Restructuring of the sales organization, launch of online sales and optimization of logistics – with visible results in the short term
Problem
This is a wholesale company selling industrial goods, which has been on the market for many years. It has always been profitable and financially solid. However, over the last few years it has seen shrinking turnover and profits. What they face is:
- double-digit market growth
- competition from foreign new entries
- consolidation of small-scale operators into larger groups, turning well-established customers into competitors
- strong increase in direct sales online, cutting out the middleman
The owners are aware that they lack the wherewithal to face such a game-changing scenario. All their limits come to the surface: a family-run enterprise with a strong company culture based on outdated business models that have delivered success over the years and which have been passed from father to son. None of this allows them to come to terms with a fast-changing competitive landscape.
Solution
A temporary general manager with a commercial background steps in to carry out organizational interventions and implement a strategy for new sales policies.
Among the measures foreseen in the plan:
- redefine the company’s value proposition to meet the demands of a changing market
- reorganize the company and redefine top management’s roles
- review the company’s processes to make them more efficient and more aligned to the new market situation
- draw up new sales policies and open up new sales channels to grow turnover
- implement new control and reporting systems
- create a robust managerial organization that can take over after the temporary management assignment is over and help with succession planning in the medium term
The temporary manager, together with his quality manager achieved the following goals in all the company’s areas.
Organizational area
- a management team is set up, largely hired from outside, to manage critical functions such as sales, marketing, purchasing, logistics, IT
- managers deemed unsuitable for the roles previously held are moved to different areas
- new tools are introduced to ensure coordination within the organization; the MBO system is thoroughly reviewed
Commercial area
- a new sales and marketing plan is defined, expressed in clear, measurable actions
- the sales network is reviewed, strengthened in those areas promising most growth, and equipped with the tools it needs to undertake the actions foreseen in the plan
- new digital and other promising sales channels are opened up
- the price list is reviewed with greater focus on the contribution margin by product and by customer
- the previous Sales Order Department is restaffed and converted into a well-functioning Direct Sales Desk
Administration, Finance and Control
- definition of a system of medium-term plans, operating plans and budgets, monthly reporting of actual results and year-end forecasts
- introduction of KPIs for all functions and daily publication of performance data
- periodic meetings are set up to analyze data from the reporting system and to agree corrective action where required
Logistics
- processes, workflows and jobs are redesigned, this resulting in a 30% increase in both individual and departmental productivity
- further improvement in efficiency (15%) is obtained by reprogramming the software for the automated warehouse management system
- daily order backlog is reduced to zero
- all contracts with carriers and forwarding agents are reviewed
- service levels guaranteed to customers are declared, measured and published
Information Technology
- an audit of the company’s information systems is performed
- the head of the function is replaced, along with some of the staff
- the information systems are replaced, new LAN and WAN networks are implemented, and a new data processing center is created
Marketing
- marketing is made an autonomous function, reporting directly to General Management
- a new Head of Marketing is appointed
- all marketing-related activities are reviewed: catalog, trade shows, promotions, sponsorship, newsletters
- all social media channels are activated
- actions to generate sell-out are implemented
- a marketing staff is set up to map the market: market size, acquired and potential market, competition analysis
Results
Thanks to the actions of a temporary manager with a sales and marketing background, acting as General Manager, the company achieved:
- an annual double-digit increase in turnover from the first year of the assignment
- a 50% increase in EBITDA measured against the initial position
- a stronger financial structure, thanks to stronger self-financing flows and the reduction of net working capital
- a new organizational chart with new functions
- modern management tools to allow a smooth transition to the next generation of owners in the near future.