In the aftermath of the coronavirus crisis and the subsequent pressures (lack of semiconductors, war in Ukraine, energy crisis), a medium-sized automotive supplier (leather products) found itself in crisis. The US parent company commissioned the current interim manager, at the time Director Finance & Administration Europe and authorized signatory, to reorganize the European finance department and strengthen the company's resilience.
Rapid outsourcing of commercial tasks to shared service centers
The reduction in production volume required an adjustment of resources and fixed costs in the commercial area. To achieve this goal, the interim manager initiated a shared service center (SSC) for commercial functions at the Hungarian sister company. Thanks to swift negotiations with the works council, the interim manager was able to successfully set up the SSC within six months. He was able to significantly improve the efficiency of the finance department by increasing the level of digitalization of commercial processes. A key component of this was more effective approval, ordering and review processes, which led to faster and more targeted decisions.
Rolling sales and earnings forecasts create greater transparency
The challenges posed by the significant increase in planning uncertainty and complexity made it necessary to adapt the internal reporting and controlling system. To this end, the interim manager and his team supplemented the standardized annual budget processes with a weekly updated rolling sales and earnings forecast for the next twelve weeks.
In the course of setting the budget and forecast, the interim manager defined measurable targets for reducing working capital and formulated action plans. An initial action plan was to optimize receivables management. The interim manager first ensured that overdue receivables were identified using standardized reports. He and his team then held discussions with the debtors. This made it possible to halve the overdue receivables.
Cost information forms the basis for discussions with customers and suppliers
The interim manager also introduced product-related contribution margin accounting, particularly for critical programs. The transparent processing of cost information formed a reliable basis for new price negotiations with customers (OEMs). In discussions with the OEMs, the interim manager was able to push through price increases. The interim manager also used the results of the controlling analyses to reduce inventory quantities with regard to critical supply chains and lead times, thereby creating a further cost advantage.
Fixed costs reduced by ten percent within twelve months
The interim manager's analyses and measures made a significant contribution to reducing the supplier's fixed costs by ten percent within twelve months. The optimized liquidity planning creates significantly more transparency and thus helps to identify risks to solvency at an early stage - and to create scope for countermeasures.
