A group for the production and sale of kitchen systems had doubled its turnover within five years thanks to strong internal and external growth. Twelve national companies in EMEA were successful in their local markets. Nevertheless, the Group was not fully satisfied with the results. The majority of the twelve individual companies were managed as independent companies. Different systems and evaluation rules made it difficult to compare results. The Group had difficulties defining and implementing synergies and strategies. For this reason - and to give the business new momentum - the Group decided to introduce EMEA-wide management for production, logistics, sales and support functions. The objectives:
- Harmonize business and results management based on best practices
- Secure reliable data and information to support local and group management and the development of shared services
- Federate the many ongoing IT projects in a resource-efficient manner and refocus on business results
- Drive profits
The interim manager was commissioned as project director and process expert for this initiative. The planned duration of the assignment: 18 months.
Harmonized and business-oriented performance reviews developed
The local companies were manufacturing and distribution companies, but with different brands and product ranges. The reporting system was strongly oriented towards financial accounting and unsuitable for business management. The local reports and analyses were very differently developed and structured. In addition, the management reports were very much focused on the analysis of target/actual deviations and weak in terms of corrective measures or forecasting.
The interim manager therefore initially set about introducing harmonized and business-oriented monthly management reviews. He defined the following key points:
- Uniform and meaningful key performance indicators (KPIs)
- Performance calculation of the main activities in production and sales
- Corrective measures and forecasting for the current quarter and year-end
After coordinating representative KPIs with production, logistics, sales, finance, HR in the local companies and Group management, the interim manager developed a template, which he further improved with the experience gained from the first monthly reviews.
Solution found for the critical construction site of data availability and quality
One challenge was to create uniform and reliable data in the individual local companies and to store and evaluate this data centrally. To benefit from improved information more quickly, the interim manager chose a pragmatic approach. For example, he had the local companies produce aggregated production, purchasing and sales analyses according to a coordinated product classification, without having to wait for a central product database and for conflicts between different structures to be resolved. At the same time, he specified and planned the central target system.
Separate profit calculation introduced for production and sales
As the individual companies also produced themselves, it was particularly important to be able to measure and control the performance of the plants in order to define and implement cost reduction programs and an industrial strategy. The interim manager therefore defined a standardized profit and loss calculation for production and mapped it in SAP. Based on standard costing, it became clear how effectively the factories controlled volumes and costs and how the consolidated results of the manufacturing function were presented. The interim manager also specified the link to the overall profit and loss account. The application of an internal transfer price between manufacturing and sales also made it possible to measure the performance of the sales organization.
New management culture and EBIT increase successfully implemented
The group and company now have clarity about results and the opportunities to improve these results. Many managers first had to get to know the management concepts. The interim manager promoted the new management culture with interfaces and internal service level agreements through an extensive training and coaching program.
The first new-style business reviews were conducted as early as the third month of the mandate. And the aggressively planned EBIT increase was already achieved in the first year.
The development of a process for Sales & Operation Planning (S&OP) after the mandate proves that the interim manager was able to achieve a lasting level of maturity in the organization and among the people. By coordinating production and sales, the Group can plan efficiently to ensure that the right products are available without overstocking and that production capacity is optimally utilized. After a long period of awareness-raising work, a pilot was launched in one factory. Within six months, the reliability of the forecasts had improved to such an extent that the process could be implemented in other factories.
