In 2015, the traditional family business WALMARK was transformed to a modern, efficiently managed organisation. At that time, Kateřina Tomášková, now interim manager of BM4U, was freshly in charge of purchasing. What obstacles did she face at that time? What strategy did she choose to increase financial efficiency and stabilize 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 intention of possible radical changes and subsequent rapid sale,” Kateřina Tomášková recalls of the situation at the time. For the record, WALMARK, a.s., was a leader on the European market for food supplements – it operated in seven regions (Czech Republic, Slovakia, Poland, Hungary, Bulgaria, etc…) and had a production plant in Třinec and a logistics centre in Český Těšín.
New leadership, new dynamic management
A new management team (CEO, CFO) has joined the previously family-run company . This began to require accurate corporate-type reporting, strategic planning, higher performance and also examined the current efficiency and possible further operation of the Trinec plant. In addition, all strategic communication began to be conducted at the top management level in English and the company headquarters moved from Třinec to Prague. And no one in the company was used to this. “Many employees, even in top positions, grew up here “from school”, had no experience from other companies and were very fixated on the original owners. The atmosphere of high trust, low stress levels and a long string of business successes did not teach employees to function in a stressful environment, to make decisions and work under pressure, and to 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 the loss of unique know-how was imminent. Paradoxically, the rapid and uncompromising emergence of a new culture slowed down the overall development and created barriers ,” adds Kateřina Tomášková.
First steps: building a central purchasing system
Kateřina Tomášková’s first and most important task in her role as Purchasing Director was to implement the central purchasing function – i.e. the process management of direct and indirect costs across the entire organisation. “Until now, only raw materials have been purchased centrally. Other costs – operational, marketing or investment costs – were entirely the responsibility of the respective country general managers and department managers in the production plant. And if you restrict someone’s powers, it is not a popular move,” adds the manager.
So she and her colleagues focused on
- Financial savings (reordering of key raw material purchases, analysis of indirect costs, review of contracts, identification of short and long term savings plans across regions and areas …),
- Process anchoring (implementation of the central purchasing process, definition and description of rules for central and local tendering, risk management, interaction with individual departments, ensuring legal standards, introduction of 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 assessment, shared KPIs, raising awareness of financial accountability, obtaining feedback, presenting results to management and the board on an ongoing basis …).
Savings and financial literacy
The strategies that have been implemented have 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 in the marketplace. Communication has been adjusted, and the company has stabilized,” remarks the manager and adds, “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 the change, but it is necessary to plan communication well, anticipate different levels of understanding and different types of reactions, and think about feedback. It is necessary to prepare crisis scenarios to ensure the necessary processes are in place, to reduce unnecessary stressors, to give people time to absorb new information and to allow open discussion that will lead to regaining work comfort. At the same time, we need to clearly define ourselves against those who are holding back change and putting other colleagues in a position of uncertainty.”
