|
The
client was a family owned business specialising in the design
and manufacture of household electronic products such as shaver
sockets, extraction fans, emergency lighting etc. The firm
had experienced significant growth from £3m t/o to £6m t/o,
but was going through a period of loss making.
The
firm had a management team of husband and wife, plus three
long-term employees who had been with them since leaving school.
The owner had become unwell and the firm simply did not have
the managerial capability of managing the larger enterprise.
Collingwood was hired as CEO to improve the performance of
the firm.
The
main actions taken by Collingwood were as follows:
- Huge
cuts were made in overheads. Jobs were redefined and £200k
savings pa produced in overheads without reducing control,
reporting or compliance.
- Efficiencies
were made on the production lines so that produced hours
(all production tasks were timed) more closely matched paid
hours. This resulted in £250k pa savings.
- Perpetual
physical inventory was introduced and the number of stock
outs reduced radically without significant impact on investment
in stock.
- Formal
management accounting with forecasting was introduced to
show management the implications of actions taken and also
to show the financial trend of the client organisation.
Within
six months and with 46 days of Collingwood involvement:
- The
profitability of the client moved from £100k loss to £500k
profit at EBIT level on an annualised basis.
- Creditor
days moved from an average of 105 to 50.
|
