source.

3. Let the ideas be their own reward. If MBX’s experience is any indication, no mandates or contests are necessary to get results. Employees can be motivated to contribute cost-saving and productivity-boosting ideas simply by demonstrating that you seek, value, and rely on their suggestions.

In the case of MBX’s campaign, no cost-cutting targets or requirements were issued, and no incentives or prizes were offered other than the Net Driver mugs and an opportunity to increase the company’s standard 5 percent profit-sharing bonuses by boosting the bottom line. It was simply an open-ended appeal for cooperation. With a corporate culture that already stressed teamwork and continuous improvement, employees got into the spirit of the exercise with little expectation of reward other than the positive reinforcement from seeing their ideas put into action.

4. Keep the campaign visible. Many programs are rolled out with great fanfare and then left to die on the vine. MBX has sustained the Net Driver campaign through all the usual channels—at team meetings, through company newsletters, with reminders on company bulletin boards, and so on—but also by presenting employees who bring cost-saving ideas to the table with a Net Driver mug. Constantly seeing the mugs on desks and workstations has helped keep the campaign alive.

The fact that the mugs are given out personally by the company’s chief financial officer—along with congratulations and a conversation about how the employee came up with his or her idea—also increases the worker’s sense of value to the organization. Getting recognized for one’s contributions by upper-level management can strengthen loyalty to an employer.

Programs like these are proof that engaging your employees in improving the business can make a difference in productivity, profitability, problem solving, and business growth itself. Your workforce has insights you don’t. Ten heads—or 10,000—are better than one.

Carl Nothnagel - MBX SystemsCarl Nothnagel is VP of Operations of MBX Systems (www.mbx.com), a designer and manufacturer of custom server appliances for independent software vendors and service providers that need to deploy complex business software in a turnkey hardware/software package.

 

 

This article was originally featured in Training Magazine.