Interim HR Executive’s Long History in Distribution, Talent for Teaching, and Ability to Put Supply Side Management to Work Helps Auto Maker Improve Operations and Lower Costs

Client:

Global manufacturer and distributor of electrical transmission components

Office:

Pittsburgh BIM

The Situation:

This company is, in many ways, a reflection of the recent history of American automotive industry. Like the OEMs, the auto parts maker has faced difficult obstacles and is in the process of implementing major strategic and operational changes in order to adjust to the market as it is today and build a foundation for future growth. One vital area currently undergoing substantial change is the company's logistics, inventory control, and product distribution systems. To support the design of new strategies, the auto components company contracted with Boyden Interim Management to assign an expert in supply chain management who could help guide the company through part of this complex and vital reorganization process. "My assignment," said Millard Humphreys, the Interim Executive assigned to the project, "was to introduce a total supply chain management strategy so that the company could improve everything from sourcing raw materials to managing inventory."

The Challenge:

It is no small assignment but “my role as an Interim Manager means that I didn’t come to the table with a pre-planned solution. As an Interim Manager, I had the opportunity to work from the bottom up to identify problems and deficiencies and to work with and educate younger managers who had yet to experience many aspects of a supply chain system.

“As a result, we are moving to introduce true supply chain strategies that promise to improve efficiencies and reduce costs,” Humphries said.

Humphreys brought with him more than 25 years of experience in logistics and supply chain management. “My experience leads me to view logistics and supply chain management from an integrated, total business perspective,” he said.  “It’s a philosophy that promises real, sustainable progress.”

Once part of a larger conglomerate, the auto parts maker was spun off as an independent concern in 1994. After 13 years of operations and mounting financial and operational difficulties, the management chose a prepackaged Chapter 11 bankruptcy in order to reorganize and rationalize the company to better prepare it to operate in vastly different markets. It emerged from bankruptcy in December of 2007.

The Boyden Solution:

Upon accepting his assignment with the company, Humphries set out to achieve three things:

• An understanding of the processes in place and any deficiencies;
• Evaluation of the knowledge and skills of the operations and front line managers;
• Recognition of the changing market and its impact on this company’s logistics programs.

“Often in situations like this, the problem is identified in one way, when it’s in fact really something else,” Humphries said.

“I found that the concerns where defined as inventory issues, yet when we dug down we really found that they amount to a distribution problem. The issues were bigger than simply managing warehouses and keeping count of what was on the shelves.”

In a situation like this company’s, it was essential to deal with a number of issues but take an integrated approach in defining solutions.

“For example, the auto parts manufacturer needed a process to assure the distribution system was aligned with what the customer was buying, what the customer wanted. Too often, the system simply put in inventory what the company makes, but not necessarily in relationship to what sells.

“As a result, inventory of some product lines builds up while some customers are forced to wait to have orders filled for the most needed products. That leads to part of the company’s production investment sitting on warehouse shelves, ineffective communications with the manufacturing side of the operations, and frustrated customers waiting to have orders filled,” Humphries said.

Changing mindsets is one of the most essential challenges for an Interim Executive.

“I look upon it as an opportunity to educate,” Humphries said. “The mid-level and operations managers have spent their working lives within a single system, in many cases. My responsibility is to bring what I’ve learned in many situations to them so they can benefit from new ways of operating and carry out the program we design into the future.”

That’s particularly important for this company since they are facing a market environment that is changing. While the OEMs remain a key channel, the demand for replacement parts is now coming more from big box retailers rather than small auto parts dealers. That reality will change the distribution process and only an integrated system can handle this reality and assure customer satisfaction.

The Interim Management model is an excellent one for these types of turn-around situations, Humphries explained. “My role is to help the management design and introduce the strategies for integrating the logistics systems for the company and help educate their managers so they can function effectively in the new system.

“I’m not the implementer. That means I’m free to help to generate ideas and strategies, while the career managers determine how and when the strategies are implemented. Since I’m here for a short period of time, I’m not in competition with any of the career managers, so my relationships can stay pretty objective.”

“Millard’s work with this organization is an outstanding example of how the Interim Management solution is positively impacting business today,” said Tom Flannery, Managing Director of Boyden Interim Management.