The subsidiary of a large retail group had run into financial difficulties. The company, which operates in the electronics sector (B2B), had initially grown continuously over the years. However, the profitability of new customer relationships was not sufficiently managed.
In addition, the problematic replacement of the ERP system and the significantly below-plan performance of a new logistics center caused considerable destabilization of key business processes. This had a critical impact on customer relationships, earnings and liquidity. In addition, the company's inventories rose significantly faster than sales within a short period of time due to poor planning, which put further pressure on liquidity.
The interim manager was hired to support the management, which was inexperienced in crisis situations, in overcoming the challenges and returning to profitability. It was particularly important for the shareholders to work together with the company's management in a critical and collaborative manner.
Coordination of ERP optimization | Logistics performance improvement driven forward
The interim manager quickly analysed the current situation and worked with the management team to develop a comprehensive action plan, which was then implemented step by step according to economic priorities.
The initial focus was on stabilizing delivery performance before the peak season in order to avoid the threat of customer churn.
The interim manager also temporarily took over the coordination of the ERP optimization and the newly established project to increase performance in logistics.
With the onset of the coronavirus pandemic, new challenges arose that were met with a series of additional measures to protect employees, ensure process reliability and reduce costs.
Business intelligence functionalities and planning tools significantly expanded
It turned out that, in addition to numerous process-related problems, there were also considerable deficits in the area of monitoring and control systems. The interim manager met these challenges with a comprehensive expansion of the business intelligence functionalities and the revision of numerous planning tools. These included inventory and purchasing planning, transfer planning between different logistics locations, customer-related contribution margin accounting and comprehensive coronavirus risk planning.
In addition, the interim manager successively identified a considerable need for corrections in the use of goods, inventory valuation and the creation of provisions. According to the results of the analysis, the deviations were mainly caused by incorrectly implemented processes in the new ERP system. This initially resulted in further negative effects on earnings. However, the unavoidable corrective bookings also increased planning security for the future.
Balanced operating result achieved despite considerable coronavirus burdens
After initially stabilizing customer relationships in a highly seasonal business, a balanced operating result was achieved in the past financial year despite considerable coronavirus burdens.
In the second half of the year, the measures already led to a significant return to the profit zone despite renewed coronavirus lockdowns. This demonstrates the company's positive economic outlook for the future.
With a reduction in inventories of more than 30 percent while maintaining full delivery capability, the company's liquidity situation was also significantly eased.
The interim manager will continue to support the company as a member of the advisory board after 19 months of the project.
