Struggling to succeed amid tough market conditions
Our client, a global industrial products company, had a business area that was not meeting expectations. Unfavorable market conditions and strong price pressure from competitors meant this particular business area had been unprofitable for several years. Added to this, the manufacturing footprint was too costly due to high overhead costs, inefficient asset allocation and production setup.
The client asked us to conduct a restructuring diagnostic and to subsequently lead the business area back to profitability in 2016. The longer-term goal was to help the company achieve its 2017 objective of reaching an overall profit margin of 10%.
Leading the turnaround
a-connect deployed an experienced management consultant and turnaround specialist to lead the project from the review phase right through to implementation.
The first step was to conduct a four-week review to validate all earlier findings and to design a detailed implementation plan. Implementation then started in late August 2015. While the project covered all areas of the value chain, we focused on the following areas in order to maximize profitability: consolidation of manufacturing and reallocation of production, logistics cost reductions, productivity improvements, and purchasing efficiencies.
Bringing the business area back into the black
Identifying and achieving performance improvements was the key to turning this business area around. With his product development and operational process improvement know-how, our independent consultant was able to pave the way to a profitable business area in 2016.
By realizing significant improvements in backlog reduction, shorter lead times, and increased product quality, a-connect helped the client identify EUR 4 million in annual cost savings. The company is now on a path towards achieving its profit target in 2017.
To learn more about how a-connect’s consultancy services can transform your organization’s future, please contact us