Create operational efficiencies
Pacer was operating a number of systems and programs, including four
disparate general ledger systems, the remnants from acquired IT infrastructures. The result was higher costs and more frequent mistakes.
Without a common financial or human resources system, there were multiple people involved in processing every transaction, creating the opportunity for costly errors.
In addition, customers were unable to track their cargo through a single
portal as it passed from one Pacer transportation division to another,
including the invoicing and payment application processes. That created
back-office redundancies, and it failed to meet customer demand for a single logistics provider with a seamless process.
But developing an ERP system for a company the size of Pacer is expensive, and while the decision was ultimately made to build a single platform
using SAP, Uremovich had to manage the expectations of investors, telling them to expect some short-term pain in order to realize long-term
gains.
“I communicated to the shareholders the importance of integrating
to one system across all service units, because ultimately, it would
drive profitability and growth,” he says. “Fortunately, there was recognition on the part of the shareholders that this had to be done; in fact,
most shareholders thought we should have done it earlier. But the
potential size of the commitment was substantial, in excess of $35 million in capital.”
Uremovich says that Pacer was experiencing another post-acquisition hangover — out- of-control spending.
“I’d give us a C-plus in terms of spending control in today’s business
climate,” he says. “I instituted more rigorous control processes and
new rules of engagement about who can approve expense accounts.
I wanted to encourage the staff to think and act like responsible owners.”
As the development of the new data system moved forward,
Uremovich was able to reduce operating costs and make staff reductions. In addition, Uremovich changed the company’s employee
bonus program to support his cost-control and customer-focused initiatives. Instead of earning a bonus only on the company’s performance, employees can now earn half of their bonus based upon the performance of their business unit, while the other half is based upon full
company results. And under this new bonus plan, employee turnover
has been reduced by 50 percent.
