Aramark Case Study: Gallup Corporation
To begin, Aramark will need to expand and increase the velocity of the Kronos time management system deployment. The $100 million in net gains realized by the system will more than pay for the expected $30 million cost for the system implementation company wide. The system will also provide ongoing efficiencies, labor metrics, and reduce state department of labor risk through appropriate time tracking.
The second action item requires further expansion of the food production management platform to increase distributor participation, which ultimately increases national volume discounts. The national volume discounts are reductions of product costs created through volume. These discounts can equate to approximately 10 % of all purchases and represent additional profitability that could be expanded further with increased velocity of specified products. Finally, supply chain will be required to renegotiate the current agreements based on the increased product …show more content…
The risk on the Kronos deployment is minimal given the fact that deployment has already begun with documented positive results. The $250 million investment represents approximately 1.8% of the sales of Aramark and approximately 43% of the current revenue. The investment could create a drag on the company if the increased sales and profitability results of the alliance are not realized immediately. In preparation of this potential shortfall, the contingency plan to cover the costs would require the gains realized through the Kronos deployment. In addition, the organization should focus on purchasing a minority owned company with a diverse portfolio that aligns with Aramark’s and profits that could maintain the investment. If the profitability can maintain the investment, Aramark could hedge a slower growth model. Finally, should the business continue to struggle, Aramark may need to reduce their technology investments until the company’s financial position improves.
CONCLUSION Aramark is positioned financially to invest in their future following the recent initial public offering. The key to the company’s future exists in retention, growth, and alignment with minority vendors. This strategic analysis addresses all key sales drivers and positions the company for sustained future growth. In addition, the alignment with minority organizations further enhances Aramark corporate