The profitability of the business was not at the budgeted levels and the business controls were not sufficiently developed to monitor and control its performance fully.
A short business review including an assessment of the management accounts, 1-2-1 interviews with a cross-section of staff, observations on the shop-floor and in the offices and a review of the order book identified a number of potential areas for improvement. A key requirement was to ensure that the ERP business management system was being used as ‘the single version of the truth’ and that the data within it were being used to give visualisation of performance. A programme of work was agreed that included;
- the development and introduction of relevant performance indicators in sales, project management, engineering, procurement, supply-chain, manufacturing and assembly
- coaching managers in the use of KPIs and in reviewing performance
- introducing a process for reviewing the cost build up of a major project versus a planned cost and for reviewing quoted and achieved sales margins
- reviewing the use of the ERP system and modifying it to provide better control of delivery
The KPIs were introduced progressively during the Summer and Autumn of 2018 and the business got used to reviewing them and developing corrective actions. Towards the end of 2018 a series of orders for projects was received for delivery in Spring 2019. These orders were entered in to the ERP system using the processes and procedures. A higher proportion of the added-value components were also sourced internally. This provided the platform to use the new approach.
The orders were delivered on time in Spring 2019 and, with the increased in-sourcing and associated productivity improvement, the profitability of the business was 6% points above target.
The MD, said
The initial review led to some clear and precise recommendations. Bill supported me and the team to develop and implement actions that helped us to improve our control of the business. I was very pleased with the financial performance in the early months of 2019 as it proved to us what we can achieve. Bill’s continued advice is a great support to me and the team.