At a Glance
115% Increase in Gross Margin
LifeSciencesCo’s troubled Laboratory Services group had gone through 3 VPs/GMs in less than 18 months. Morale was low, sample quality was slipping and cost was rising. The company wanted some quick changes to turn this operation around.
The main ingredients of any business turnaround/transformation include: People, Cost, Process.
People are always the most critical piece. Starting with people, we reviewed all the resumes of the employees and talked to each one of them one-on-one to understand their strengths and motivation. We also tried to understand from the employees’ points of view what was working and what was not. We discovered that the Lab Manager had set a negative tone and too much emphasis was placed on blaming people for mistakes instead of encouraging people for taking initiatives.
We reviewed the financials for the Services operations to understand the different cost components and looked for opportunities for improvements. We discovered that the financial model for the Services operations was not setup properly, resulting in over-pricing for some projects and under-pricing for others. Furthermore, the use of temporary employees to cover peaks and valleys had resulted in very high operational cost and unstable quality.
Last but not least, we reviewed all the process documentation to understand the general operations as well as gaps, discrepancies and opportunities. Some of the main problems included:
Lack of standardization across projects making it difficult to define quality metrics and set customer expectations
Lack of communication with different groups within the company, especially with Sales
Working together, we started the company’s first Lean Lab project, developed new financial models for different types of services, defined delivery metrics, revised contract templates, improved internal communication between the different groups, and worked with Sales to manage customer expectations.
Energized by the success of the Lean Lab project, morale had improved substantially. The Services Team started to receive rave reviews from both customers and Sales for high quality data and attentive project experience. The stabilized operations gave time to make personnel changes, including replacing the Lab Manager. The increased sales and reduced cost resulted in a 115% improvement in gross margin in just 6 months.
- S. Wallace