PROJECT EXAMPLES
Restructuring and reorganisation of manufacturing companies;
programmes enhancing revenue and efficiency of international production networks
CRO-OPERATIONS
OEM
Leading British sports car manufacturer in the luxury segment
approx. EUR 1.6 billion turnover
COO-INTERIM
TIER 1
World market leader
in motion control
approx. EUR 1.3 billion turnover
CRO-INTERIM
TIER 1
Automotive supplier
Mechatronics
approx. EUR 200 million turnover
COO-INTERIM
TIER 1
Automotive supplier
Mechatronics
approx. EUR 250 million turnover
SENIOR ADVISOR
IDW S6
(Restructuring Assessment &
Turn Around Concept)
Mechanical engineering
Plastics technology
approx. EUR 200 million turnover
FURTHER PROJECTS
esp. with
IDW S6
(Restructuring Assessment &
Turn Around Concept)
on request
CRO-Operations (Chief Restructuring Officer-Operations) / Transformation Manager at the world’s leading British sports car manufacturer in the luxury segment (OEM)
RESULTS:
- Value-added costs: approx. -30%
- Productivity increase: > 30%
- Reduction of indirect functions: approx. 30%
- Current stocks: approx. -50%
- Space requirement plants: approx. -40%
KEY DATA:
- The world’s leading and only independent British developer and manufacturer of sports cars in the luxury segment
- Globally recognised traditional brand for over 100 years
- EUR 1.6 billion turnover
- 3,000 employees
- 2 final assembly plants in Great Britain
- The company is based in Great Britain
Management of the restructuring and transformation of the two final assembly plants in the UK (interim)
Reorganisation of the final assembly plants with significant cost reductions and quality improvements per vehicle, taking into account the latest logistical processes and all necessary indirect functions in the administrative areas.
Situation and framework conditions:
The world’s only independent manufacturer of sports cars in the luxury segment is reorganising its vehicle production for the future.
The task is to develop a production system that is a leader in terms of flexibility, efficiency and quality. The production system forms the framework for the manufacture of customised luxury cars in a “build to order” process. Each vehicle is unique, i.e. each vehicle exists only once.
The plants must be designed and dimensioned in such a way that they contribute to a competitive result as part of the production system.
The manufacturing processes for luxury vehicles form the core of the plants. All indirect, administrative areas must also be dimensioned and aligned to ensure the best results for customers and the company.
Procedure:
Under the leadership of the CEO and in close collaboration with the COO and other management functions, the future requirements for the company are derived from the market. The resulting target criteria become part of the company-wide strategy.
To meet future customer expectations and the growing market, the final assembly plants, the production system and parts of the suppliers are being reorganised.
The design, specialisation and dimensioning of the two final assembly plants is carried out in detail, taking into account the synergies to be worked out in the interaction within the plant network.
Extensive changes are being introduced, particularly in logistics and final assembly. Processes and work content in final and pre-assembly are revised and redesigned. Logistical processes are redefined according to a “build to order” process. Components are delivered “just in sequence” to the production cycle of the respective vehicle.
Further developed management processes and quality control loops ensure the transformation and the result.
The earnings effects result primarily from the specialisation and dimensioning of the final assembly plants and the development of synergies in cooperation.
The merging of previously separate final assembly lines and the revision of assembly sequences in detail also contribute to the further professionalisation of logistics processes. A comprehensive restructuring and reorganisation of a globally renowned and leading logistics service provider is part of the process.
The enhanced production system supports efficiencies through further digitalisation. The systemic improvement includes redimensioned, indirect functional areas as part of the value streams.
Results (extract):
- Reduction in value-added costs of approx. 30%.
- The reorganisation leads to productivity effects of >30%.
- Indirect, administrative functions are reduced by approx. 30%.
- Internal circulating stocks are reduced by approx. 50%.
- Reduction of space requirements for pre-assembly and final assembly in both final assembly plants by approx. 40%.
- Reorganisation of the logistics service provider leads to significant cost reduction per vehicle.
