Turning Around A $45 Million Company In A Declining Market

Summary: Doubled EBIT and increased sales 45% with new products.

Problem: The $45 million manufacturing unit had a record of new product starts with cost overruns and late contract delivery that created a severe strain on the division P&L. The unit was a primary candidate for the divesture list. The products were military ordnance items with rigorous performance and safety criteria produced under government contract. 10% of sales were government contracted R&D with potential follow-on production. Our goal was 70% of current production to be from products less than 3 years old.

Approach: These were highly technical products were the scientists and engineers could not easily be replaced, yet they controlled all problem resolutions to meet production schedules. My primary approach was to build a collaborative environment, get these experts to participate, and then provide local and division visibility and recognition on their performance.

Results:

	Doubled profits
	Increased sales 45%
	Increased inventory turns fourfold (14.2 turns)
	Grew order fulfillment to +99%
	Grew ROI (RONA) to high of 56%
	Reduced new product cycle time from idea to production by 30-75%
	Exceeded expectations with 90% of current sales from new products and processes
	Brought 37 major new products to market, each with marketing, facilities and capital investments in $4-10 million range

How we did it: My primary tools were clear objectives, accountability, communication and visibility. I instituted program management-type processes which included action items/targets, due dates and assigned responsibilities from each meeting. All action items lists were reviewed in management team meetings. The objective was to make sure that collaborative relationships were maintained among production, engineering, marketing, R&D, finance and the customers on a regular basis.

	Weekly production reviews with monthly R&D involvement
	Problem resolution/new production start-up meetings as appropriate: 5-7 days a week - twice daily/daily/twice weekly/weekly
	Supplier Meetings: pre-bid, contract award, start-up and progress meetings
	Monthly R&D reviews for performance and budget
	Quarterly Customer Reviews with production and R&D
	Quarterly R&D reviews with production

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