A business turnaround case study is a detailed analysis of a business that has faced significant challenges and has been able to successfully recover.

The case study provides insights into the reasons behind the business’s struggles and its eventual turnaround. It also highlights the key strategies and tactics that were used to achieve business success like increased productivity or profitability, better reviews or feedback from customers, etc.

The case study can be an invaluable resource for business owners and managers who are seeking to improve their own business performance. By understanding the reasons behind a successful business turnaround, they can learn from the mistakes of others and apply those lessons to their own businesses.

Here’s one example of a business turnaround case study for a manufacturing company.

Manufacturing Company Turnaround

The Challenge:

• The business was unprofitable, cash negative, and losing customers. Management in conflict & demoralized.
• Customers were very unhappy and were reducing orders and changing suppliers.
• The manufacturing process consisted of extrusion and thermoforming, i.e. a linked batch operation.
• A disorganized and dirty factory that had been put on notice by BRC to improve in 6 months. Poor delivery lead time, weak safety, and bad maintenance.
• Order lead time was very long and OTIF very Management had therefore decided to make trays to a forecast and this had exacerbated the problem further and driven up WIP and FG. WIP and FG stocks were in excess of 6 months.
• Stock counts were uncontrolled and not carried out regularly at month-end.
• Although cash was very tight there was no effective cash forecast regime in place.
• There was an inadequate sales plan in place which was subsumed by the need to constantly deal with customer crises related to late delivery and quality problems. There was excessive dependence on two customers.
• Customers in the UK, Ireland, and Benelux.

The Solution:

• Reduced headcount from 138 to 65, dismissed all directors and two managers, and in the process eliminated two layers of management.
• Developed management team & strategic plan & implemented Lean. Reviewed sales & production through value stream analysis & drove the integration of these functions.
• Changed ‘make to forecast’ to ‘make to order. Reduced FG stock to 10 days & WIP to 5 days, eliminating a 3000 sqm store. Cut order delivery time to 24hrs on identified lines.
• Set up shop floor data collection and installed IT that provided real-time performance measurement on 2 extruders & 8 thermo-formers. Measured Availability, Speed, Quality & OEE reviewed by shift. Implemented asset care system. Improved availability & developed planned maintenance.
• Integrated the order entry and production planning processes, drastically improving service speed, flexibility, and order turnaround. OTIF 99%.
• This process together with Kaizens energized the shop floor and forged strong (e.g. T/F tool change cut from 4 hrs to 2 hrs then 15-30 mins).
• Reorganized management & segregation of rework and reduced bad waste to <0.1%.
• Implemented a safety improvement plan with monthly meetings. Guarding, ASIs, Risk assessments, changed material flow, implemented safe WIP roll handling. Removed FLTs from production areas.
• Reduced NPD lead times from months to 4 weeks through a key alliance with a toolmaker.
• Worked closely with sales team & key customers. Weekly reviews of existing customers and new business development.
• Established detailed monthly financial reporting & 12-month rolling cash flow updated daily.

Results:

• Reduced breakeven from £13m to £7m, brought the company to profit in 12 months and reduced stock by 80% in 8 months. Improved OEE by 73% in 18 months.
• Cash positive in 18 months.
• Direct labor reduced from £2.4m to £1m pa, and material cost decreased by 22% in 12 months.
• Reduced low margin business, grew sales profitably to £9m in 2 years.

In business, there are always ups and downs. Companies that can weather the storm and come out stronger on the other side are the ones that are leaders in their industry.

When a company is in trouble, it can be tempting to give up and liquidate assets. However, sometimes the best course of action is to go through a business turnaround.

This involves making changes to the way the business is run in order to get it back on track. Sometimes this means making cutbacks and reducing expenses. Other times, it might mean investing in new technology or expanding into new markets.

Whatever the case may be, a business turnaround can be a difficult but necessary process. If done correctly, it can help a company to come out of a difficult situation even stronger than before.

Written by Mike Stewart, BSc Chem Eng, MBA: Strong practical experience at MD level. International experience includes being ‘parachuted in’ on a number of occasions to turn around troubled companies, as well as entering new markets and growing businesses.

Led 3 turnarounds in 7 years at £40 -£60 m pa businesses (330-500 people). All were complex multi-site manufacturing businesses with very demanding JIT customer service requirements.