- Consistent implementation of the “Build to Order” and “Just in Sequence” concept delivers the result of being able to run a maximum product mix.
- The enhanced production system provides the basis for sustainable, profitable growth in the luxury segment.
- Effective management processes form the basis for an entrepreneurial, agile working culture at all hierarchical levels.
- The output of vehicle production can be significantly increased or adjusted as required.
- New, future vehicle technologies and developments can be integrated into the existing plants and assembly lines.
Excerpt from some of the focal points and procedures:
- Dimensioning and redesign of the two final assembly plants. Revision of the space planning.
- Consolidation of two final assembly lines. Implementation of the “Build to Order” and “Just in Sequence” concept.
- Restructuring of the logistics service provider to bring “Build to Order” and “Just in Sequence” to the target state.
- Significant further development of shop floor management. Integration and networking of all hierarchy levels. Use of state-of-the-art digitalisation elements. Introduction of agile management and CIP processes (Continuous Improvement Process).
- Further development and shortening of quality control loops within the entire production process. Significant reduction and avoidance of internal rework.
- Interim production management of the start-up and ramp-up of a super sports car. Coordination and alignment of all functional areas. Control of supplier management with regard to delivery capability and quality.
COO (Chief Operating Officer)
at the world’s leading supplier of motion control, damping systems and gas springs (Tier 1))
RESULTS:
- EBIT increase to: 14%
- Entry into M-Dax
- Achievement of the plants’ target EBITs in the international plant network through professionalisation of management processes
- Restructuring of the plant at the headquarters;
thereby regaining competitiveness;
new customer orders won as a result
KEY DATA:
- World market leader in the development and manufacture of motion control, damping systems, gas springs and electromechanical drives.
- EBIT 2-digit
- EUR 1.3 billion turnover
- 7,000 employees
- 20 production sites, some with multiple locations on all continents
(including Germany, Romania, China, South Korea, USA, Mexico, Brazil) - The company is based in Germany
Head of the international production network – Member of the Management Board (Interim)
Realignment of the European production & location strategy
Transformation of a centralised plant at the headquarters and company headquarters
Situation and framework conditions:
Global market leader in the development and manufacture of motion control, damping systems, gas springs and electromechanical drives. Supported by acquisitions in recent years, the company offers a highly diversified product portfolio. Technically complex solutions for a wide range of applications are developed and supplied to a wide range of industries. The global presence of around 20 production sites promotes market penetration on all continents.
At the same time, the strength in diversification requires a production system that does justice to the different characteristics of the products and locations. Locations must continue to specialise in order to ensure leadership in technology and costs in the future.
The significant further growth targeted must be reflected in a global location strategy that offers products competitively and close to the customer in conjunction with robust and ecologically sustainable supply chains.
The European location strategy must be further developed. The advantages and specialisation of Western and Eastern European locations must be further developed. Production sites specialise in the respective tailored product portfolio. Appropriate investment concepts support orientation and future viability.
A competitive, sustainable location concept for the plant at the headquarters and company headquarters is to be developed and implemented.
Plant structures are further developed and adapted depending on the product portfolio and market volume.
In addition, the task was to recruit a suitable successor in the role of interim COO and to transfer the COO function to this person with the developed procedures and focal points.
Procedure:
In close cooperation with the CEO and CFO and with the involvement of other functions, in particular the business unit heads, priorities are defined and procedures established as part of the company-wide strategy.
The focus is on stable, increasing and sustainable EBIT development. The necessary transformation requirements are derived for this purpose. A reliable, forward-looking EBIT contribution from the individual production sites forms the basis for the future direction of the individual site and the Group.
The dimensioning of the production sites with regard to future requirements is carried out. The product portfolio including growth forecast is allocated.
Logistical value streams are made transparent and aligned with future requirements. Assessments of geopolitical issues are incorporated into the process. Existing supply restrictions are evaluated and solutions are found. The supply of materials and supplies to all plants and customers is ensured while at the same time reducing material stocks.
