Administrative Process Improvement Award 1

A. O. Smith China


Even after conditions stabilized in China and consumers resumed shopping in person, the pandemic's continuous impact on offline (in-store) sales brought to light a broad variance in the productivity of retail stores. Without a clear understanding of efficiency of individual stores, it was difficult for leaders to set a straightforward strategy to optimize sales through the retail channel. 

The team designed an analysis tool to evaluate each store's efficiency by measuring its profit/loss ratio (P/L), then weighting the return on investment (ROI) on a city-by-city basis. Once each store was graded and categorized by P/L—Green for ≥35%, Yellow for 25%-35%, Red for <25%—the team implemented a Regional Office Management System to provide clear guidance for sales planning and investment.

"We launched a tiered management program, in which regional offices implemented new measures for sales improvement and resource investment, such as promotions and product displays, according to each store's rating," said project team leader Huajing Cao. "We developed digital tools to gain easy visibility into and manage the key contributing factors to stores’ operational efficiency."

Based on their tier, new policies went into effect, and store efficiency improvement was added to the assessment metrics for both our distributors and our regional office managers. To track the effects of the measures, the team created a new digital platform that provides real-time monitoring and analytics for store performance, as well as early warnings for low-performing stores, and a weekly City Diagnosis Report with customized problem analysis for each city.

The team met with each distributor whose stores were rated in the Red category, helping them to analyze the reasons for low efficiency and to develop action plans accordingly. Many stores were able to improve, but more than 1,000 were shut down as unprofitable.

"Our selection committee chose this project because it applied thoughtful, systematic analysis of each of our stores’ operational efficiency, based on profit/loss ratio, then outlining a comprehensive strategy for optimizing the performance of the entire network of stores," said Kevin Wheeler, chairman, president & CEO. "As a result, by the end of 2021, stores' P/L ratio reached 34.5%, a year-over-year increase of three percentage points."

"I would like to thank my team members for their hard work and efforts and the leadership team for their guidance, support and trust in me," Huajing said. "With this recognition for our team, we will continue to try our best to implement the Company's core values and culture and bring our best to work every day."

2022.06.30 Values Recognition ADMIN1Back Row, left to right: Hongmei Ma, Zhen Zhang, Michael Li, Guangyang Wang, Zhen Ren, Jiaona Zang, Yanyun Li, Huachao Wang, Xinyuan Ge, Elaine Du. Front Row, left to right: Yan Li, Shangle Chen, Jianqiang Hu, Julia Ji, Jack Qiu, Dongmei Li, Minlin Wang, Jim Song, Tony Lu. Not pictured: Huajing Cao, Minlin Wang, Hongwen Zhu. © 2022 A. O. Smith Corporation

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