A graduate engineer and managing director of Jenaer Leiterplatten, Sven Nehrdich has a thirst for challenge – that’s why he’s also studying in parallel for an Executive MBA at the School of Management and Technology at Steinbeis University Berlin. Using a financial management cockpit, Nehrdich aims to shield his company from internal and external threats. The main ones: growing competition and pricing pressures in the electronics industry (due to the Asian market) and the competitive environment becoming more and more dynamic. The “ratios cockpit” is designed to help decision makers to react quickly and correctly to changes in the market and competition while taking the right countermeasures to alter the environment to the company’s benefit.
Jenaer Leiterplatten specializes in manufacturing printed circuit boards (PCBs) in small quantities and short delivery times (“express services”). Thanks to a 33 year track record in PCB manufacturing and a seasoned group of employees and flat hierarchies, the company is perfectly positioned to offer technically sophisticated PCBs in a broad segment of the market – and putting them in customers’ hands in the shortest time imaginable.
How well his company is doing at the moment financially, is not a reason in itself for Nehrdich to change management policy at the executive level. He realizes, however, that the market and environment are always in flux, and this could have a huge impact on the company. So Nehrdich is using this time of prosperity to launch a monitoring system that’s intertwined with the company’s strategy – in fact, no such early warning system to track internal and external indicators had ever been deployed at Jenaer Leiterplatten before. Developing the management cockpit was also Nehrdich’s project towards his master’s degree studies.
Ratios could not be derived from strategic objectives or management structures, so Nehrdich also launched a risk management system as a basis on which to determine the ratios. Every risk which could affect the company was pinpointed and graded on how severe the effect could be. With the ratios in hand, Nehrdich prioritized them and used several evaluations to establish ranges as well as warning and alarm thresholds for every ratio. Another side effect: the analyses also improved the company’s information management.
Once the ratios were established, the next task involved simulating various kinds of damage-control actions and compiling a catalog of countermeasures. Nehrdich modeled the look of his financial management cockpit on a flight cockpit. During several test runs, he simulated ratios to trigger a deviation in threshold values and also experimented with different displays in a variety of situations. Having undergone many iterations and improvements, the system is now in use.
Equipped with his own financial management tool, Nehrdich can now size up how Jenaer Leiterplatten is doing at a glance. Should the ratios deviate, he can quickly activate pre-determined control mechanisms. What’s more, the financial management cockpit acts as a model on which to launch customized cockpits in other areas of the company.