A company that had been in business for more than 50 years with production facilities in the southeast, midwest and west coast was languishing in a growth environment. Complacency became the culture within the company and long tenured executive management failed to recognize the changing dynamic of the industry resulting in high overhead, substandard quality, loss of business and lack of profitability.
After performing an in depth evaluation of strategies, personnel, systems, processes, and customer demographics, one issue we found that the company was overstaffed, in both management and labor. Unfortunately, several members of the senior management team were unable to adjust to the changes within the industry and projected a defeatist attitude that permeated the company. This contributed significantly to the breakdown in planning, lack of cost control, poor quality, backlog in production and ultimately customer attrition.
We worked with the principal to develop, implement and execute a plan to aggressively restructure the company. The program incorporated stringent cost containment measures, retirement of some personnel, realignment of responsibilities, and elimination of some positions within the company. It included: processes for accurate forecasting, strict quality control, and continuous improvement quality assurance; an employee training program; production quotas and incentives; and an aggressive customer relations campaign. Additionally, we recognized as an opportunity a shift in market dynamic that most of the industry viewed as a threat.
The successful turnaround resulted in: a three fold increase in production while reducing warranty returns from 30% to less than 1%; a 40% reduction in employee expense; a 15% reduction in total overhead; and, a 17% gain in revenues.
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