Making the Necessary Change
4/10/2019 by Bailey
A Partner in a Connecticut based law firm contacted B&B regarding a challenge in a privately-held business. The CEO of the niche manufacturer was experiencing rising revenues but decreasing profitability due to quality and productivity issues that were increasing expenses and impacting on time delivery.
B&B met with the President to learn about the history and evolution of the business, current organization structure, and the order management and production flow process. B&B asked a lot of questions that provided insight on procurement of commodity based materials, product development, quality issues, run rates, manufacturing capacity, open orders on the floor, bottlenecks, grading of leadership, systems integrity, metrics management, impact on margins, expectations of key customers, supply chain, culture, demand planning, S&OP, and so forth.
The business model had changed but current leadership for manufacturing and supply chain had not adjusted to those changes. Quality issues were directly associated with production and demand planning inefficiencies. Revenues were growing but business valuation was suffering and profits were declining. B&B recommended a change in leadership for a new Director of Operations and was engaged. B&B partnered with the CEO to define criteria, short term goals of the role and the evaluation process. B&B researched, evaluated, and presented four candidates that met all the criteria and partnered with the CEO on the selection process. Total search process took 28 business days. New Manufacturing Director was able to streamline productivity, eliminate nagging quality issues, and improve on-time deliveries to 97% within a six month period.
Positive cultures drive profit and employees who fit that culture outperform those who don't. Modifying or changing a culture becomes an art form that can be disruptive but necessary. Key factors are (1) the resiliency of employees to bounce back from negative emotional encounters as change evolves; (2) leadership with strong change and project management skills that can influence and persuade on the need for change; (3) ability to unlearn and accept new ideas and processes; (4) the willingness to challenge the status quo and accept innovation; and (5) manage uncertainty until change is accepted.