The Interim General Manager was commissioned by an Italian company in the electrical industry for a restructuring mandate in Tianjin (China). With its Chinese subsidiary, the globally active company is a technological partner to numerous companies in the development of new systems for driving electric and hybrid buses and medium-duty trucks. The group also supplies a large number of other companies with electrical and electronic components.
The assignment originally consisted of two parts: The interim manager was to relocate the company's branch to an area in the north of Tianjin within three months to reduce costs. In addition, the aim was to quickly bring the company into the profit zone through improvements in quality management and lean production.
Relocation: conditions and benefits negotiated with the local government
At the beginning of the assignment, the interim manager coordinated the relocation of the branch and the production facilities with the local team. The layout and process flow in the new plant were the same as in the old plant. This had been agreed with the headquarters prior to the mandate. After the move, it turned out that the application for an environmental license had not been submitted. The authorities had set the site strict targets for emissions. However, this target was unattainable for technical reasons. Thanks to his many years of experience in dealing with Chinese authorities, the interim manager managed to negotiate less stringent requirements and other concessions with the local government for the following years.
Order situation deteriorates drastically in a short space of time due to poor quality
After the move, the four old, dilapidated production lines were set up in the new plant in exactly the same way as at the old site. One for a major US customer, one for a South American customer and two for Chinese customers. However, the processes were not optimized, the employees were not qualified for the work and the machines were not maintained. Soon after the move, the problems worsened. The South American customer changed suppliers. As a result, the interim manager had to close this production line. In addition, the Chinese customers reduced the purchase quantities.
This meant that the major American customer became vital to the plant's survival. The US customer was also dissatisfied with prices, quality and delivery reliability and had already started looking for a new supplier. The interim manager's most important goal was now to improve production as quickly as possible and align it with the needs of the US customer.
Asaichi board and plant tours introduced for improvements in production
The shortcomings in production were partly due to the fact that the management paid little attention to the production lines. Instead of focusing on the problems in the value chain, management got bogged down in meetings and individual measures. As a result, the morale of employees and the production workforce also suffered.
In order to remedy the glaring production deficiencies, the interim manager improved the qualifications in production by developing a continuous improvement process with the aim of achieving lean production. He initiated an Asaichi board and morning planning tours to inspect, discuss and document problems on site, discuss solutions and implement them with deadlines.
Six Sigma initiative and staff reduction increase productivity and capacity utilization
In order to meet the many challenges, the interim manager hired a specialist (Six Sigma Black Belt). The joint initiative quickly led to improvements in production. Productivity increased by 38 percent and machine utilization rose from 84 to 92.5 percent.
In the next step, the interim manager combined a reduction in staff with a training offensive. In consultation with the headquarters, he reduced the headcount. For the remaining employees, he developed a training program including store floor management in production, engineering and purchasing. The interim manager also convinced his client to invest in the machinery.
Quality initiative launched with the US client, defect rate reduced to zero
In order to save the collaboration with the American client, the interim manager initiated a close collaboration with the US company. Together with the customer's quality engineers, he developed the processes with which improvement requests could be implemented and the quality of the products ensured. Among other things, he succeeded in reducing quality defects to 0 using poka-yoke stations and remote camera monitoring in Chinese production and shortening throughput times by 50 percent, which led to on-time deliveries.
Operating result increased by 400 percent within 36 months
The major American customer was delighted and increased the number of orders. In the further course of time, the improvements made by the interim manager reduced the internal failure rate by 86 percent and cut scrap costs by 97 percent. The site also passed all audits (9001/18001/14001). The interim manager's mandate was extended several times due to the numerous tasks and successful interim steps. After a total of 36 months, the relocation and restructuring of the branch was successfully completed. As a result, the order situation improved considerably. The sales volume increased by 30 percent and the operating result grew by more than 400 percent. Total labor costs were reduced by a fifth.
