Two Bpeace volunteers, Kimberly Smithson-Abel, a business development and HR specialist from Texas, and Shankar Lakhavani, a Lean Six Sigma Master Black Belt and manufacturing specialist from Pennsylvania, spent a week in El Salvador advising Sevialca, a growing road maintenance and signage firm.  Boldly, they all agreed on a 5X Growth Plan for expanding the business and developing processes to run it smoothly and transparently.  Practical and inspiring:  

XX consultant Shankar Lakhvani (left) and Kimberly Smithson-Abel (right) help José María, owner of road signage firm Sevialca in El Salvador (center). Bpeace business volunteers Shankar Lakhavani (left) and Kimberly Smithson-Abel (right), with Bpeace Fast Runner José María, owner of the road maintenance and signage firm SevialcaTwo Bpeace volunteers, Kimberly Smithson-Abel, a business development and HR specialist from Texas, and Shankar Lakhavani, a Lean Six Sigma Master Black Belt and manufacturing specialist from Pennsylvania, spent a week in El Salvador advising Sevialca, a growing road maintenance and signage firm.  Boldly, they all agreed on a 5X Growth Plan for expanding the business and developing processes to run it smoothly and transparently.  Practical and inspiring:  

The countryside is lush in El Salvador. The rainy season had just ended when we got there, and the vegetation was almost jungle-like — poised to gobble the roads right up. Roads are important in a developing nation like El Salvador, and José María Villela and his growing company Sevialca have a hand in maintaining a lot of them.

Started in 2006, Sevialca’s first few years were spent developing state-of-the-art, customized machinery for road-paint application and finding initial clients. By 2011 the company had tripled its employees and was executing highway projects in Panama and Honduras in addition to its home country.

[caption id="attachment_4103" align="alignleft" width="300"] Kim and Shankar learn about Sevialca's road maintenance and signage operations in El Salvador. Sevialca's Administrative Coordinator Cindy Chavarría (center) teaches Kim (left) and Shankar (right) about Sevialca's road maintenance and signage operations in El Salvador.[/caption]

Run by founder and president José and his wife, Sevialca currently has 45+ employees. The company contracts primarily with state agencies or large prime contractors for line painting, guard-rail installation and road signage, and does a small amount of business with the private sector as well.

A technical whiz and an innovator at heart, José had recently restructured Sevialca into three firms: a highway product distributor, a construction company and a highway maintenance firm. His growth plans included doubling both employees and sales over the next two years and expanding further into other Central American countries.

How to meet the growth opportunities

The road business is particularly booming in El Salvador these days due to several factors: the recent completion of the U.S. government’s five-year $461 million Millennium Challenge Corporation compact; the tax policy of the country’s present government, which favors infrastructure/road projects; and the use of taxes to improve the transportation infrastructure.

At Sevialca's offices, Shankar (left) and Kimberly (right) meet with XX XXX.At Sevialca's offices, Shankar (left) and Kimberly (right) meet with XX XXX. But all companies have growing pains, and Sevialca’s were showing in two ways: (1) escalating costs, which required improvements in operational efficiencies and processes; and (2) uncertainty as to how to allocate scarce resources to business growth — the company was simply spread too thin.

Given the friendly business climate for the company, and Sevialca’s growth strategy, we set one key objective for our visit: to analyze and improve operational processes and staff workload.

We met with José María and his management team to listen and learn. After analyzing the current state of the company’s core operational processes, we subsequently conducted a few days of basic Lean training to define and eliminate the “8 Wastes of Lean” and reduce capital requirements and labor costs.

A radical change in focus

From our discussions, we could see that Sevialca was mainly focused on government contracts and large subcontracts. We pointed out that although large public projects may lead to larger profits, they have larger business risks and capital investment requirements (tying up manpower and money in expensive machinery and equipment), and less probability of success. Plus, the company had to keep its trained labor and staff on payroll while waiting for these large contracts to come in.

Kimberly Smithson-Abel (center) and Shankar Lakhavani (right) help XX , XX of Sevialca with XX. Kimberly Smithson-Abel (center) and Shankar Lakhavani (right) help XX , XX of Sevialca with XX.  

We suggested that switching the company’s focus to smaller, but profitable, projects would exploit certain competitive differentiators, such as the “home court” advantage of being located in El Salvador, the profitable COD (cash on delivery) business, productive use of existing capital intense equipment, and the expertise of the people which Sevialca has on its payroll.

New plans and a transparent approach

Though it meant delaying investment in other Central American countries, what emerged was a 5X Growth Plan for growing the business and developing processes to run it smoothly and transparently.

To achieve a 5X increase in sales and profits, we recommended the creation of a department dedicated to smaller commercial contracts — to generate cash, improve customer satisfaction (to drive repeat business) and keep employees productive while waiting for the big contracts.

A streamlined project management system would manage the smaller but more numerous projects so they could be executed with minimal waste and rework, and also help Sevialca develop the operational capability to execute larger projects more efficiently and at less cost.

Shankar (center-right) and Kimberly (center-left) with with Sevialca to streamline their processes and reduce costs. Shankar (center-right) and Kimberly (center-left) with with Sevialca to streamline their processes and reduce costs.  We also worked with José and his team to create and clarify roles and responsibilities for the small projects business, and together we developed a balance-of-year (BOY) plan with goals, actions and execution dates.

To promote transparency and enable daily project reviews, we suggested the use of four visual display boards:

• Quotations Board: all quotations with 50+% probability of success
• Quality Board: all customer and process quality issues, and resolution status
• Project Location Map: projects for that week in green; future projects in yellow; projects with issues in red
• Project Tracking Board: project status and backlog

On our last day, José personally nailed the boards to the wall in the area dedicated to small projects, to signal he was ready to attack this part of his business with gusto.

What a productive week! Our biggest take-away from this successful trip? Entrepreneurial qualities transcend borders and are ubiquitous around the world.

Postscript: We are happy to report that Sevialca is currently negotiating several road projects that could employ 100 people over the upcoming months.

The Sevialca team and Bpeace consultants Kimberly Smithson-Abel (far right) and Shankar Lakhvani (third from right). The Sevialca team and Bpeace consultants Kimberly Smithson-Abel (far right) and Shankar Lakhvani (third from right).

Add comment


Security code
Refresh

0
Shares