Lessons learnt from companies that brought in interim executives as experts rather than risking the business’s future.
This is part of a series on interim executives filling critical gaps, for part 1 please click here, for part 2, click here, part 3 click here, part 4 here and part 5 here.
Interim General Manager: Who’s Watching the Local Shop at Global Companies?
While there are many ways in which an organization can ensure they don’t get sunk by the competition, one major way to make an impact is to bring in an interim executive. From finding a whole new path to implementing rapid course corrections, an interim executive can reset, rejuvenate, and reignite a business that’s struggling to turn its ship.
A great example is a small-to-midsize company in the heavy- duty manufacturing industry. Being a family-owned and foreign-owned business added to the challenging situation of declining performance from its U.S. operations. After consistently sliding the wrong way for twelve months, company ownership decided to bring in an interim general manager, Horatio, to right the ship’s course before finding a longer-term leadership solution for the struggling operation.
The company had a global presence with factories throughout the world. Unfortunately, the corporate leadership team had lost control of its U.S. plant performance and wasn’t able to self- correct. Some of the top issues included negative profits, declining sales, rampant quality problems, missed delivery commitments, and increasing customer complaints. It was also no surprise that employee morale was at an all-time low. Key customers were pulling their orders and sending them to competitors.
Within the first week, Horatio quickly identified common issues he had seen many times before. The on-site management team was inexperienced; it lacked the know-how and leadership to drive peak performance and to turn things around. There had been a suboptimal manufacturing resource planning (MRP) implementation with minimal training, and the team was overwhelmed by reactive crisis management; there was no time for proactive improvements.
Horatio immediately established a daily focus on specific bottlenecks affecting quality and delivery. After a review of poor purchasing patterns, he stopped excess purchasing activity through daily review meetings and MRP system reviews. From these meetings, he helped the team identify system errors and correct the MRP forecast, safety stock errors, and redundancies that were driving the purchasing. He launched a thirty-five-day timeline to reduce much of the profit loss through the elimination of an external warehouse that was no longer needed. Sales and operations planning were established with cross-functional collaboration, including forecast reviews and capacity planning.
To minimize the quality issues, the team expanded QA inspection within the plant, new products, and shipping activities. Through this process, the team finally gained the ability to self-identify where some bottlenecks were occurring and to make adjustments to improve.
One of the biggest challenges for the sales team was their number one business driver—sample orders. When these took too long or lacked in quality, driving new business became next to impossible. Cross-functional meetings and daily reviews helped to refocus on this area, as well as to share improvements made in other areas that could be applied to this department. Increased communication and visibility provided everyone with what they needed to be successful.
Three months later, it was difficult to believe it was the same company. On-hand inventories were rapidly declining, and the closure of the external warehouse quickly gave the division some much-needed cash flow. The sales team saw sample-order lead times reduced by more than 50 percent; volume capacity to deliver high quality, on time increased by a factor of three. Overall cost reductions were made while improving the manufacturing process and decreasing defects and reworks.
The biggest indicator of customer complaints steadily declined, and sales staff reported they were back in good relations with their key customer accounts. After only a month of working with Horatio, the division experienced the lowest internal defects and highest manufacturing productivity that it had seen in the previous twelve months.
The operations manager of the division said it best: “It has been extremely enlightening to work with Horatio the past few months. His clear insight and logical approach have clarified a very irrational situation. His operational expertise has made a forever lasting impact in our direction and approach; he has aimed us in the correct direction for success. His ability to assess our leadership and make corrections that we just overlooked has been a tremendous asset.”
Lesson Learned on Interim Executives
Often, it just takes someone with an outside perspective and experience in similar types of situations to help a team get back on course. Nothing can replace on-site leadership with knowledge of the local culture, but an outside perspective can reveal where the problems exist by peeling away layers of organizational blinders and inertia.
3 months + 1 interim executive (total cost of $44,000) = Savings of $500,000+
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