The interim manager was hired by a European industrial group as interim CFO to support the turnaround at the group's largest production site with seven plants in Malaysia. The interim manager took on two roles: He managed the Finance, Accounting, Tax (FI) and Controlling (CO) departments. He also supported the local Managing Director (Site Manager) as Finance Business Partner.
The Malaysian company with a turnover of 160 million euros and 2,800 employees had been acquired by the European industrial group several years previously. This was followed by years with a very unsteady performance profile on the operational and financial side. Constant management changes exacerbated the situation. The year in which the mandate took place began promisingly for some of the plants. However, the initially stable order situation could not be sufficiently exploited. Significant quality problems and operational inefficiencies led to an unreliable OTD (on-time delivery) rate and high inventories with a high risk of impairment. Many quarters with negative EBITDA led to high employee turnover and low motivation among managers and employees. This is when the interim manager began his work.
Multi-stage turnaround plan developed without a focus on cost cutting
Together with the site manager and segment management, the interim manager developed a multi-stage plan to achieve the turnaround. After analyzing the data, there was agreement that a turnaround could not be achieved primarily with a cost cutting exercise, as this would have further damaged the already severely impaired motivation.
During this phase, the site manager and interim manager placed great emphasis on transparent and open communication, both internally and with the headquarters (HQ) - regardless of whether it was about successes or failures. Both were convinced that this was the only way to achieve reliability and trust at all levels.
Management and controlling reorganized and communication processes optimized
In a first sub-project, the site manager and interim manager optimized the organizational and reporting structures and adapted the communication processes to the new set-up. The Site Manager appointed a new Head of Production and a new Head of Supply Chain/Materials Management. In addition, several plant managers were replaced or rotated. All with the aim of having the right managers in the right place.
In Financial Controlling, the interim manager and his team set about quickly establishing a robust reporting structure. He eliminated a number of structural deficits in the analysis and reporting of financial results. The management team and organization now had a clear picture of the budgets and internal targets. In the next step, the interim manager developed an internal controlling forecast process that made it possible to analyze and understand current events more quickly.
Losses significantly reduced after five months and motivation improved
After five months, the first successes were recorded. The results improved, the heavy losses were stemmed and the first signs of positive energy could be felt in the team. This was all the more remarkable because during this period it also became known that the parent company was preparing to sell the subsidiary. During this difficult phase, the interim manager was able to convince his department heads in intensive one-to-one discussions to stay on board and continue on the turnaround path, which was now beginning to bear fruit. The interim manager was asked to extend his mandate by five months.
Quality offensive and 6-S program make a major contribution to the turnaround
Despite the positive trend, the overall situation, including the quality risks, was not yet under control. Segment and site managers had set up a 6S program and a quality initiative, but the results were not yet satisfactory. Site Managers and Interim Managers improved the 6S program by clearly naming responsibilities for major deficits. It was important to avoid the "loss of face" feared in Asia with the necessary empathy. At the same time, managers were visibly highlighted and rewarded for good performance.
Site managers and interim managers also took every opportunity to underline the importance of the program. This included joint daily 6S rounds in various plant areas (walk the talk). After some time, the 6S ratings improved in many areas and became an important component of the turnaround.
Optimized inventory control and revenue tracker developed and introduced
In order to further improve controlling, the interim manager set up a standardized profit and loss statement for each plant. Together with the Material/Supply Chain Manager, the Interim Manager further promoted transparency by developing and introducing a weekly inventory trend based on quality grades. The package of measures led to a significant improvement in overall inventory management and faster identification of problem stocks.
In addition, the interim manager implemented a revenue tracker for daily sales and quantity reports. He also introduced weekly forecast meetings, i.e. coordination meetings between finance, supply chain, production and management. The increased transparency led to a continuous improvement in overall inventory risks. The second HQ inventory audit confirmed the progress made in this phase.
EBITDA positive after eight months - further improvement in motivation
After eight months, the first positive EBITDA result was achieved. Product quality improved and delivery reliability (OTD performance) also showed significant improvements. This trend was maintained in the following months. The renewed motivation of employees and managers was now very noticeable.
Cost measures prepared to bridge the slump in orders
In the fourth quarter of the following year, the order situation changed for the worse. Site managers and interim managers now had to define a series of short and medium-term cost measures in order not to jeopardize the results achieved. This could be accomplished within a short period of time, as the interim manager and his controlling team had already developed and rolled out a conceptual and analytical framework. This allowed the cost center managers to quickly identify the potentials, coordinate them with the site manager and interim manager and implement them. The interim manager was asked to extend his mandate for a further three months.
Inventory targets achieved and handover to successor initiated
In the end, the inventory targets were also achieved. The third and final round of internal audits concluded with a very positive result. It recognized the great efforts made by the interim manager and the teams involved and the excellent results achieved.
Financial results and inventories continued to develop positively in the following months and the interim manager was able to hand over to the new (permanent) CFO at the end of the year.
