Business performance turnaround for a multi-country division of a global building products group
The issue
- LATAM division of a €3bn global construction product manufacturing & distribution group
- Country-based business units in 14 geographies from Mexico to Chile with 3,500 staff generating revenues of €400m
- A sustained period of under-performance with operating margins at sub-3% making it the worst-performing division in the Group
- Divisional layer not adding any value with local businesses being left to operate independently, some with more success than others
- An extended analytical diagnostic by a global consulting firm had established the scale of the problem, but no credible and accepted plan to address the issues had emerged
- The need was for pragmatic help to make change happen with the full buy-in of local management
Solution
Plan and mobilise stage
- Confirm the scale of the improvement opportunity
- Agree targets and align with budgets to have one set of numbers
- Create a plan and a governance model to balance top-down coordination with full engagement from the business units
Delivery stage
- Initial focus on four of the largest markets where impact potential was greatest
- Reduction in margin leakage through pricing optimisation, product mix & discount control
- Introduction of operational excellence basics across manufacturing facilities
- Inventory optimisation, including clean-up of obsolete and slow-movers
- Reduction of corporate overhead layer and leverage of shared service centre to reduce in-country costs
- Capability development of management and teams across all disciplines
The results
- The Division was transformed from worst to best performer in the Group within 12 months
- Operating margin tripled and accrued benefits delivered were 45% above the programme target
- Working capital was reduced by €25m
- The change management effort involved over 1,000 staff across all functions and businesses
- Awarded ‘Best International Project’ by the UK Management Consultancies Association
- Curzon entered a risk-reward commercial arrangement on benefits delivered
We wanted a step change in performance, done in a way that would build capability to make it sustainable… the results speak for themselves. – Divisional CEO
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Environmental impact reduction in Construction project delivery
Challenge
The building and construction sectors are responsible for c.40% of carbon emissions. Typically, carbon reduction efforts in construction have been focused on the materials or at component-part level.
Curzon supported the client in developing an understanding that all future innovation and digital enablement designed to lower carbon construction processes and ways of working, such as connected autonomous plant (CAP), must address all construction activity and the full project site.
Curzon's approach
Curzon defined ‘The Digital Site’, to provide the enabling infrastructure with an ecosystem of software and hardware technology solutions to function. This will facilitate the most accurate GPS-based automated gearboxes, connected and autonomous plant and more.
Digital site standards are being deliberately designed to enable CAP. The most demanding use-case (electric and autonomous vehicles), can be applied to ensure that any new definition and standard(s) for digital site infrastructure meets the requirements of both the near and potential future for carbon Net-Zero ways of working.
Impact
The Digital Site will be a game-changer:
- All CAP is powered by hybrid or electric technology
- Hydrogen fuel-cell powered vehicles have been trialled, with plans for hydrogen fuel-cell powered excavators by 2023
- Reduced emissions – CO2 (98%) CO, NOx
- Reduced noise emissions
- Many networking solutions offer long-term benefits to local residents
- Lower risk of fuel spills
