To drive up operating income from an uncompetitive 3% to 20%, the average of its internal sister subsidiaries
- $105 million division of $3 billion aerospace/defense manufacturer
- Relatively high sector competition for RFPs lead to lower-than-normal margins
- CEO does not want to accept low-margin programs just for the sake of volume and improved capacity utilization.
- This is Brooks International’s fourth assignment for him
Issues and Barriers
- Accurate/required information unavailable in a timely manner
- Standardized/structured metrics not evolving to meet needs
- Best practice-based System for Managing is non-existent
- Other contributors to under-performance include: poor inventory turns and the cost of poor quality and capacity utilization
- Developed and translated SMART goals throughout the organization
- Organizational alignment included development of specific roles/responsibilities for various positions and creation of expert models/best practices
- Designed/aligned systems of production demand/design/planning
- Developed and implemented management/supervisory effectiveness program in conjunction with a new, enhanced System for Managing
- New continuous improvement culture ensures that bottom-line gains will not only be sustained but further improved
As a direct result of this initiative, the CEO client exceeded his operating profit growth objective primarily through better management systems and process controls, which led to more than $20 million in bottom-line improvements. Beyond this, fresh revenue opportunities are now available through improved bid margins, further meeting another of the CEO’s objectives. Primary contributors to the improved operating income included:
- Production capacities increased by $5.2 million
- Overtime was reduced by $3.9 million
- Machine downtime was reduced by $4.3 million
- Cost of poor quality was reduced by $4.3 million
20 (% OI) is a different area code than we’ve been in before. That’s just good stuff.
— President & CEO
Twenty percent is doable, but there is no way the old management team would have done it.
— Regional Vice President