Profitable growth is not achieved by increasing revenue alone.
To achieve financial success and drive profitability a company must find ways to operate more efficiently by eliminating wasteful and redundant processes and streamlining operations wherever possible. Turning your maintenance operation into your next big profit center requires a profit-driven maintenance approach.
Over 50% of supermarkets in the US are operating their refrigeration and HVAC systems inefficiently, which is driving utility costs and product shrink numbers higher, creating a recurring negative impact on store profits. This assessment does not include the amount of lost sales from customers walking past cases with frost-covered products, damaged products or no products at all due to system failure.
Achieving Maximum Operating Efficiency of supermarket Refrigeration and HVAC systems is the cornerstone of a successful Profit-Driven Maintenance program. Baltic Trail’s team of supermarket industry experts has developed the Operating Efficiency Rating (OER), a process that measures the impact of critical operating systems on other areas of a supermarket’s business, including Energy, Shrink, Regulatory Risk, Legal and Insurance and Corporate strategy.
Baltic Trail Engineering’s Profit-Driven Maintenance approach helps supermarkets achieve efficient operations and proper program balance to drive profits to the bottom line at the store level. When adopting a “profit-driven” maintenance approach the refrigeration and HVAC systems in supermarkets can provide stores a net margin lift of upwards of 18%.
Managing Risk, Increasing Opportunity
Success in any competitive business context depends on having a cost advantage, a value advantage, or ideally both. A supermarket’s “critical systems” need to be used effectively and efficiently so its customers are provided with the highest level of quality products possible. These systems are also the primary drivers of energy spend, can be a source of loss of sales from case malfunction or downtime, and can be a major contributor to shrink. The risk of fines and legal action from regulatory agencies such as the EPA for refrigerant leaks and the local Board of Health for not maintaining proper product temperature is constant and real.
Baltic Trail’s Profit-Driven Maintenance approach will provide insight into areas of the operation that require attention, thereby reducing risk exposure and potential costly payouts as well as identifying opportunities for cost savings at the store level.
Elevating the Maintenance Role
The importance of the maintenance function – and specifically the work related to refrigeration and HVAC – could be elevated at the corporate level due to its role in maintaining product quality & availability, energy efficiency, regulatory compliance, and environmental responsibility; all of these areas can be a major factor in driving profits. Balancing the cause and effects of these systems requires deep experience in supermarket operations, combined with expert data analysis of operational systems and the knowledge to align these outputs with corporate goals and objectives.
Baltic Trail will partner with existing, in-house maintenance professionals to help the team create and implement a Profit-Driven Maintenance approach.
The Impact of Maintenance on Other Business Functions
Performance measurement systems target not only the refrigeration and HVAC systems but their relationship and impact on costs related to all maintenance areas. Performance measures should be linked to an organization’s strategy in order to provide useful information for making effective decisions and shaping outcomes. The value-based performance measure evaluates the impact of maintenance activities on the future value of the organization and provides the link between the actual output and the desired results.
At Baltic Trail, we measure the current REF/HVAC operating efficiency as a standalone metric and then measured its relationship to utility consumption, regulatory compliance risk, impact on store shrink, role in legal cases & insurance claims and its contribution (positive or negative) to corporate strategy. Our data analysis shows that increasing a store’s Operational Efficiency Rating (OER) by 5% can increase its Net Operating Profit (NOP) by 10%.
What does Profit-Driven Maintenance do for you?
For Supermarket Executives: It addresses key business areas such as Total Cost of Ownership, energy consumption, shrink, regulatory compliance, sustainability, safety, the customer experience and, ultimately, store profitability.
For Senior Management: The approach provides a framework and specific programs to set up and maintain a more efficient maintenance operation. In an increasingly competitive environment the Profit-Driven Maintenance methodology allows for a fact-based approach to maximize existing resources and specifically identifying opportunities for continuous improvement in all areas of the maintenance function.
For Operational Managers: It means bringing a clear view and understanding of the maintenance function from a business standpoint to accompany the technical and operational realities. Adopting Profit-Driven Maintenance at the operational level clarifies performance outputs, simplifies program management and positions the manager to become a more integral part of the broader organizational strategy.
The maintenance value function is achieved by a department which has the objective to organize the maintenance or refurbishment activities for the assets involved in the most profitable way, or in other words, to reach the highest level of output against the lowest possible operating cost, or the lowest Total Cost of Ownership and highest Return on Investment.
The question is: Is it possible to specifically define the opportunity and put in place the right resources and programs to provide cost effective and innovative solutions, lower operating costs and in a sustainable manner aligned with corporate objectives? The answer is: Yes, with Baltic Trail by your side.