A leading global manufacturer of car rims from the USA (Detroit) had signed the contract for a joint venture with a Czech steel producer for a rim plant. Thanks to project financing from the World Bank and an international banking consortium, the project plan to double production capacity to 6.5 million car rims per year was approved. The company sent an expat team of engineers from America and achieved the first project goals within 18 months: the construction of a modern paint shop and the installation of state-of-the-art production lines.
In view of the imminent first deliveries of rims to new customers in Germany, the upcoming first installment payments to the banks and the sometimes difficult communication situation among the project participants, the company sent the current interim manager as interim CFO and advisor to the top management. The interim manager was chosen primarily because of his market and language skills. At the time, he was CFO and a member of the supervisory board of an Italian-French packaging joint venture with a leading Czech paper group.
Driving the joint venture forward and ensuring smooth communication
Together with the local team and American engineers, he was tasked with driving the project forward on site at the plant. Another important task was to ensure smooth communication with the stakeholders, including the management in Detroit, the joint venture partner as well as customers, banks and suppliers. In parallel to this task, managing the financial performance of the joint venture in line with the agreed metrics in the syndicate agreement and creating a team in finance was a high priority.
Causes of poor initial deliveries identified and addressed
When the manager started his assignment, the first deliveries to new customers in Germany had started and there were customer complaints to the parent company in Detroit. The deliveries were far below the requested quantity and were also late. The interim manager therefore set about analyzing production with the local production team. He quickly established that regular breakdowns on a press machine were the main reason for the shortfall.
In order to continuously monitor and improve the performance of the press, he launched a kaizen project to document the output per shift and all machine breakdowns with their causes. At the same time, the interim manager created a business case for a second press machine (investment requirement: 10 million dollars), which was approved by the US company within 2 weeks.
Qualitative and quantitative improvements increase customer satisfaction
After a fundamental review of the planning and logistics processes, the manager presented new production and delivery plans. Within just a few months, the quality and quantity of deliveries had improved to the highest level of customer satisfaction.
Finance area realigned - new installation of Oracle
In addition to the work in production, the interim manager was also entrusted with the realignment of the finance area in another sub-project. It had already become clear in the first few weeks that the financial figures were not reliable. During the analysis, the interim manager discovered that the Oracle financial software had not been installed properly and that the employees had not been adequately trained. Many employees in the department were unable to use Oracle efficiently. This led to significant difficulties and delays in the production of financial reports. The interim manager then arranged for Oracle to reinstall the software and provide comprehensive training for all employees.
He then commissioned an auditor to carry out an interim audit as of June 30, as an important project review with the bank consortium was planned for the beginning of September. This required reliable financial figures with profit and loss, balance sheet and cash flow reports in accordance with GAAP and IFRS.
Processes for new monthly financial statements developed in due time
The figures from the finance department were not only unreliable due to the problems described above, they usually arrived 30 days or more after the end of the month. This made it difficult for the local management team to identify and address the critical cost issues.
In order to remedy this, the interim manager initiated a workshop with the finance team. This resulted in proposals for a new month-end closing process that guarantees reliable key figures within 3 days. The new process was documented in the form of instructions with a process diagram and responsibility matrix. The management team responded positively to the reduced lead time - and the parent company and members of the banking consortium were also very satisfied with the project review and reporting.
Renegotiated terms and introduced cash flow management
In order to ensure repayment of the loan to the banking consortium, the interim manager set about establishing a cash flow system. After negotiating improved payment terms with top customers and suppliers, he introduced a granular rolling cash flow model. On the manager's recommendation, it was agreed that the cash flow model would be presented twice a week in the morning team meeting.
Transferring a future-proof finance department to a successor
In order to compensate for understaffing and retirements, the interim CFO increased the number of staff in the finance department. At the same time, he identified two capable junior managers, whom he developed as potential successors - also at the client's request.
