Operational excellence programme for large medium-sized companies
In the second half of 2018, we were asked to support the turnaround of a large, globally active medium-sized company. Together with an internal project team, we developed and validated measures with a medium-term savings potential in the three-digit million range with the management and mapped them transparently in a tool for ongoing controlling.
After decades of success, the company had now been confronted with a steady erosion of its market position and profitability in almost all businesses for several years. A broad-based innovation and growth offensive had not succeeded in reversing the trend, but rather exacerbated the negative development. At the same time, administrative expenses and internal services continued to rise regardless of the sales trend.
In this situation, we launched an ambitious programme together with the CEO and CFO in September 2018 in order to generate an adequate return on capital again. An equally structured approach along the entire value chain and a pragmatic approach with clear prioritisation of the relevant drivers were decisive factors. Another success factor was simply transparency, starting with the number of production sites and their interconnectedness.
In December 2018, the cost-cutting initiatives developed by Corporate and the businesses (including plant and site closures and administrative cost reductions) were approved by the company's Board of Directors. This has created a solid foundation for the company's further development, which is now being implemented.
In order to build on the glorious years of the past, the current year will not only see the determined implementation of the identified measures, but also a strategic review of the business and an increase in organisational efficiency. Both factors - an erosion of the market position and organisational dysfunctions - are the real causes of the current earnings problems.
Progress on three levels will be necessary to permanently improve organisational performance:
- Leadership: individual ownership of goals and priorities, shared alignment in the leadership team, focused performance dialogues - to give a strong leadership team its full impact
- Collaboration: Orientation towards overarching success drivers for the entire company, overarching transparency and team play instead of going it alone - as the basis for the rapid further development of the business and for the best possible cost position
- Positioning: further optimisation of the footprint in production and sales, focusing/increasing efficiency in support functions and a pragmatic adjustment of the organisational structure where necessary - in order to create a competitive operating model in the long term
It will be important to dovetail the organisational performance enhancement with the ongoing operational improvement initiatives as far as possible and, for example, to view the reduction of overhead functions not as mere cost compression, but as an improvement in efficiency. 2018 got off to a flying start - 2019 will show whether the strategic and organisational conditions are in place to return to the old size.
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Do you have any questions or are you interested in working with undconsorten? Together we can discuss how we can make your organisation more successful with a holistic approach and functional expertise with a focus on sustainability, implementation and efficiency.
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