A $300 million global corporation that develops and markets innovative healing systems

Background

Customers are acute care hospitals, extended care facilities, home health providers and managed care organizations. Company products and services are managed in the U.S. through 140 service facilities by over 500 Service Consultants.

The Problem

Over 60% of the 140 service centers are staffed with five or fewer Service Consultants (SC). The expense burden on so few SCs to support a service center facility and the expenses related to product inventory, spare parts, and a small fleet of trucks makes it difficult to be profitable. Service Consultants are required to fill all the roles required by the business: delivery person, biotech mechanic, clinical care advisor, laundry person, etc.

Scope and Assignment

The project objective was the reduction of expense related to labor, vehicles and facilities while maintaining the current level of service. Synergetics developed a “hub and spoke” configuration that of a central hub facility that performs all of the non-core functions such as repair and laundry for all of the outlying “spoke” facilities in addition to servicing its own territory. The spokes in the pilot group are all within approximately 100 miles of the hub which becomes the sole location for the expensive spare parts inventory needed for repairing the larger, more complex products that comprise the company’s acute care product offering.

The Results

The primary benefit of a “hub and spoke” was to extend to the smaller centers the economies enjoyed by the larger centers. This enabled the small centers to achieve equivalent expense ratios while continuing to fulfill their service commitments.

The “hub and spoke” infrastructure will also help the company be more flexible in responding to market changes, new product launches and competition. The smaller spoke offices can be added, removed, or relocated more easily; a change of product inventory can be made more effectively via the hub; additional expenses can be absorbed better by the larger “hub and spoke” than by the individual center.

Training expenses have been dramatically reduced as a loan technician can perform the repairs and services at the hub that previously where being performed at all of the small service centers. The model has been implemented and proved effective and will be expanded to cover all of the service centers in the coming year. Savings are estimated to be $12 – $15 million.

Synergetics Installations Worldwide, Inc.

75 Congress Street, Suite 201 • Franklin Block Building • Portsmouth, New Hampshire 03801 • (603) 433-8940