A competitive, future-proof location concept for the plant at the headquarters and company headquarters is developed and implemented.
Synergies within the international production network are identified, unnecessary structures are adapted and converted into an increase in EBIT.
Results (extract):
The Group achieves a significant increase in EBIT in the period under review, despite a marked slowdown in the global economy. An EBIT result of 14% is achieved.
Increasing the effectiveness of the International Production Network (IPN). Utilisation of synergies. Reduction of product manufacturing costs at the respective production sites. Significant levers for increasing EBIT have been identified.
A transformation concept is being developed for the main plant at the company headquarters, operationalised in sub-projects and implemented. Competitiveness in Europe is secured.
The Eastern European production footprint is being further developed to regain cost leadership in the European market. Customer orders that were initially thought to have been lost have been convincingly won back by the OEMs.
Excerpt from some of the focal points and procedures:
The International Production Network (IPN):
- Management of the International Production Network (IPN).
- Subdivision of the IPN into product/production site groups. This enables further specialisation to be achieved.
- Increasing the effectiveness of the international production network, utilising synergies and increasing standardisation in the manufacturing process.
- Standardisation of business and management processes. Reduction in product manufacturing costs and increase in Group EBIT.
- Analysis of the European product portfolio and allocation to Eastern and Western European production locations, taking into account various criteria
- Preparation of transformation and adaptation plans for the European plants
Consistently target-orientated management of the individual plants and within the plant network:
- Introduction of shop floor management in the production plants and integration of the worker level. This included significant further development of the continuous improvement process.
- Definition of key figures and consistent management of the key figures towards the respective targets for each plant
- Extensive increase in machine and system availability (OEE)
- Organisational development and further development of management and leadership processes to improve results in the plants (quality, delivery, costs). In particular, this enables the organisation to find sustainable solutions for complex tasks.
- Ensuring the ability to deliver to customers during the coronavirus period.
Transformation of the plant at the headquarters and company headquarters:
- Development of a future-proof plant strategy as part of the IPN
- Elaboration of EBIT development over the multi-year planning period
- Developing and sharpening core competences and unique selling points
- Derive the investment volume for the required production capacities and technologies
- Derivation of measures and investments in the area of digitalisation and Industry 4.0
- Definition of the fields of action for the transformation
- Introduction of a project management office to implement the defined fields of action
- Management of the programme of measures. Elaboration, further development and implementation of the programme of measures to increase earnings
- Creation of the communication strategy for stakeholders, the workforce and employee representatives
- Presentation, discussion and approval of the transformation with and by the Supervisory Board
CRO (CHIEF RESTRUCTURING OFFICER)
AT A WELL-KNOWN AUTOMOTIVE SUPPLIER FOR PRODUCTS IN THE FIELD OF STEERING TECHNOLOGY (TIER 1)
KEY DATA:
- Development and manufacture of steering systems
- 200 million EUR turnover
- 8 production sites (incl. in Germany, Bulgaria, Norway, Mexico, China);
large value-added share in Germany - Registered office and development centre in Germany
Management and implementation of the restructuring
Strengthening of the existing management team by supplying more managers and specialists (incl. plant management, assembly management, shop floor management, logistics, SAP)
Circumstances and environment:
The medium-sized company, family-run for many decades, is based on a very heavily pronounced technological product expertise. Robust products led to a very large market share of well-known customers being established. The products are, generally speaking, safety-related in their use. A unique selling point lies in the fact that the value-added chain is characterised by a very large amount of in-house manufacturing.
In recent years, the company has increasingly come under pressure due to rapid growth in the form of turnover and product variety, combined with fast implementation of a globalisation strategy. Production sites were established in various regions and countries, a “local for local” strategy was introduced under high pressure. The fixed-cost structure significantly increased during this period. Furthermore, the international production network necessitated an increasing and urgent need for organisational structures and processes.
