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Turnaround management presentation for WMU
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- 5. Types of Turnaround Growththrough innovation Financially stable Distressed Financially unstable Bankrupt Today our focus is on the second type
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- 7. Turnaround Model –Executing Strategy
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- 10. Financial Analysis Cash Flow Break-even Profitability BalanceSheet Marketing Analysis Products & Services Product Distribution Sales & Mktg System and Strategies Manufacturing & Operations Analysis Engineering Research & Development Company Organization People Issues Strategic & Competitive Position Analyze Situation
- 11. Stabilize Business Financial Management Marketing Management Manufacturing& Operations Management Engineering / Research & Development Management Challenging the Culture
- 12. Org Structure Partial orfull Management Change Strategies and Expectation
- 13. Restructure Business Financial Management Liquidity Improvement BalanceSheet Cleanup Control Systems Development Managerial Accounting Systems Marketing Management Reassess Product Line / Competitive Pricing Exploit and Develop Products Study Customer / Distribution Mix Review Sales and Mktg Strategies Manuf. & Oper. Management Eng, R&D Management Organization and People Management
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- 16. Issues Emerging fromBankruptcy • Heavy Northeast concentration, Marcal brand limited growth opportunities, existing position threatened • Introduction of Small Steps® in 2009 – Re-brand with better softness and tensile strength – Raise prices – Green authenticity – major differentiator • Strategy Response – Differentiate from competitor Own Brands – Create a platform to grow business in new markets 10/20/2011 16Dhamo,S
- 17. 10/20/2011 Dhamo,S 17 IssuesEmerging from Bankruptcy • Employees were stressed out and morale was low • Chaotic environment • High inventories Finished Goods, Raw material, working capital • Issues with Teamster • High injury rate, service and delivery issues • High production Cost • Poor efficiency • Quality issues
- 18. 2009 – 2010Headwinds Slow Adoption Rate Many retailers outside of Northeast wanted proven sales track record for the Small Steps® brand before selling in stores Single-Focus Strategy Initiatives concentrated on Small Steps® At Home (“AH”) opportunities; few resources invested in Away From Home (“AFH”) or Own Brand efforts Sales Decline Exited from perceived unprofitable business; spike in input costs in 2008 (fiber, energy, freight) Increased Competitive Intensity Growth in Own Brand sales led big brands to increase the frequency and depth of price promotions 10/20/2011 18Dhamo,S
- 19. • 16% reductionin cost per ton since 2008 • $3mm in savings • Reduced net working capital by $21mm • 32 staff positions eliminated (25%) Business Transformation Barriers to profitability Course of action Results to date • High production costs • High transportation costs • Operational inefficiencies (poor inventory management and converting efficiency) • High SG&A • “Lean Six Sigma” operational efficiencies and cost reductions • Outsourced to 3PL and restructured purchasing • Working capital reduction • Overhead reduction Stabilize Business Org Structure Restructure Business10/20/2011 Dhamo,S
- 20. • Opened new accountswith significant new customers (Wal- Mart, Food Lion, Kroger) • Significant increase in Own Brand bids ($100mm+ in 2011) Business Transformation Barriers to profitability Course of action Results to date • Lack of sales focus relative to customer needs • Reorganized sales and marketing into customer-focused teams • Added virgin product grades to converted product and parent roll lines • Expanded Own Brand and Away From Home (“AFH”) teams to pursue new growth opportunities Stabilize Business Org Structure Restructure Business10/20/2011 Dhamo,S
- 21. 10/20/2011 Dhamo,S Complete change inSenior Management Team Restructured organization (top to bottom) Restructure Business Value stream map – Order to Cash Kaizen and Lean on both manufacturing and transactional processes KPI/Dashboards Metrics, Follow up, Auditing Pricing of products Policies and Procedures Improved Quality of the product Performance Management Organizational Development Org Structure
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- 23. Safety Improvements Industry Average= 3.50 Safety Metrics – OSHA TIRR 10/20/2011 23Dhamo,S
- 24. Operational Excellence (1) Chartshows reductions using an index based on 2008 cost per ton •Union job classification Complete restructuring from 120 to 22 •Order fulfillment Fill rate increased from 80% to 98% • Scrap – 40% reduction in scrap since 2008 16% Cost per Ton Reduction Cost Per Ton Reductions Through Operational Excellence Initiatives(1) 2008 Material Labor Energy Mfg OverheadKaofin 2011 Note: Being Scrappy 10/20/2011 24Dhamo,S
- 26. Key Take Away Peopleare the best asset = Change Culture Weeding out below average Retaining top talent Bring-in fresh thinkers NJMEP Lean, Kaizen, 6 Sigma Value Stream, RCA, FMEA, 5Ws KPI, Dashboards, Metrics Organization Development (OD) Operational Excellence Performance Management Safety Culture Service/Quality Culture Scrappy - Cost Engagement
- 27. Turning arounddistressed business is stressful ???? Strategy and Execution is critical Cultural Change is essential Adapting to change management is a must Focus, Speed and Scrappy Attitude Lots of opportunity Having Fun Key Take Away
- 28. Key Take Away Failuresin Turnaround Management’s inability to implement change culture and structural change Market and economic conditions Organizational inertia in the face of compelling need to change
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- 31. Water / Change Management Solid Gas Shape/ Flexible StrongWeak Necessity Liquid