Radical Profit Turnaround at a Major Manufacturing Company

WORKOUT STIMULATES FOCUS AND ENERGY

After several years of losses, a major effort was needed to regain profitability. Schaffer Consulting’s WorkOut process was implemented and helped teams maintain focus and energy through regular reviews of progress.

LEADERSHIP CHALLENGES COMMODITY PRODUCT LINES

A major manufacturer was faced with a daunting challenge. It needed to break through to profitability after several years of losses. With a majority of business coming from commodity products, much of the turnaround in performance had to occur in the production lines for these products in the company’s four plants. In initial discussions, company leadership set a goal of making an improvement of an additional $1.5 million in profit in that fiscal year from the commodity product lines.

SCALE OF CHALLENGE DEMANDED A MAJOR WORKOUT

The scale of the challenge demanded action on a wide front, involving as many people as possible. Schaffer Consulting suggested WorkOut as a way to bring together key people from across functions, facilities, and levels to brainstorm improvement ideas, quantify and prioritize them, and develop immediate recommendations for how to implement the most valuable changes. To find the necessary profit improvements in just six months required a major WorkOut involving 50+ people working in a number of small teams.

The challenge was to define the goal and areas of focus for the WorkOut. Schaffer Consulting worked with the leaders of the business as the “design team” for the WorkOut.

To keep the WorkOut event focused and moving forward, Schaffer Consulting suggested the topics for the small teams – scheduling, production, inventory management and the management of other costs. Schaffer Consulting consultants facilitated the two-day session, keeping everyone on track and energized with the challenge at hand. At the Town Meeting more than 12 recommendations for improvement were approved by the business leader and his team.

Ideas Implemented Rapidly and Effectively. After the WorkOut event, Schaffer Consulting consultants worked with the twelve teams to help them implement their ideas rapidly and effectively. We coached them to stay on track by keeping their goals front and center, maintaining a disciplined work plan, and following through on accountabilities. Schaffer Consulting consultants also continued to work with the WorkOut Sponsor and other senior managers who had taken on responsibility for seeing the recommendations through to completion. We supported them in their role as leaders of the change process, helping them to maintain focus and energy through regular reviews of progress.

GOAL REACHED

In terms of bottom line profit, the WorkOut was immensely successful, enabling the company to exceed its profit improvement goal. In six months the company was able to declare victory on its goal of an additional $1.5 million in profit.

WorkOut Introduced a New Way of Working. In addition, the WorkOut also introduced a number of improvements that lasted well beyond the six month timeframe of the initial effort. For example:

• A cross-functional, multi-plant “best practices” team started to travel to each plant every quarter to review opportunities for improving production methods, sharing best practices, and following up on past ideas. That work generated annual savings of more than $250,000.
• Critical improvements were made in the sales forecasting process – raising sales forecast accuracy to 95% by the 15th of each month.
• Process efficiencies were improved – resulting in dramatic reductions in wasted materials and associated costs of disposal.