In 2015, the traditional family business WALMARK was transformed into a modernly managed organisation aiming for efficient management. At the time, Kateřina Tomášková, current interim manager at BM4U, had just managed the purchase. What obstacles did she face at the time? What strategy did she choose to increase financial efficiency and stabilise the company? We will tell you in the following article.
“In 2015, shortly after I joined WALMARK, a.s., the founders and co-owners of the company, the Walach brothers, announced the sale of their shares to British investment funds whose representatives made no secret of their potential intention of radical changes and subsequent rapid sale”, Kateřina Tomášková recalls the situation at the time. To clarify, WALMARK, a.s. was a leader on the European food supplement market – it operated in seven regions (the Czech Republic, Slovakia, Poland, Hungary, Bulgaria and others) and had a production plant in Třinec and a logistics centre in Český Těšín.
New leadership, new dynamic management
A new management team (CEO and CFO) joined the formerly family-run company. The team began to ask for accurate corporate-type reporting, strategic planning and better performances, and also examined the current efficiency and possible future operation of the Třinec plant. In addition, all strategic communication began to be conducted at the top management level in English and the company’s headquarters moved from Třinec to Prague. And no one in the company was used to that. “Many employees, even in top positions, grew up here ‘from school’, had no experience from other companies and were very dependent on the original owners. An atmosphere of high trust, low stress and a long string of business successes did not teach employees to function in a stressful environment, to make decisions, work under pressure and adapt flexibly to new conditions and demands“, says the manager.
The intrusion into the comfort zone of most employees was noticeable and caused palpable panic at all levels of the company.“The internal destabilisation of the company was a risk to the implementation of the planned changes and a loss of unique know-how was looming. The rapid and uncompromising emergence of a new culture paradoxically slowed down overall development and created barriers“, adds Kateřina Tomášková.
First steps: Establishment of central purchasing
Kateřina Tomášková‘s first and most important task in her role as Purchasing Director was to implement central purchasing, i.e., the process management of direct and indirect costs across the entire organisation. “Until then, only raw materials had been purchased centrally. Other costs – operational, marketing or investment – were entirely within the remit of the respective country general managers and departmental managers at the production site. And if you limit someone’s powers, it is not a popular step,“ she adds.
So she and her colleagues focused on
- financial savings (retendering key raw material purchases, analysing indirect costs, reviewing contracts, identifying short and long-term savings plans across regions and areas, etc.),
- process anchoring (implementing the central purchasing process, defining and describing rules for central and local tendering, risk management, interaction with individual departments, ensuring compliance with legal standards, introducing rules for approval and authorisation of costs, orders, contracts, etc.),
- communication with people (engaging and motivating key people across functions, strengthening the central procurement team, needs/requirements assessments, shared KPIs, increasing awareness of financial responsibility, obtaining feedback, continuous presentation of results to management and the board, etc.).
Savings and financial literacy
The strategies that have been implemented resulted in savings of approximately CZK 20 million in the first year and increased financial literacy across the company. “Through more efficient cost management and better reporting, we not only gained a better overview of the company‘s financial health, but also increased our overall efficiency and competitiveness on the market. Communication has been established and the company has stabilised,“ the manager notes and concludes: “Any change that, for example, fundamentally alters the atmosphere in the company, shakes up existing certainties and establishes new power relations is a risk factor that must be taken into account. In any case, it is not necessary to eliminate a particular change, but it is necessary to plan communication well, to anticipate different levels of understanding and different types of reactions, and to think through the feedback. Crisis scenarios have to be prepared to ensure that the necessary processes are in place, to reduce unnecessary stress factors, to give people time to absorb new information and to allow for open discussion that will lead to regaining comfort in the workplace. At the same time, we have to clearly define ourselves against those who hinder change and make other colleagues uncertain.“