The interim manager was hired as a project manager by a dairy group based in Germany (1.5 billion turnover, 20 companies). He was given a multi-part assignment. Firstly, as a controlling and restructuring consultant, he was to introduce effective controlling in production, supply chain and logistics (procurement and sales logistics). This was to be followed by the development of initial measures to improve processes and performance in the companies of the Eastern Europe Division (350 million turnover, 7 companies).
For a company of this size, the controlling department was inadequately developed at the start of the assignment. Instruments for creating transparency were lacking, as were control parameters and decision-making bases for management (plant, group) at an operational level.
Rough concept for future controlling developed and agreed
As a result, one of the interim manager's most urgent tasks was to first develop a coherent and interlocking rough concept for future controlling. To this end, the interim manager evaluated the rudimentary controlling instruments available. He collected the necessary information in close coordination with the relevant employees in the respective departments/divisions and the management of the plant and the Group. Naturally, the analysis included the operational processes in the direct service areas and the supply chains.
The draft concept essentially included a management-relevant information and key performance indicator system. The system consists of interlinked key performance indicators that build on one another and have hierarchically selective, strategic and operational elements.
The controlling concept was approved and implemented after several revisions.
Analysis from inspection to value stream mapping
The particular technical challenges of the controlling project included, above all, recording and analyzing the actual processes at the individual locations. The interim manager used various methods for this. These included Questioning, inspection, evaluation of work and organizational documents as well as evaluations according to the top-down/bottom-down approach (core process, sub-process, process step, individual activity, value stream analysis).
The modelling of a standardized, uniformly applicable key performance indicator system also posed special challenges. The product range and production processes at the individual locations were superficially similar. On closer inspection, however, they had special features that made standardization and unification difficult. The information technology implementation of controlling benefited from the fact that the interim manager had very good knowledge of SAP, BI/data warehouse tools, MS Excel and other ERP systems.
Performance weaknesses identified and solutions implemented
The interim manager identified initial weaknesses during the process analysis, which were later confirmed once again using the KPI system introduced. The interim manager took the following measures to counter this:
The introduction of cost centres and key performance indicators in the sales logistics/outgoing goods warehouse area and the subsequent reorganization of the area enabled personnel costs to be reduced by 19 percent.
New productivity indicators in the context of the sickness rate, particularly in the labor-intensive areas of production, made it possible to eliminate overcapacities that had become apparent and reduce personnel costs by 27 percent.
A specially developed variant of the key performance indicator range made it possible to more precisely determine the minimum stock level and the time at which orders for indirect B and C materials are triggered. As a result, inventories - i.e. working capital - were reduced by around 22% and liquidity was significantly improved.
One of the main challenges in improving processes and performance was the complexity of production. Sometimes there were practical obstacles to implementation, because eliminating weak points during ongoing production would have disrupted the supply chain too much in other areas.
Intercultural challenges mastered with communicative skills
The interim manager experienced working in the south-eastern European cultural area and the associated differences in mentality and language as a challenge on a personal level. With a mix of assertiveness and communicative and diplomatic skills, the interim manager managed to overcome the initial resistance. His perseverance and willingness to reach a consensus as well as the progress made in the project ultimately overcame the scepticism of the local managers and employees, who had previously acted largely autonomously and sometimes self-confidently.
Systematic controlling allows transparent decisions
With the completion of the interim mandate, the management of the Eastern Europe Division has a systematic and ongoing controlling system with a standardized and integrated system of key figures. This controlling enables transparent decisions to be made on the basis of reliable indicators. The logistical and production processes are largely transparent.
Supply chain controller and COO to expand position achieved
The preparation of regular controlling/key figure reports, the continuous development of controlling structures and the initiation and implementation of improvement measures in the sense of "continuous improvement" in the areas mentioned are among the challenges that remain. Also on the advice of the interim manager, the parent company is therefore considering creating positions for an Eastern Europe Supply Chain Controller and a COO Eastern Europe Division.
