The starting situation
An SME in the metal-mechanical sector of 145 people finds itself with losses of approximately 10% on its turnover, without a clear vision of the future and with a totally demotivated organization.
Below are a series of points that further detail the problem:
- High production and marketing costs, around 30 percentage points higher than the sector Totally oversized personnel structure Lack of knowledge of the profitability of its products Lack of knowledge of the profitability of its customers Poor commercial management and pricing policy Totally inefficient internal processes Lack of motivation and high level of absenteeism (16%). Technical department immobile and no alignment with the technical demand of the market. Absence of production management and operations. Clear inefficiencies in order management.
The proposed solution
From the global point of view that Improven Consultores applies in this typology of projects and taking into account the critical situation in which the following solutions were proposed:
Organizational level:
The entire organization chart of the company was redefined, creating new roles (director of operations, director of R&D and director of human resources) and evaluating the management team to make the analysis of person-position suitability as well as training needs at the level executive.
Change management was fully led throughout the project, assuming a high level of responsibility in the project.
In addition, a Regulatory File was designed and carried out that affected 40% of the personnel, supported by the change in the organizational structure and the optimization of processes.
At the Process level:
Each and every one of the company's processes was redefined:
- Production planning and control processes Commercial management process Order management processes Purchasing processes Plant-level production processes Internal logistics processes Subcontract management processes External logistics processes (transport outsourcing).
At People level:
To carry out the organizational change described above, it was necessary to study the profiles of each of the people with some relevance within the organization. Training sessions were held for middle managers in performance management and managerial skills.
On the other hand, the perception that workers had of the company was changed by improving their jobs and making them participate in the improvement committees that were created. This fact facilitated the management of change.
At Cost level:
Regarding the analysis and cost control, the following were carried out:
- Both a strategic and operational cost study identifying that 20% of the company's products did not cover even the variable expenses associated with the product Creation and implementation of a cost system Annual budget analysis and the appropriate tools were provided for the Monthly budget control. Analysis of the profitability of the product lines as well as of the main customers. Launch of "Target Costing" programs for key products. Study of new product lines.
At the Information Management level:
An in-depth analysis of the information systems needs as well as the current situation of the ERP was made.
After that, the use of ERP was promoted in all areas of the company, notably the improvement in the production and purchasing areas.
In addition, the Improven team developed specific software to assist ERP in its Production Planning and Management module.
The methodology
The overall development of the project was carried out using Improven Consultores' own methodology for this type of project, which is indicated below:
In addition, since it is such a broad project, a series of methodological tools were used to help treat specific problems, such as:
- Target costing programs Reference studies (Benchmarking) Own methodology for cost analysis QC. Methodology for quick change SLP Methodology.
The results
After the implementation of the project, some of the quantifiable results were:
- Return on investment of the 5-week project One year after the start of the project the company was put into profit again Clear strategy in the medium and long term Thorough knowledge of its cost structure 45% improvement in customer service Customer Improvement in product and manufacturing processes quantifiable by 1,500,000? Cost reduction in purchases of 4.5% Clear improvement in staff satisfaction Development of two new innovative product lines with higher margins than previous.
