Focus On Product Strengths
A $50 Million cable manufacturer had suffered for many years with zero or minimal profits. Corporate management had decided to close the facility but allowed a project team one last chance to develop and implement a turnaround plan. The team had 13 weeks to generate a viable and believable plan using product and customer profitability analysis, activity analysis and operations efficiency studies.
The project team successfully demonstrated how a return to an 8 percent Return on Investment was possible in Stage 1 of a two-part recovery process. The first stage actions included:
• Eliminating several small unprofitable product offerings that required specialized work centers.
• Reducing specifications on some products where customers were not requiring those standards. A “Better/Best” product grouping was introduced.
• Charging for special services that had previously been given to the customers. These extra services were not even offered by their competitors.
• Reducing overhead costs by eliminating non-value added activities.
The second stage involved the acquisition of another company that doubled its size and provided more economy of scale with less competition.