Case Studies

Tile & Stone Fabricator and Installer

Client Description
The client, established in 1992, is a licensed C-54 tile contractor specializing in the installation of all types of ceramic tile, natural stone tile and glass block, in custom, new production, and residential home remodels, as well as commercial projects. In 1999, the company expanded into fabrication and installation of natural stone slab. In 2006, they were acquired by a private equity firm.

The Problem & Objective
The Company had consistent healthy gross margins and revenue growth the three years prior to the acquisition. After the acquisition, a new management team was brought in by the private equity firm and gross margins began to decline. The objective of the company was to understand the decline in margin and regain the pre-acquisition gross margins. 

The Approach

• ASSESSMENT: The following was determined about the Tile Company after the acquisition:
  - The Company was profitable but margins were declining.
  - It was customer responsive and respected by their customers.
  - The leadership team was new and wanted to take the business forward.
  - The workforce were skilled craftsmen, open and eager to change.
  - The business culture was not pervasive.
  - Management below the leadership team was thin with limited training.
  - The supply chain process was broken.
  - Information technology strategy needed to be developed.
  - Metrics were limited and not pervasive.
  - Prioritization of initiatives was intuitive and undisciplined.
  - Opportunities for learning were not realized with limited cost and schedule feedback.
   
• STRUCTURE: A leadership team consisting of the President and his direct reports and the Affinity Partners Program Manager was formed to define, direct, and achieve the Improvement Process. After key issues and opportunities were identified, Barrier Removal Teams (BRT) were formed to make process improvements in supporting sub-processes and key mainline process segments. BRTs were used to drive the improvements by using a multi-step approach starting with aligned overall objectives that were broken down into supporting, measurable and congruent sub-objectives. Project and subproject lists were developed, baseline processes and sub-processes were mapped with differences in complexities noted, and resource assignments were generated. Performance objectives were specified, which lead to the identification of barriers to these desired objectives, and subsequently, to the implementation process to remove these. The leadership team educated the workforce where necessary in the organization.
   
• MEASUREMENTS: Very few metrics existed at any level in the company. Therefore, it was important to install a few high level, simple metrics such as gross margin, cycle time, quality and performance to schedule, to communicate that the objectives were met. These were augmented with the implementation of second level metrics in key sub-processes that had bottlenecks and barriers.

Results

• The organizational structure was flattened to gain accountability and improve communications.
• Metrics were installed.
• Quality of customer installations improved by 45 percent.
• Gross Margin regained 23% of the lost margin points from the low point of performance in six months.
• The Company continues to realize performance improvement with the new tools, processes, structures and learning.