Chapter 143
Chapter 143
Episode 143. Scathing Pruning (1)
In the MH Distribution 5th-floor conference room, department heads from each division were seated.
Shinwoo, having just finished his onboarding greetings, also arrived. At the same time, the department heads rose from their seats to welcome Shinwoo before sitting down together.
"I have reviewed the company's operational structure, financial statements, and the conversion rate of the newly implemented distribution system, from the days of Baesung Distribution to the present MH Distribution."
Everyone looked anxious, wondering what would come next.
"First, the system conversion rate is not very good. I would like to hear more about this matter. Could the Head of Operations please explain?"
Kim Byungseok, the Head of Operations, turned on the microphone at the front and spoke.
"There was an issue with unfamiliarity regarding the newly installed equipment at each logistics center. We anticipate that the conversion rate will gradually improve as personnel become accustomed to it."
"Isn't the system installed to increase the speed of automated logistics sorting? If the installation itself was without issue, there shouldn't be a separate problem of getting used to it."
Kim Byungseok, as if unwilling to back down, continued his response.
"I believe you are saying that because the CEO is not well-versed in logistics operations. Even with the significant role machinery plays in the current logistics market, human hands are still indispensable."
"That is correct. I am not very knowledgeable about logistics. However, wasn't the plan to reduce labor costs in logistics sorting and reallocate the available personnel elsewhere? That's why I had my onboarding ceremony today and recruited experienced hires, as I understand it."
As soon as Shinwoo concluded the acquisition of Baesung Distribution, he communicated remotely with the department heads and ensured all necessary provisions were made.
Yet, Kim Byungseok seemed intent on reversing the situation, like someone entering a restroom versus exiting it.
"It is because an adaptation period is necessary."
"Exactly. Why else would we hire experienced personnel? We're hiring people who can be immediately deployed to practical work. Or, are you perhaps not assigning them proper tasks because of factionalism, saying things like 'they're from Baesung'?"
Kim Byungseok's expression stiffened for a moment.
Factions existed in any organization. Especially in corporations, employees of the original company tend to band together more tightly during mergers and acquisitions to protect their own lines and territories.
To them, new hires with experience who were not originally from Baesung Distribution were bound to be an obstacle.
"I don't understand what you are saying. This isn't the 1980s... Such things absolutely do not happen at our Baesung... no, MH Distribution."
He was so flustered that he even mixed up the company name.
At this, Shinwoo handed a USB drive to Meian and instructed him to insert it into the conference room laptop.
The projector activated, and the contents within filled the entire front wall of the conference room.
【I was hired as an experienced employee, but I'm only being given menial tasks without being taught my actual job. Is this why I joined...】
【I'm no different from a new hire.
And then they assign me tasks unrelated to my role, and criticize me if I don't perform well...】
【The seniority and cliquishness are too severe. They only talk amongst themselves, ostracizing me. When a problem arises, they don't answer my calls, and then they complain about how I handled things in the meantime...】
【Talk to headquarters? Even if I did, they'd just use the logistics center's authority as an excuse.】
.
"These are interview excerpts from individuals who recently joined MH Distribution as experienced hires at various logistics centers. You stated earlier that there were no factions or cliquishness, so what are these?"
"......"
Silence ensued.
Clink— Clink—
Amidst the quiet, Shinwoo rolled his 8-Sided Dice and glared at the department heads as if he could devour them.
"I understand that you cannot micromanage every single employee. However, shouldn't you at least pay attention to ensure that work proceeds properly?"
"......"
"Head of Operations, Kim Byungseok. Why are you silent? Since there is no Head of Division currently, Operations is in charge of the logistics centers, isn't it?"
"...I apologize. I will pay more attention."
Shinwoo looked at him with a sigh.
"In the US, KEDEX increased its sorting error rate by 3.4% and processing speed by 220% with its system. Of course, they handle tens, no, hundreds of times more logistics volume than we do in Korea. Given that, do you have any idea how much MH Distribution's logistics centers should be able to improve?"
"But! That's too much of a stretch...!"
"Our country is smaller than the US, with shorter distances between cities. Can you still say it's difficult?"
The disruption in the logistics center system implementation was due to the existing personnel. Instead of focusing on doing their jobs properly, they were preoccupied with protecting their positions and seeking promotions, and busy excluding those different from themselves.
Shinwoo intended to overhaul all of these chronic problems. Of course, he had studied diligently for it and had a good grasp of the situation at the former Baesung Distribution logistics centers.
"...I will find a way to make it work."
"Report weekly. Then, we will move on to matters concerning the financial statements."
Meian, who was at the laptop, advanced the screen.
There, the items related to last year's income statements and balance sheets, following the transition from Baesung Distribution to MH Distribution, were listed at length with graphs.
Simultaneously, the faces of Oh Daeyeong, Head of Finance, the Head of Accounting, and the Head of Bookkeeping turned as dark as if they had been smeared with coal.
"I am aware that there were significant deficits due to issues that arose during the Baesung Distribution era. Furthermore, the financial statements are riddled with holes due to the slush funds created by the late founding chairman Bae Young-cheol, who had ties to politics and the judiciary."
Sensing an atmosphere where past mistakes might be dismissed and quietly overlooked, some people's faces relaxed slightly.
"However, even after my acquisition, these holes do not seem to have been easily filled. Do you know why, Head of Finance Oh Daeyeong?"