Our approach:
In close cooperation with a well-known audit firm, we made the key drivers of complexity and cost transparent, translated this into a future strategy tailored to the customer and worked out a comprehensive package of measures. Together with the management and executives at the various sites, we gradually implemented and continuously refined the package of measures.
The joint approach enabled us to significantly and, above all, sustainably improve the cost and cash-flow position.
Summary of a few focus areas and courses of action:
- Member of the steering group (shareholders, customers and other participants) in the role of the “CRO”.
- Support in the M&A process.
- Organisational development and further development of management and leadership processes to enhance results at the sites (quality, delivery, costs). Thereby, in particular, empowerment of the organisation to find a sustainable solution for complex tasks. Enhancing effectiveness in cooperation in the international production network.
- Leading the programme of measures. Drafting, further development and implementation of a package of measures to enhance the result.
- Introduction of a logistics organisation throughout the group.
- Development of logistical processes for an efficient cooperation across all plants.
- Logistical control of production orders and safeguarding of supplies to customers within the international production network.
- Introduction of comprehensive support and provision of training courses on using the SAP system.
- Reduction of complexity in particular by redesigning logistical supply chains and reduction of long through-put times within the international value-added chains.
- Significant reduction of special cargo and quality costs.
- Planning and implementation of relocations of production. As a result, significant complexity reductions due to the unbundling and consolidation of value-added stages.
- Extensive increase in the availability of machinery and equipment (OEE).
- Introduction of shop floor management into the production plants and integration of the worker level. This includes significant further development of the continuous improvement process.
COO (Chief Operating Officer)
AT A WELL-KNOWN AUTOMOTIVE SUPPLIER FOR MECHATRONIC COMPONENTS (TIER 2)
KEY DATA:
- Development and manufacture of mechatronic components (incl. for micromotors, microgears, actuators)
- 250 million EUR turnover
- 4,400 staff
- 8 production sites (Germany, Hungary, Romania, Mexico, China);
very large value-added share in Eastern Europe in particular Hungary - Registered office and development centre in Germany
Management of the international production network – member of the management board
Circumstances and environment:
A medium-sized, family-run company, which specialises in the development and large-scale manufacture of mechatronic components. Unique selling points include the capacity to manufacture high quality, mass-produced mechatronic components (in some instances, safety-related applications in vehicles). The company has grown rapidly within a few years due to the acquisition of major contracts and purchases of further business units. Alongside this growth, the number of production sites has rapidly increased (in part, also due to purchases which had already needed restructuring at that time). The rapid growth necessitates further developing and adapting existing organisational structures and processes accordingly.
The company is primarily characterised by the fact that the most significant part of its added value had already relocated to Eastern Europe and new projects, generally speaking, start there. Although the focus of the added value is already in low-wage countries, the costs and results situation is not adequate.
Our approach:
In close cooperation with a well-known audit firm, we worked out the key cost drivers and made them transparent. Together with the shareholders and customers, the target state of the global site strategy was further developed and refined. A comprehensive package of measures was created; related to the entire group and formulated in detail in a site-specific way. A key challenge was to reassess the existing very large number of individual measures for their effectiveness, to combine these, prioritise them and to assign clear responsibilities within the corporate group. In our approach, we further strengthened the organisational structures, such as quality, technology, logistics and supplied the prioritised packages of measures aimed at these divisions. These packages of measures were then further developed within these functional areas and transparently implemented at the respective sites. The attendant further development of management and leadership processes was a very important element here.
This approach significantly and sustainably improved the cost and cash-flow position, which was crucial for the M&A process running alongside this.
Summary of a few focus areas and courses of action:
- Integration and continuous communication with the most important customers and reporting on the current situation, the actions taken and their effectiveness.
- Close coordination with the customers re. quality, delivery and costs; at the same time, integration of representatives of the customers in the respective sites.
- Organisational development in various sites, in particular in the production, logistics, quality and technical planning and service functions divisions. In the process, further development of functional excellence in the respective functional areas. Further development of the matrix organisation in order to significantly improve cooperation within the corporate group.
