Conducting a cost reduction program in the transport sector by Frederic GOMER

Industry insights

Conducting a cost reduction program in the transport sector 01

Company background and Challenges

Results

In few words, please describe your company activity.

Which

results

have

been

obtained

after

the

“Mubarrad is a publicly listed Kuwait-based company,

implementation? How long did it take to reach the

specializing in land transport, logistics, heavy transport, truck manufacturing and maintenance. Mubarrad is a GCC player

“It took six months after implementation to start seeing

with operations in Kuwait, Dubai, Oman and Egypt. With a

improvements. The team built a 6-year strategic plan with

market value of 21.6 Million KD, its assets are worth 37 Million

clear objectives. At that time there was a significant drop in

KD for a total of 200 employees (excluding drivers).”

sales, but we finally managed to increase the revenue by 33%.

expected outcomes? What are the next steps?

Several strategic initiatives were launched such as:

Which pressures forced Mubarrad to embark on a cost 

reduction program?

“After

several

acquisitions

Upgrading transport asset quality and improving utilization rate

and

major

internal



Securing long term contracts

transformations, a new management team has been appointed



Concentrating businesses in Oman and Dubai to

in mid 2010 to restructure completely the financial and operational departments in order to drastically reduce costs.

increase profitability 

Building up a new executive committee with a cross

The situation when we arrived was a very high SG&A costs

functional view to drive the change and bear

compared to the revenue, accentuated by a difficult economical

decisions as a team

context.”

What did Mubarrad decide to do to overcome this challenge?



Implementing a CRM system to optimize the decision making process with the market dynamics



Increasing project planning and execution to increase the projects success rate

“The new management team decided to go for the best



Close monitoring of losses

practices in the industry, and conducted several analyses



Focusing on employees efficiency while transforming the mindset from employees to leaders

(SWOT, balanced SCORE Card, zero based costing, Porter analysis…) with the support of management consultants.”



Diversifying the logistics offering



Expanding the regional coverage

Industry Industry Insights insights Mohammad E. Al-Muaili Vice Chairman - CEO Mubarrad Transport Company

04 Which lessons to retain in conducting such initiative?

Key lessons learned

Did Mubarrad face any difficulties during the project phase?

“The major issue that we faced during the project phase

“People are definitely the most important assets for a company, especially when the company decides to embark on a major

was the change resistance from the existing staff, so we

transformation program that involves changing the way it

had to take tough decisions in order to institutionalize a

operates. We can witness it everyday at Mubarrad, so we tried to

full commitment from everyone and to bring the morale

really have the right personnel with the right mindset who

up within the company. As a new team, we were

considers himself as an owner of the company rather than just an

constantly walking on eggs, as we wanted to improve the

employee. In the end, the success of the company lies in a team

situation

effort and not on one-man show.

but

without

jeopardizing

the

day-to-day

operations. It was helpful to set up employees SCORECard,

The challenge in the GCC is mainly “People are definitely employee butofaseach wellemployee to assurebut thataseveryone would be performance about having the right people, and able totoassure measure its own would contribution to the global well that everyone be the most important unfortunately, there is a workforce initiative. able to measure its own contribution deficiency in this market, which is even assets for a company” to the global initiative. One of the very stronger in the area of supply chain individual performance of each not only only totomonitor monitorthethe individual

One of the very first things that we did was to bring all top first things wastoto bring bring all top management things that that we we diddid was management (including myself) in the same office close to top management (including in (including myself) in the myself) same office close to the the operations, as the executive office used to be remotely the same office closeexecutive to the operations, operations, as the office used to be remotely located. It was important for us that we, the management, as the It executive office for used to be located. was important us that we, the management, lead by example and demonstrate by our own acts the remotely located.and It was important for led by example demonstrated by our own acts the high commitment that we were expecting from our us that we, the management, lead by high commitment that we were expecting from our employees.” example and demonstrate by our own employees.” acts the high commitment that we

and logistics. At Mubarrad, decided to tackle the skills issue andwe logistics. through two educational segments: one with small workshops through two educational segments: to improve the technical and soft skills of the employees and one with small workshops to improve harmonize the levels between departments, and the other one the technical and soft skills of the with extra professional activities organized by the company to employees and harmonize the levels cement the bonds and improve the interpersonal relationships between departments, and one with within the company.” extra professional activities organized

So far, the results werebythethereduction loss tothe 71bonds K KD companyoftothe cement

employees.” program has brought in substantial cost savings and this has reflected “wereo expecting far, thefrom costourreduction from 2.2 Million KD at and the same period inthe 2009.interpersonal The road is improve positively in the overall result. The road is long and we haven’t finished yet our mandate.” long and we haven’t finished yet our mandate.” relationships within the company.”