The arrow of questioning, already aimed, struck Oh Daeyeong, who was startled.
"I understand it to be due to deferred labor costs, repair costs for vehicles used in logistics, courier, and cargo operations, and expenses for office supplies used by each department. Additionally, accumulated compensation for goods damaged during transport and industrial accident processing costs for work-related incidents have led to the current situation. And..."
It was a rather detailed explanation.
Shinwoo nodded, waiting for Oh Daeyeong to continue.
"...The introduction of new equipment and the replacement of old equipment also incurred significant costs. This was a directive from the CEO, carried out by selecting vendors for future preparedness."
The final explanation seemed to emphasize that Shinwoo himself bore some responsibility for the current problem.
Of course, Shinwoo understood the intent all too well, which even made him chuckle.
"So, what you're saying is that these matters are the cause of the current actual operating profit margin dropping to minus 2%."
During the Baesung Distribution days, with annual sales in the hundreds of billions, the operating profit margin was only about 10-13%. A minus 2% in that context represented an enormous loss.
"As you know, the logistics sector can incur significant losses from unforeseen circumstances. Nevertheless, sales are consistently generated. At this rate, I believe a turnaround to profitability within three years is certain."
Corporate operations were, in essence, a balancing act. Shortfalls were covered by corporate loans or liquid assets, and when new revenue was generated, it was reinvested.
Clink— Clink—
Shinwoo rolled his 8-Sided Dice again. The sound echoed in the momentarily silent conference room, subtly pressing on the department heads' temples.
"Three years... It's not a bad figure, but do you truly believe those issues are the sole cause of the deficit?"
Oh Daeyeong felt he had explained it quite well. Perhaps because of that, his expression was more confident than at the beginning.
"Are there any other reasons?"
At this, Shinwoo gestured to Meian.
Then, the screen changed again, displaying another item.
【Maritime Vehicle Repair Shop】
【Mansang Car Center】
【KR Vehicle Repair Center】
【Geumsang Truck Bus Specialist】
【Saedong Auto Repair Shop】
.
.
"These names look quite familiar."
"What... is this?"
"Do you really not know? Then I suppose we'll have to call in someone who does."
With another nod, Meian, with an uncharacteristic calmness, opened the conference room door. Simultaneously, two middle-aged men who had been waiting outside slowly walked in, their faces etched with worry.
They were Yoo Jongwoon of MH Courier and Jang Taejin of MH Cargo, who had continued as subsidiary CEOs even after the transition to MH Distribution.
The department heads, unable to not recognize their faces, were greatly surprised.
"Gentlemen, do you know what the names on this list represent?"
Seated beside the conference table, the two nodded, their faces still pale as they looked at the screen.
"...We know."
"...We do."
In that moment, the department heads understood why the subsidiary CEOs, the most crucial figures in today's meeting, had been absent.
"What is it? CEO Yoo Jongwoon, please explain."
In response to Shinwoo's question, Yoo Jongwoon slowly began to speak.
"They are the affiliated repair shops that handle the vehicle inspections and repairs for our MH Courier..."
"Do you also know what the problems are with those places?"
After a brief pause, Yoo Jongwoon continued in a trembling voice.
"...They would overcharge for repairs, bill the company, and then receive a portion of the payment back from the repair shop."
A sudden commotion erupted, and the faces of several department heads contorted severely.
However, Shinwoo's questions did not end there.
"So, it's a rebate. What happened to that money?"
This time, Yoo Jongwoon struggled to speak.
Seeing his hesitation, Shinwoo stared at him and asked again.
"Shall I tell you? Of course, if I do, you will have to accept the consequences that will follow for you, CEO Yoo Jongwoon."
"Ah, no! 10% of the rebate funds went to the repair shop, 15% to me. The remaining 75% was deposited into the MH Courier General Affairs reserve account and then used as payment for purchasing supplies from a company called OZ Office."
Beep—
At that moment, the screen changed to different content.
There, information about the company OZ Office and its representative's name were clearly displayed.
【Representative: Oh Daeseung】
"The name of the OZ Office representative looks quite familiar, doesn't it? Head of Finance Oh Daeyeong."
"Wh-what are you trying to do?"
"What do you mean? I'm stating the circumstances suggesting that Head of Operations Oh Daeyeong embezzled rebate funds from subsidiaries into a shell company."
"That's absurd! It's true that my cousin operates the place. But we haven't given any special treatment just because he's family! They deliver goods properly. Moreover, they supply office supplies not only to subsidiaries but also to our MH Distribution headquarters."
"Then we've prepared for that too."
Beep—
Another piece of information appeared. This time, it was a comparison table of the quantity and cost of office supplies MH Distribution received from OZ Office versus those used during the Baesung Distribution era.
Simultaneously, Shinwoo glared menacingly at Oh Daeyeong and couldn't help but raise his voice.
"The office supply costs paid to OZ Office over one year amounted to 2.3 billion won. However, the actual quantity of supplies used, converted into monetary value, is 500 million won. Where did the remaining 1.8 billion won go?"
"Naturally, it remained as inventory..."
" Do you think I would present this without verifying the inventory!"
Shinwoo's voice boomed through the conference room, freezing Oh Daeyeong and everyone else in place.
"The remaining inventory is barely over 100 million won. Even combining all the discarded items, it wouldn't amount to ten million won."
At the same time, Oh Daeyeong's eyes darted around, clearly contemplating what excuse to offer.