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A
$500m t/o group was growing at around 30% pa. The European
part of the group, responsible for 45% of sales, was performing
poorly in profit and cash terms. This had a considerable impact
on the performance of the group and on its ability to sustain
required growth.
Collingwood
was hired as CEO and CFO of the business with particular responsibilities
in the areas of operations and finance. The main improvements
made were to:
- Re-negotiate
contracts were appropriate. Previously some of the firm's
contracts operated at a loss, and several at very low margin.
In some cases contracts could be re-negotiated, but in other
cases poor business had to be gradually replaced by profitable
business.
- Improve
logistics. Supplying quality product on time to large production
lines made a significant difference to our customers. A
new scheduling system was developed which helped make sure
product was supplied on time and customer product lines
functioned correctly.
- Improved
receivables performance. Proactive control of receivables
allowed the company to move from 35% current debt to 95%
current debt.
- Rationalise
stock. Previously European parts had included a considerable
quantity of very old parts. In an industry where product
very quickly becomes obsolete, we were able to carry out
a rationalisation that allowed the company to focus on the
more likely customer stock queries.
- Pan
European Service Network. This was set up so that we could
use local third party service personnel to rapidly resolve
any product quality issues that might arise.
The
result of the above was a far more profitable European operation,
and one that contributed to the continued growth of the worldwide
group. Shortly after the above changes, the group was sold.
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