The Challenge:
One of the largest non-profit hospital companies in the US held several for profit health care service companies in its portfolio. One of the portfolio companies was in a distressed state following a series of unfortunate company and market driven events including a fledgling ERP / MRP implementation, market maturity within the industry forcing a reduction in margins to remain competitive, entry of Original Equipment Manufactures (OEM) into the market, looming FDA regulatory constraints leading to additional cost to serve, and lack of robust management operating systems and business case driven decision making to navigation thru the challenges. This company, a leading aftermarket medical device business with a national field service team, equipment sales force, parts distribution, and 2 re-manufacturing operations, required evasive maneuvering with surgical precision to stop further financial hemorrhaging and prevention of service risks.
Results:
Following a comprehensive Value Stream Analysis, we dropped in an Operating Partner from our firm to run the company through the turnaround and lead the parent company executive team through determining the future of this business unit. Through several steps over 6-8 months losses were dramatically reduced and the business was prepared for sale. Our team established a framework and operating system to manage several dozen improvement initiatives to improve cash flow, cash generation and growth. Once the company was stabilized, we prepared the company for sale and worked through offers of 3 interested companies, eventually selling to a division of an industry leading OEM.
Highlights this client achieved include:
- Cut losses month over month achieved first profitable month in 3-4 years within 6-8 months of start, accumulated cash in operating account towards the remaining months to pay outstanding debts and to payback loans floated by the parent company.
- Prepared company for sale, obtained several offers, eventually awarding to a division of one of the leading OEM’s in the industry.
- Simplified the business model, flattened organization structure and eliminated complex services and products.
- Implemented new ERP and MRP to clean up financials and provide transparency on profitability and improve cash management.
- Implemented counter intuitive practices such as increasing short cycle revenue generating activities with lower dollars such as minor repairs requiring minimal materials and just a few hours of labor while reducing larger dollar services requiring higher materials cost and several days repair cycle time.
- Led the business through ISO 13486 certification, while selling the company prior to completion, had driven significant improvement in quality, turnaround time, and new product launch.
- Accelerated R&D launches and discontinued projects without strong business case.
- Relocated production facility to lower cost location in less than 40 days prior to lease renewal to reduce fixed overhead.
- Trained staff on Six Sigma structured problem solving methods.
- Trained company on Lean Manufacturing and lead Lean Implementation.
