30% reduction in overhead for government contractor

Client Overview

The client was a high tech, low volume manufacturer in a heavily regulated industry. Most of their contracts were government related and they had large R&D and engineering requirements. The client had recently been acquired by an LBO fund. The former parent company had provided key IT services including procurement and financial. Inventory was tracked using a home grown system that did not cross-check with procurement. Program forecasting and completion tracking was handled by an obsolete software package running on non-Y2K compliant IT system. Overhead rates were double best in class. Program management was client specific with dedicated design and engineering teams. The result was broad duplication of effort and proliferation of part numbers.

Our Involvement

We became involved as soon as the client was acquired. We helped the client select a low-end financial package and integrated it with a low-end MRP package. Our approach was to implement the MRP without any software modification while transferring a sense of ownership to the key process leaders in each functional area. We set up and managed a team of key people to pilot the software. The team’s objective was to plan a job, write PO’s, receive material, and issue material to job work orders. We brought job planning and purchasing on line in 2 months with an additional month to integrate inventory.

Concurrently, we developed a simple software tool to let them track program completion and forecast. We migrated all the data from the non-Y2K hardware into this new tool, implemented it, and trained their people to use it. We set up a team of engineers and designers to develop a standard parts list and to identify common components.

The Result

Having provided the client with the tools required to streamline their business, we were able to achieve a 30% reduction in overhead rates. This resulted in increased proposal competitiveness and increased sales. The company was sold by the LBO fund 14 months after it was acquired for a 145% ROI.

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