Loss reduction increase profit and managerial control in a leading Telecom operator


Abstract

A Latin American Telecom operator suffering from high logistic and financial losses in its public pay phone department had to adopt strategy to reduce losses and improve managerial controls.


Company Overview

The client  is one of the major Latin American telecoms, operating hundreds of thousands public phonesas incumbent in one of the geographic areas created in a privatization process (including public phone network). The company owners realized that due to the lack of control and availability of information to the management, main processes related to the cards distribution were having high losses and operating under risk. ICTS Global was asked to quantify these losses, and later, design and implement solutions that would reduce losses and provide managerial control.


The Problem

The integration of formally state owned telecom branches into one single operator, brought operational challenges of standardization and central control. The lack of central control over production, distribution, stock and sales of public pay phone cards, generated physical loss of cards as well as loss of sale. In parallel, the absence of control and the attractiveness of the cards brought ethics problem and adverse intents. After a series of mini-crisis events, results of the ethics problem, the company decided to address the issue on a corporate level.


The Solution

The first step was to map in each of the different branches the operational processes, people involved, technologies in use and control mechanisms. The findings were analyzed and vulnerabilities identified. Loss measurement method was developed and losses calculated. At the second step, an integrated solution was developed and implemented through the following main fronts:

• Processes - structured processes to prevent and deter potential loss generators. Standardization of processes in all branches. Formalization of information flow and central control at the HQ.
• Change management - restructuring with new definitions of rolls and responsibilities and formal interface with other areas. Conducting training and launching communication plans.
• Implementation of controls: Control tools/procedures were developed and implemented in all main processes. All controls include KPI and managerial reports improving availability of information to decision makers.
• Ethics reinforcement: All involved staff participated in integrity program and ethics was reinforced. "Hot line" was opened for denunciation of bad intentioned activities against company’s interests.
• Knowledge transfer - a new Loss Prevention area was established during the project and all the required know-how was transferred so that this area could maintain the low level of losses and ethics behavior established during the project.

The Benefits and Results Delivered

Within 9 months, loss levels were reduced by 90%, impacting the bottom line profits of the company. The improved ethical behavior and management control contributed significantly to enhanced business performances.