Company in the consumer electronics sector asks QMT to incorporate an interim manager as CEO for a period of 12 months.
The company has significant losses in its wholesale subsidiary. Turnover has been falling for three years and the expenses have been increasing. The previous management had tried to reverse the situation by making a flight forward. Which resulted in making the situation even worse. As a result, the warehouses are full of merchandise, of which a big part is obsolete. Additionally, there are significant debts to key suppliers, and they threaten to stop deliveries.
The previous General Manager refused to change the strategy and demands more time to see the results. For this reason, the Board of Directors decided to ask him to step down.
QMT incorporates a CEO with the aim of refloating the company within 12 months and, if this is not possible, to liquidate it in an orderly manner. Once the initial analysis has been carried out, it is concluded that the company, with another business model, is viable. To implement it, the following decisions are taken:
- Closure of unprofitable delegations. Transform the company from a national distributor to a regional distributor.
- Changing the purchasing policy, acquiring at the end of the day only what has been sold during the day.
- Changing the logistics system so that vendors send the goods directly to customers.
- Restructuring of delegations, which maintain only commercial functions, while all other functions, mainly storage and administration, are centralized.
- Replacing the management team and reducing its number.
- Adaptation of the computer system to communicate directly with suppliers.
- Opening new lines of business with a different model that provide better margins and less seasonality.
- Reduction of costs by layoffs.
Results after 12 months
The general manager of QMT obtains big improvements in all the areas, the most outstanding being:
- Reduction of the cost of logistics by more than 50%.
- Reduced personnel cost by 30%.
- Savings on overhead, excluding staff, by 26%.
- 94% stock reduction.
- The savings allowed freed up to update suppliers.
With all this, and despite the closure of some delegations which produced an initial sales decline of 5%, after 5 months, the company reached break-even, and after 12 months, the company operated, with a viable business model and was very profitable in its industry.
Currently, it is generating enough profits and cash-flow to have an optimistic future.