- Leading the programme of measures. Drafting, further development and implementation of a package of measures to enhance the result. Assignment and prioritisation of the measures to the respective functional areas. Introduction of management/ review control loops and management processes.
- Support and management of start-ups and full-capacity production of new products, processes and production lines.
- Safeguarding of delivery capacity to the customers. Managing the reduction of the backlog.
- Increasing the technical availability of equipment and machinery. Consolidation of maintenance and servicing (incl. further developing tool making, introduction of management processes).
- Relocation of processes and technical equipment to other sites (within the plant network and to the customer).
- Introduction of shop floor management into the plants. At the same time, significant further development of the continuous improvement process.
Senior Advisor Operations
AT A WELL-KNOWN MECHANICAL ENGINEERING FIRM IN THE PLASTICS PROCESSING INDUSTRY
KEY DATA:
- Development and construction of large-scale facilities and machinery for the plastics processing industry
- Market leader in this product segment
- 200 million EUR turnover
- 7 production sites (Germany, Italy, USA, China);
Main focus of the added value is in Western Europe - Registered office and development centre in Germany
Partner focusing on technology and operations in cooperation with an audit firm
Circumstances and environment:
A medium-sized company which has been represented as a leader in technology on the market for many decades and is firmly established on the market due to its continuous progress in innovation and the robustness of its machinery and equipment. The company had been taken over by an investor a few years earlier. The corporate group recorded considerable sales growth during the last few years. Purchase of a smaller competitor and a significant expansion of the product range offered was pivotal for this.
The complexity within the company sharply increased as a result.
The company had evolved from a mechanical engineer into a system provider (turnkey) without following the organisation and process structures required for this. The existing project management system was insufficient for complex system projects in an international production network.
Added to this was the fact that the internationalisation of the sites was further fostered in parallel. The available skills of the staff were squeezed in some instances due to the strong growth and increase in complexity. The manufacturing process of a piece of equipment/ machinery was characterised by the fact that this was very often spread over several sites. The existing understanding was, amongst other things, characterised by optimally using spare capacities and available skills worldwide. In this context, the manufacturing costs have substantially increased compared with the planned costs.
Our approach:
The substantiated evaluation of the company situation carried out jointly with the company was the basic prerequisite for the further course of action. A significant part of the basic understanding lay in the fact that the increased complexity and volume of the respective contracts must also be reproduced according to the organisational structures and processes. In particular, the changed requirements of the “project management system” tailored to the company in conjunction with the “operational target states of the respective sites (dimensioning and skills)” were of great importance. A major breakthrough also lay in understanding how the content of contracts included has changed over time and how, at the same time, implementation has encountered limitations and attempts at solutions have been rigorously derived from these (incl. distinguishing contracts according to skill needs, quantifiably assessing the complexity of the technology, illustrating value-added chains within the international production network).
Summary of a few focus areas and courses of action:
- Analysis of the sales performance of recent years in conjunction with the characteristics of projects taken on. A larger number of significant projects was consulted here and subjected to an operational analysis. A very tailored profile emerged for each individual project. This profile was reconciled with the existing skills of the company. The discrepancy was thereby clear. It must be emphasised here that this course of action provided the basis for introducing corrective actions and above all accurate predictions could also be made regarding the course of future projects and their cost structures.
- Analysis of the customer projects according to their contribution to profit/ loss in conjunction with the technical project specification. Derivation of correlations.
- Formulation of basic principles to carry out the target structure and dimensioning of the respective sites. This created the prerequisites for further consolidation of value-added processes within the international production network.
- Specialisation of the respective sites in specific project content (tailored to the respective project specification; incl. also reduction of the intercompany dependencies).
- Order acceptance process (inter-divisional assessment, audit and decision-making) adjusted to and coordinated with the capabilities and “operational bottlenecks” of the individual sites.
- Specific content for further development of the company-specific project management and quality management system. Tailored to projects within the field of traditional mechanical engineering, but, above all, also to projects as the provider of complex plant systems (turnkey supplier).
