Manufacturing Turnaround Execution: A Guide for a Successful Turnaround.

 

Abstract

After reading this article, you will have a deeper understanding of how to manage a successful manufacturing turnaround effort. Building on the previous two articles, I will share how to bring your team together. This will allow you to lean on each other for support. You will also learn to implement a reporting structure, so there are no surprises. I will share some guidelines around remaining financially responsible for the business. Validating the effectiveness of the plan is important. I will share how to engage key stakeholders to do so. A manufacturing turnaround will draw the board of director’s attention. I will share how to manage the relationship. This will allow you to remain proactive and collaborative. Communication is key in a turnaround. I’ll share who needs to be updated and what information should be relayed. Unexpected situations are likely to happen. I’ll share how to prepare for them. Finally, I will share how to keep employees engaged and create a positive environment.

Did You Know?

  • Create an all-hands-on-deck environment.
  • Have a high sense of urgency.
  • Have a low tolerance for excuses.
  • Expect proactive action when out of pace with targets.
  • Encourage collaboration between teams.
  • Be ready to support your team.
  • Data-based decision making.

Key Takeaways

DIMENSION TAKEAWAY
Unity Align the senior leadership team, define roles, and encourage cross-functional collaboration to bring the team together.
Monitoring Establish key performance indicators, progress reports, and open dialogue.
Financial Stewardship Display financial stewardship by implementing cost management measures, optimizing working capital, and reporting transparency.
Feedback Seek validation for the effectiveness with the plans with employees and customers.
BOD Relationship Proactively maintain a collaborative relationship with the board of directors by providing timely updates, engaging in strategic discussions, and providing transparent reporting.
Communication Maintain ongoing communication with key stakeholders, such as customers, employees, suppliers, and investors.
Flexibility Maintain a flexible approach by anticipating scenarios and embracing an iterative approach.
Recognition Celebrate wins and recognize individuals and teams going above and beyond.

I wrote two previous articles sharing strategies for turning around a manufacturing business. The first one gives you a holistic view of the process. The second article focused on uncovering the root causes of the issues and building a turnaround plan. This article will take over where the previous one left off. In this article, I will focus on sharing a process for successfully executing the turnaround effort with your team. Read on as I cover all the key aspects of a successful execution.

1. Bring the Team Together.

The first thing you want to do is create a sense of unity within your team. The idea is to create clear rules of engagement. This way, everyone can function productively.

a. Leadership team alignment—The leadership team must be aligned in this effort. Ensure the entire team understands the sense of urgency. The key here is to collaborate toward the same outcome.

b. Define roles—Define the leadership team’s roles and responsibilities on the turnaround. Ask them to do the same for any direct reports involved in the turnaround effort.

c. Cross-functional collaboration- During a turnaround, avoid politics and turf wars. Ensure everyone understands they must share resources and collaborate with other departments.

Watch this video to learn more about how manufacturing leaders create buy-in.

2. On-going monitoring.

Establish a structure for overseeing and monitoring results of the turnaround plan.

  1. Performance metrics- Agree on performance indicators for each objective. Strive to develop leading and lagging indicators. This will allow you to respond to negative trends proactively.
  2. Progress reports –Establish a cadence for bringing the team together. Every objective will have an owner. Have each owner report on results, action status, countermeasures, and next steps.
  3. Open dialogue – Create a safe environment for the team. Allow them to share their concerns, insights, and collaborate on implementing solutions.

Read this article to learn how to make the most of your KPIs.

3. Financial Stewardship.

Early in this process, you want to establish responsible decision-making. Resources are likely scarce, and every decision counts.

a. Cost Management—Evaluate any financial decisions using a cost-benefit analysis. Emphasize the need to avoid unnecessary purchases. Identify opportunities for cost reduction to preserve cash reserves.

b. Working Capital Optimization—Implement just-in-time inventory practices. These will reduce inventory levels and carrying costs. Manage receivables and payables to improve cash flow and ensure liquidity.

c. Financial Transparency – Ensure compliance with government regulations. Provide transparent financial reporting to the leadership team, board of directors, and employees. This will maintain credibility and trust.

Watch this video to learn more about the four stages of manufacturing improvement.

4. Feedback mechanics.

Create a process for understanding the effectiveness of your manufacturing turnaround execution.

a. Employee feedback – Seek feedback from employees on the effectiveness of the strategies. Also, ask for improvement suggestions.

b. Customer Surveys—Conduct customer satisfaction surveys. Seek to understand the customer’s perception and identify where adjustments are needed. This will show the customer that you are focused on fixing the problems.

“Talk to your employees on the shop floor and office for 15 minutes daily.”

5. Board of Directors Oversight.

A turnaround effort will bring higher levels of scrutiny. Maintain a collaborative relationship with the board. Be proactive about keeping the board of directors appraised of the situation.

a. Timely updates – Provide recurring updates on the progress, results, and any adjustments made. Support your updates with financial reports, key performance indicators, and any other information (i.e. success stories, images, customer surveys, etc.)

b. Strategic discussions – Engage the board in strategic discussions to ensure alignment between leadership and governance. Seek their input and follow their guidance. Leverage their expertise to improve your perspective.

c. Transparent reporting – Ensure accurate and transparent reporting to the board. Address any concerns raised by the board promptly and openly.

Watch this video to learn about the five manufacturing business scenarios.

6. Stakeholder Communication in Manufacturing Turnaround Execution.

A successful manufacturing turnaround requires open communication. Maintain dialogue with all stakeholders.

a. Employee communication – Keep employees informed with regular updates on successes and challenges. Listen to their concerns and address them promptly. This will help you avoid employee disengagement and turnover.

b. Customer outreach – Share updates with customers. Explain the measures taken to address their complaints. Take note of their feedback and respond accordingly.

c. Supplier collaboration – Engage your suppliers. Be transparent and collaborate on ways to improve the supply chain.

d. Investor relations – Keep investors informed about the turnaround plan. Also share the long-term vision of the company.

Watch this webinar to learn more about how manufacturers overcome supply chain challenges.

7. Flexibility in Manufacturing Turnaround Execution Strategy.

Unplanned situations can arise. Remain flexible in your approach. The path to success will not be a straight line but a series of adjustments.

a. Scenario Planning – Continue to anticipate potential challenges and opportunities. Make adjustments to the plan accordingly.

b. Iterative improvement – Embrace an iterative approach to your plan. Allow the turnaround plan to evolve based on the following:

  • Results,
  • Feedback,
  • Market conditions,
  • Team input, and
  • Industry trends.

Read this article to learn how manufacturing leaders hurt business execution.

8. Recognition.

Leading a turnaround effort can be taxing. Be the cheerleader for your team. Provide ongoing words of encouragement. Celebrate every win, big and small. Recognize teams and individuals that go above and beyond. Maintain a positive outlook and boost morale by keeping everyone engaged.

 

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