Value Chain – Curzon Consulting

£1billion division split into 6 semi-autonomous business units, spending £450m per annum on materials and sub-contracted services
Each business unit under revenue and margin pressure especially those dependant on public sector work
By re-establishing good procurement practices a modest 3% savings target was agreed upon, the stretch being that the full cash saving had to be delivered in-year
No single picture of procurement spend or performance compared to the external market
Procurement & supply chain savings were already baked into business unit budgets and there was pressure from plc to deliver over and above this

Created a definitive ‘spend cube’ and with it a single set of numbers
Completed a top-down and bottom-up analysis of spend at the detailed category/supplier level and agreed impactable spend
Created and executed a prioritised implementation plan closely monitoring and recording the benefits as they are realised
Redesigned the P&SC organisation bringing in the necessary skills and expertise as required

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The UK business of a global construction materials manufacturer had been losing money for several years due to inefficient operations and declining sales in an industry sector experiencing extremely challenging times.
A full business review and improvement plan were required to stabilise the business and address the financial performance.
Significant cost reduction efforts had already been made to offset the declining sales and lower margins, but the business was continuing to lose money.
Sales lacked the basic tools and capabilities to compete effectively and operations were poorly managed resulting in over-production, an inefficient organisation and poor working practices.
The leadership team was highly dysfunctional and lacked the capability to define and execute a plan to address the situation.

Undertook a full situational analysis of the business operations and identified changes required to reverse the performance trend
A comprehensive change programme was designed and implemented with the full involvement of the business management team
Recognising that the current actions were primarily to address the initial objective of eliminating the business losses, a parallel stream of work focused on the market and development of the future strategy for the business
This dovetailed with the reorganisation of the commercial functions and outlined the business’s future journey to go beyond a break-even situation and achieve acceptable returns

The programme had a significant impact on the business across all areas of the value chain and delivered a sustainable bottom-line improvement of over £5m p.a in 12 months.
In addition to the delivered cost optimisation actions the re-focusing and capability development work with the sales team secured a contract renewal with three principal customers and the acquisition of a new major account and stemmed the loss of any further business.
The new ways of working that focus on using sound management information to run the business and to action issues have taken root across the organisation. Decision making improved and continuous improvement is becoming established.
The Group Executive sees the step change in performance that was achieved in the timeframe as the most successful intervention of its kind across the portfolio in recent years.

A complex multi-stage casting, machining and coating operation manufacturing precision components for the aerospace industry
Underperforming organisation and low levels of ownership for improvement
Extremely low velocity through the process, with poor yields and excessive scrap
High inventories of work in progress and finished goods
Production measures encouraging over-production
Silo mentality in operations exacerbating the WIP situation
Disaffected workforce with little interest in driving continuous improvement and no effective performance management in place

Analyse the current situation to articulate the operational improvement potential (yield uplift and inventory reduction)
Create the business case for change (P&L and cash impact)
Design a pilot to create an integrated supply chain for the largest volume product including suppliers and JV partners
Detail design of a pull model and elimination of WIP stages along the entire supply chain
Re-design of the layout and organisation to separate ‘dirty’ and ‘clean’ operations to reduce rework
Launch of a continuous improvement approach within the shop floor to tackle scrap, rework and productivity issues
Design and introduction of a cascaded performance management framework

40% reduction in inventory identified through WIP elimination
The feasibility of a 50% reduction in production lead time confirmed
10 percentage-point improvement in yield performance from closer process control
Plan to deliver £5m savings in-year agreed
Changes to ways of working implemented in pilot cells with Lean work-flow approach trialled
Programme of Lean training and continuous improvement projects implemented
New KPIs are being used to drive the performance of the value chain in place of traditional cost absorption metrics