A medium-sized manufacturer of special forklift trucks had acquired another company in order to expand its portfolio. The acquired company had previously run into financial difficulties (pre-insolvency status) and was therefore available at a favorable price. A year later, the specialty forklift company acquired a very well-positioned attachment manufacturer in order to further deepen the value chain. However, the acquired company was in a strategic crisis. In addition, a number of managers and experts were unsettled and willing to change, as the previous owner had left.
In this situation, the interim manager received a mandate for both companies as Interim CEO and Interim CRO. The assignment was:
- Integration of the acquired companies into the newly founded group of companies while simultaneously optimizing all processes and leveraging synergies
- Avoidance of insolvency of the southern German company and complete turnaround
- Strategic Realignment of the central German company and avoidance of the departure of key managers and experts
Increased financial strength and averted insolvency with lean management
In the case of the first acquisition, the interim manager realized quick wins as a first step. He used lean management methods in all areas. At the same time, he reduced the working capital in order to improve the company's ability to finance itself. In order to optimize the supply chain, he negotiated new, extended payment terms with suppliers and set up consignment warehouses. A reduction in personnel and wage/salary cuts as well as the merging of functions with the sister company and the "parent company" (reduction of fixed costs through the establishment of shared services) also contributed to the rapid strengthening of financial power. Last but not least, he agreed a higher credit line with the house banks.
Production shifted from loss-makers to low-wage locations
After implementing the quick wins, the interim CEO developed a new strategic direction for the company. Once the unique selling points had been defined, a new product catalog was developed in consultation with the parent company.
The interim manager had already identified a number of products as loss-makers. However, the company could not do without these products. The interim CEO therefore made make-or-buy decisions. The production of these products was then relocated to low-wage locations in China, India and Brazil in the form of joint ventures.
In order to strengthen the design and development department, the company recruited experts from well-positioned competitors. At the same time, work on the new product lines was driven forward with great intensity.
Reorientation of the product lines to expand the value chain
The second company, the one to expand the value chain, generated a good profit with some products. However, it was already becoming apparent that some of these "cash cows" would become "dying dogs" in the not too distant future. There was also a lack of rising stars. The interim manager initiated a reorientation by initially outsourcing the production of loss-makers to suppliers in low-wage locations.
Keeping managers in the company through a remuneration concept and team building
In order to keep the managers and experts who were willing to change jobs in the company, the interim CEO initiated a team building program. This included numerous discussions as well as team measures that resulted in a stronger bond. A completely new remuneration concept also made a significant contribution to improving employee retention.
In order to increase retention even further, shared services and material group management were introduced across all companies in the indirect area. In order to give more weight to individual positions, important material groups were deliberately assigned to this subsidiary.
Last but not least, the company was able to poach top sales managers from competitors, who increased the pride of the entire workforce through their sales successes and thus strengthened loyalty to the company.
Significant increase in turnover in both companies in the first year
The site, which was threatened with insolvency, was saved from bankruptcy. After significant losses in previous years, it achieved an EBIT of around 5 percent in its first year. Turnover increased by 20 percent with a 15 percent smaller workforce. The company launched new products on the market, which significantly enhanced its image.
The second location also increased its turnover (by 15 percent) and achieved an EBIT of more than 10 percent. Apart from a few departures, the core management team and experts were retained.
Shared services significantly reduce fixed costs
Fixed costs were significantly reduced across all locations, including the "parent company", thanks to the establishment of shared services. The new material group management and the optimization of the supply chain significantly reduced working capital and created purchasing advantages. In many areas, the companies rose from B or C customers to A customers.
In both companies, the interim CEO introduced the concept of lean production and lean administration. As a result, all business processes were significantly streamlined. The introduction of new SAP software also contributed to this.
In the course of the interim mandate, new management teams were found for both companies. The clients were very satisfied with the outcome of the mandate.
