ZIFFPAGE TITLELost in the SauceBy Kim S. Nash | Posted 2005-08-04 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
New systems obscured key financial data, forcing managers to make decisions on half-cooked information. After filing for bankruptcy, the company is working to recover.
Lost in the Sauce
By May 2004, New World filed for bankruptcy. Lisa Donahue, New World's acting chief executive officer, was surprised by the inability to easily get information about the company when she arrived from AlixPartners a month later.
Profitability by customer and by product, weekly cash forecasting, information on finished goods shipped, results of changes to pricing strategiesall were buried. "To get a good pulse of a business very quickly, you look for these things," she says. "That type of information was not readily available."
Donahue's first task was to stabilize New World. She, West and Lausas worked with business-group managers to identify the performance metrics she wanted to see. First, they determined which OneWorld modules, Oracle databases, ad hoc spreadsheets and Microsoft Access databases contained the data she needed. They outlawed Access and coded several reports themselves to distribute regularly to Donahue and other managers.
West and Lausas also showed business staff how to query OneWorld and get at some of this data.
The company still uses a mix of Excel and OneWorld reports, but Donahue and her team can now see many more statistics more readily. That includes which customers are profitable for the company; and how much it costs to produce a pound of pasta, factoring in labor costs per hour, machinery expenses and raw materialsand comparing those costs to the prices customers have negotiated. She's acted on the data, too. For example, the company stopped selling to restaurants when she figured out New World lost money on those deals.
Financial operating reports are now put together monthly, including discussion of line items that vary from what was forecast the month before. The company's executive staff can find out when the number of pounds of pasta produced per hour drops, and determine whether it was due to broken machines or employees calling in sick. That analysis is available because plant managers keep more detailed electronic records about labor, downtime, waste and product output.
A CEO should be able to view these numbers with a few keystrokes, but at troubled companies that isn't the case, says Donahue. She did restructurings at Exide Technologies and Regal Cinemas during their bankruptcies in 2002 and 2001, respectively. Like New World, Exide had grown through acquisition but failed to integrate the new companies well, she says. "It's costly and time-consuming to [integrate companies], and when cash starts becoming an issue, it's one of the areas that even if it just limps along, they neglect."