Improve Financial and Operational Management of SME in Oman
The client is a well established mid-sized construction company that specializes in commercial buildings and high-end residential properties. The management started to realize a number of challenges and had to address certain strategic issues.
Our effort vastly improved the company’s cash flow management, regulatory and legal loopholes, planning and execution functions and business development. Naturally, the client knew that in order to remain competitive they had to review and reengineer many items on their operation manual.
Challenge
The biggest challenge was that the company had no credit history within the local banking system. Therefore, they had to fund everything out of the owners’ pocket. That frequently caused serious issues with their stakeholders. Funds were never enough, incoming invoices took forever and cheques were bouncing. Naturally, that affected the company to secure new projects as well as deliver the existing ones.
- Improve sales and operations and production planning:
The teams focused their efforts on a few of the highest-value S&OP levers in order to review the current planning process, identify gaps in the planning infrastructure and analytically understand demand and supply variability. - Determine the right inventory level:
With hundreds of medications in the market, Pharm Ltd. needed a proper method to predict and manage their inventory. Using a mean absolute percentage analysis (MAPE), the teams defined appropriate levels for raw materials and finished products by mapping actual versus forecasted sales on the most important SKUs. -
Optimize the supply chain for perfect order planning:
Initially, the diagnostic determined the stressors that affected sales and service levels. The teams focused on resolving issues related to higher-than-normal back-orders and lead times, which stressed the entire supply chain and led to delays in medications reaching consumers.
Solution
The Ibex Globe came up with combined applying contemporary operations management theory with real world practicality. Obviously, everyone knew that the systems through which the business was operated had to be updated, the real challenge was updating them without disrupting the whole organization in a negative way, let alone disturbing various stakeholders (management, engineers and workers, vendors, customers, etc…). The solution was to introduce proper business process manuals. In addition, focusing on proper financial and operational management. Eventually, our recommendation begun to produce results sooner than anticipated.
Results
Initially, the company obtained a total of RO800,000 of banking facilities at a very competitive rate. In addition, the owners have become more conscious about the flaws in certain areas of operations.
Furthermore, a dedicated sales and business development team was put in place to explore growth opportunities not only in construction (core business) but also in ancillary services such as maintenance and engineering consultancy.
The business landed a few extra projects and enhanced its visibility within its niche market.
By the numbers, the effort:
- Reduced purchasing cost by 9%
- Decreased variability by 22%
- Lowered the risk of back-order by 95%
- Increased capacity to handle concurrent projects by 17%