BUSINESS TRANSFORMATION: THE CHANGE TO SUCCESS
Global corporation in the chemical industry achieves turnaround through business transformation
Being profitable at 30 sites worldwide and take over market leadership – the goals a large chemical corporation and supplier to the automotive industry set for its business transformation. Led by the Horváth best practice approach, the company achieved comprehensive change across all levels of the organization and reported record financial results prior to project completion.
The provider of automotive technology had set an ambitious goal upon launch of the business transformation. Accomplish the turnaround with triple digit EBIT target was a bold task considering the complex setup as part of an internationally operating corporation with over 30 sites across five continents. Many cultural barriers had to be overcome to establish a common understanding of the need for change. The company had to improve its profitability and the entire organization needed to pass through a comprehensive change process for a sustainably successful future.
SUCCESSFUL BUSINESS TRANSFORMATION WITH HORVÁTH BEST PRACTICE
The company got experts from Horváth on board to support its international team as the consultants had previously led the overly successful transformation of a fellow subsidiary which convinced management of the best practice approach.
The Horváth team was assembled from four international locations and implemented a tailored transformation program together with the client. The transformation office played a key role, made up of specialists from both partners who were established right below top management level. They analyzed the status quo, defined a target picture and steered the over 1500 individual measures of the project that were developed in collaboration with the respective organizational units before driving implementation across regions.
OPTIMIZED ASSET EFFECTIVENESS AND TRANSPARENCY
Increased asset effectiveness alongside more transparency of processes and data on shopfloor level were supposed to increase EBIT and profitability. The product portfolio has a vast array of variants and the individual production sites manufacture highly customized solutions tailored to customer specifications and local regulatory constraints, leading to extremely complex production processes.
One of the starting points for the transformation were the long cycle times in manufacturing. Production schedules were changed last minute at times, with negative impact on the entire supply chain and high unit cost. The lack of standardized KPIs for comparison of performance and steering across the organization further complicated matters. To achieve project goals, transparency of cost and performance across individual production sites had to be established. Global supply chains were further stabilized by rigorous enforcement of “frozen zones” for production plans, timeframes when no further changes were allowed and customers made aware of these rules.
OPEN COMMUNICATION FACILITATES SUSTAINABLE CHANGE
At the same time, the entire organization had to be realigned and customer centricity made even more of a focus. It was crucial to set up a global steering model to utilize the individual strengths of sites more effectively and to foster collaboration across functions and regions. To achieve this, a new target operating model was drawn up and implemented together with the client. Key competencies were defined and based on availability either built internally or acquired externally by utilizing targeted hires based on specialized skill sets.
Engagement and commitment of senior management is always vital for success of transformation processes. Leadership needs to consistently back the project and lead by example when it comes to execution and implementation to convince the entire organization of the need for change. Employees of the automotive supplier had to build a collaborative attitude and a mindset of continuous improvement.
Open, regular and purposeful communication played an important role. Works assemblies, team meetings and newsletters were among others utilized to inform the organization of change, goals, planned initiatives and project progress. As the transformation progressed public presentation of success stories and appreciation of accomplishments became more and more important to uphold motivation.
QUANTIFYING SUCCESS OF BUSINESS TRANSFORMATION
To enable transparent visualization of project progress and success the transformation office developed tailored impact tracking reports for all measures. Iceberg charts were set up to visualize weekly progress across maturity levels, performance dashboards and weekly progress overviews by workstream and region outlining financial impact across the project. In addition, Horváth experts supported the finance function to increase cost transparency and an optimized product cost calculation. The company planned implementation of a business intelligence solution and is utilizing a transitory tool developed by Horváth to bridge the timeline. Due to transparent data and processes the client does not only have a clear picture of project progress, but also has the required information for performance management across sites to effectively steer the business.
The automotive supplier has made the transformation in cooperation with Horváth a lighthouse case. The consulting team enabled the company to drive change from the inside and embrace the continuous improvement mindset necessary to be successful. Even prior to project completion the business was able to post new record financials in the latest quarterly results. Following successful reshaping of the organization, the company is now very optimistic about future developments.
The consulting team enabled the company to drive change from the inside and embrace the continuous improvement mindset necessary to be successful.