Case Study on Operations Improvement

The Situation

Sanjay’s printing and packaging unit had stable revenue but margins that had narrowed over two years. Paper and ink cost more, he had already raised prices as far as customers would accept, and he had concluded that the only remedy was to win more orders. He came to us believing he had a sales problem. The early numbers suggested otherwise — the issue was less the revenue coming in than the cost leaking out.

What we found

• No proper job costing, so some jobs were under priced and others over-serviced.
• Pricing had not been reviewed against rising input costs, so margins eroded quietly with every quote.
• Untracked wastage, with scrap, spoilage and low yield consuming a meaningful share of paper cost.
• Power was a hidden drain — ageing machines, poor scheduling and a power-factor penalty.
• Labour and machine time were not planned against the order book, producing idle capacity and overtime at the same time.
• Maintenance was reactive, with breakdowns and downtime adding avoidable cost.
• Overheads had crept up through unnegotiated supplier rates and unmonitored freight.
• Cash was tied up in slow stock and late-paying clients, and some GST input credit was being missed.
• There was no MIS or variance tracking, so cost creep went unnoticed until it reached the bottom line.

What we did

• Built a proper job-costing system so every quote reflects true cost, then repriced or declined unprofitable work.
• Reviewed pricing against current input costs and reset it where it had fallen behind.
• Addressed wastage by tracking scrap, setting yield targets and recovering value from it.
• Reduced power costs by correcting the power factor and rescheduling runs, with payback maths applied to machine replacement.
• Planned labour and machine scheduling, moved to preventive maintenance, and consolidated suppliers and freight on negotiated rates.
• Recovered missed GST input credit and introduced a monthly cost dashboard with variance tracking.

The Result

• Job costing and revised pricing are in place, and the first decisions are already improving margin on the same revenue.
• Wastage, power and scheduling initiatives are underway, with measurable reductions expected as they take full effect.
• Recovered input credit has provided an immediate cash benefit.
• A phased machine-replacement and maintenance programme is planned to address the remaining efficiency costs over the coming year.

The Takeaway

When margins narrow, the instinct is to chase more sales. Frequently the faster and more certain gain is the cost already leaking from the business. A disciplined cost and operations review tends to recover margin that was there all along — without compromising quality or pressing customers harder on price.

If revenue is holding but profit keeps slipping, the answer is usually inside the business rather than outside it.

Some names and identifying details in this case study have been changed to protect client confidentiality.