In spring 2016, the interim manager was commissioned by a US company in the packaging industry to make seven production sites in Europe fit for realignment. The company had previously mainly supplied the food and beverage industry. The US company now wanted to win new customers for labeling systems and labels in the life sciences and pharmaceutical sectors with a pilot project in Europe.
Converting production to new complex products during ongoing operations
The transformation was to take place during ongoing operations and with existing resources, previous sales were to be maintained - and profitability was to increase as much as possible. This presented a particular challenge. After all, packaging goods for the food and beverage industry are produced in very large batches - with a very small gross margin. Disruptions in production almost always have an immediate impact on profitability. This is why managers do everything they can to avoid disruptions and delays in operations. The production of rather simple packaging goods for the food and beverage industry was optimized accordingly.
Labelling systems and labels for the life sciences and pharmaceutical industry, on the other hand, are requested in very small quantities and must also meet many specifications with great attention to detail. This requires a correspondingly high level of customization, trials and test runs, which in turn disrupted the ongoing production of the food products - and thus also jeopardized the already low margin.
US parent company had misjudged the possibilities of the plants in Europe
At the beginning of the project, the interim manager's main task was therefore to convince the plant managers to allow the model project to run alongside routine business. Once the first steps had been taken, it soon became clear that the US parent company had misjudged the status of the plants in Germany, England, France, Ireland, Italy and Switzerland. Interim managers and executives shared the view that the successful implementation of the model project would require considerable investment, for example in new processes in the areas of organization, cleanliness, warehousing and logistics as well as training and further education. The managers estimated that the necessary introduction of Six Sigma alone to improve the quality of processes and products would take two to three years.
Budgets and plans developed for changes during ongoing operations
Parallel to the launch of the model project, the interim manager was in intensive contact with the parent company for months. Together with the branch managers, he drew up a series of budgets and plans for the Management Board and Supervisory Board in order to make the best possible progress with the changeover during ongoing operations. He also transparently presented the risks of the changeover.
Project ended after 18 months | Successful acquisition of a competitor
After the parent company had stuck with the model project despite all the difficulties, there was a turning point after 18 months. The Supervisory Board decided to abandon the project. The most important reason: the opportunity had arisen to acquire a competitor with core competencies and market access in the field of labeling systems and labels for the food and beverage industry. This increased turnover by more than 50 percent in one fell swoop.
European sites benefit from improvements from the project phase
On the one hand, the change in strategy was welcomed by the management team at the seven production sites, as they were now able to focus on their core business again. On the other hand, the 180-degree turnaround was regretted. This was because the plants had benefited from the fact that various production processes could be optimized during the interim mandate and productivity had increased. In addition, the model project had shown that the sites were perfectly capable of reacting proactively to challenges.
The client was very satisfied with the result of the interim mandate. The US parent company offered the interim manager the opportunity to continue supporting the optimization of the European plants.
