Global Transformation Executive
Turnaround Using Procurement - Hitachi Global Storage Technologies
Driving Value Across Portfolio of Autonomous Businesses - Nortek Holdings
- Situation: Hitachi had the #3 position in the hard disk drive market, which is characterized by relentless price competition, short product life cycles and high investment in product innovation. From 2003 to 2007, HGST had annual losses exceeding $200M per year. I was recruited by the COO and CIO to be part of the leadership team to turn around the company.
- Actions: : I assessed that while aggressive stretch targets were set at 10% each year, the required building blocks for success were not in place. I refocused and energized the organization to a “turnaround mentality” by instituting a sense of urgency, facilitating more aggressive opportunity identification and applying more sophisticated, cross-functional, cost savings approaches (including accelerated strategic sourcing, low cost country sourcing, outsourcing, benchmarking, should-cost analysis, consumption reduction, early engagement in NPI process, supplier Quarterly Business Reviews and continuous improvement, value analysis). In parallel, I upgraded and realigned the organization to strategic (total cost reduction) rather than tactical activities. Transforming from a regional to global commodity operating model allowed greater leverage of spend volume, market intelligence and disciplined processes. Stakeholders were aligned using early engagement and common performance metrics. E-Sourcing tools were instituted to capture much greater savings, earlier, relative to previous processes.
2008 operating expense purchases in my scope were reduced 13% ($130M) relative to ‘07 levels, contributing to HGST’s first-ever profitable year. This savings performance was about 2X better than any prior year. Capital expenditures were reduced ~40%, from $500M+ in 2007 to less than $300M in 2008. Operating cost of procurement function was reduced by 20% ($7.2MM in ‘07 to $5.8MM in ’09). A pipeline of savings projects valued at 12% savings was identified and initiated for 2009 impact. Projects using e-Sourcing technology tools had ~30% reduced cycle time and ~4% additional saving.
Nortek was a $2 billion holding company that wanted greater profits from it’s portfolio companies. Nortek had inconsistent processes and a decentralized business unit culture. I was recruited by the COO to transform the Strategic Sourcing organization of four autonomous business groups (27 companies) to best practice levels, and drive cross- portfolio benefits
Working with division presidents, VPs and sourcing directors, I developed a shared vision of and transformation path to sourcing excellence. Procurement focus was shifted from transactional to strategic activities. Cross-functional opportunity assessments were performed and aggressive stretch targets set. Disciplined processes, Global Commodity Councils and metrics were instituted to ensure alignment
Reduced total cost structure by $106M (~12% ) from 2002-2006, under a market environment where commodity and energy price indexes increased over 150% during the same period. Identified opportunities and initiated plan to realize $42M (~5%) savings for 2007 impact. Increased Low Cost Country sourcing spend from 5% to 27%, delivering $37M savings. Risk management mechanisms resulted in over $17M competitive advantage in raw material prices and elimination of supply disruption during the dock strikes of 2005
General Motors had poor profitability due to strong global competition and high cost structure. A.T. Kearney, Management Consultants, was hired to assess the manufacturing plants to determine if these could be brought to world class levels of competitiveness.
For 8 GM component manufacturing plants, I led several teams of 6 to 12 people to perform supply chain and manufacturing benchmarking and implement identified improvements. Focus areas were procurement, quality, uptime, production planning and scheduling, maintenance, plant layout and synchronous manufacturing. The teams identified improvements, developed implementation plans and assisted GM personnel in implementation to the point where they had the confidence and know-how to realize the remaining benefits with internal resources.
Typical savings were 8-20% of the cost structure addressed with significant skills transfer to the GM organization.
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