Before we go into the details of the brand turnaround project, I would like to give a short statement about being a women leader: YES, I AM A WOMEN BUT I have always behaved without thinking I am a women. Work place is competitive for all (men and women) and what will make difference is results, how to get them and how you develop your team& work with others. I have always tried to lead by example. When I took this turnaround challenge, I was the first women to do so and my sales force and customers were mostly men. I gained respect step by step from all. Then I tried to balance the team with more women as I believe the balance creates a good mix and is part of diversity.

Let’s look at the brand turnaround project:

• Industry: Apparel
• Positions held: Sales Director and then General Manager
• How hired: Internal promotion via internal interviews
• Brand turnaround context: First signs of decline when I applied for the role. At that time I held a sales director role on a smaller brand within the company and became with the new role the first women in that role for this brand in this market!

STEP 1: FACE REALITY

• Meet customers, spend time in the field with the sales team on different channels
• Assess in depth & evaluate impact of decline on your budget in terms of revenue and profitability
• Hold conversation with your top management and be transparent
• Hold meetings with your direct and indirect team and be transparent about the challenge to over come
• Start working on actions to minimize the current gap to prepare the brand turnaround

STEP 2: CHANGE – “INSANITY IS DOING THE SAME THING OVER AND OVER AGAIN AND EXPECTING DIFFERENT RESULTS” EINSTEIN QUOTE

Same behaviors will generate same results. Once you know that you need to identify what changes are required. You need to be radical and drive their implementation.

STEP 3: FASHION APPAREL REQUIRES ALSO PROCESS AND STRUCTURE FOR A SUCCESSFUL BRAND TURNAROUND

Apply the same principals in apparel than in FMCG but in a simple, smart way. This approach was new at that time for apparel industry.
Principles:

1. Prioritize your accounts (revenue/profit criteria)
2. Plan your visits/calls 4 weeks in advance
3. Share your final plan a week before with your manager of the whole organization
4. Prepare each call with clear quantified objectives and define agendas
5. Debrief on agreed actions regarding the next steps and the achieved results
6. Keep all information in the customer file.

Drive execution of this new way of working via your managers team and ensure by yourself it’s done. Be consistent on it if you want your team to believe in it and do it.

STEP 4: CELEBRATE SUCCESS WITHIN YOUR TEAM AND GROW YOUR TEAM CONFIDENCE

Failing at delivering budget creates tension and month after month, team starts lacking confidence. This is reason why it’s key to start celebrating even small success from one team member or one region with all. It gives a light and put everyone in a different mode. It’s like in sports. If you believe you can make it, you train yourself and there will be a day when you will be successful.

STEP 5: NEVER COMPROMISE SHORT TERM WITH MEDIUM TERM

Brand turnaround comes from several factors but there is a big one called “brand equity” on which sales have a great role to play. Sales have to drive revenue within the frame of brand equity! This is never to forget. Align with marketing and merchandising on brand objectives and ensure sales force understand them and have also qualitative objectives to reach and reason behind those targets. Ensure you deliver your short term with quick win that will not damage your medium term objectives

STEP 6: BRING RETAIL BEST PRACTICES INTO WHOLESALE

• Sell out focus is key any case.
• With a retail back ground, it’s obvious.
• For ones having work in wholesale, it has been a learning path.
• Focus most of your team on improving sell thru results of their customers.
• Act as a retailer for your customer! It’s has been a key mindset to develop and actions to put in place.

STEP 7: CELEBRATE SUCCESS WITH ALL

Important to take time to celebrate and pause to review progress and how success has been achieved. Celebrate with all within the company to ensure team spirit is kept in good time also!

STEP 8: BE DEMANDING, CONSISTENT AND RESILIENT AND FAIR TO YOUR TEAM!

If you want your growth to be sustainable, you need to keep driving implementation all initiatives and ensure processes are used at any time. This is restless effort!

STEP 9: KEEP DEVELOPING YOUR TEAM AND EMPOWER THEM

Spend time in coaching and developing your team. Identify within your team who could be your potential bench and prepare him as best as possible. It will allow you to be promoted and feel secured if you have a successor ready for the role.

WHAT I LEARNED:

• Work under business and financial pressure
• Be transparent
• Say what you do and do what you say
• Be consistent
• Be demanding
• Encourage your team especially when times are tough
• Invest time in coaching & developing your team

About the author: Nathalie Schneider, an experienced commercial executive director, with significant expertise of leading multi brand brand retail operations. She has a strong track record of aligning teams. As a senior business leader, she is adept at strategic planning, change management , driving execution of profitable sales results and delivering continuous improvement in sectors of retail, wholesale and fashion.

View Nathalie’s short bio