Impact Story

Transforming operations to recover from the global financial crisis

A global mining company saw its selling price collapse during the global financial crisis. Recognizing the need for dramatic improvement but unable to see where it would come from or how to make it happen fast enough, the company asked McKinsey to help develop a transformation program that would repair its bottom line.

Impact

$1b

delivered during partnership with McKinsey

$500m

more delivered afterwards via new skills built

5%

increase in truck utilisation in 3 months

Approach

We helped the client plan and execute two waves of operating changes that improved efficiency and added more than $400 million to the bottom line in 10 months (exceeding the client's target of $300 million in 12 months).

However, full recovery would clearly require even more. Together, we set a new target of achieving $1 billion of improvements. The first two waves had captured the easier opportunities so reaching the $1 billion goal would mean transforming fundamental aspects of company operations.

For example, discussions with the general manager at one of the mines identified truck utilization as a prime target for transformation. We worked closely with front-line employees to pinpoint issues with efficient truck utilization, such as delays in delivering loads and excessive waiting time, and set improvement goals.

Defining and implementing appropriate Key Performance Indicators (KPIs) was critical. Success required setting the right performance objectives at every level of the organization. We defined specific objectives related to the overall goal of improving truck utilization that fell within the operating scope of employees at each level. As a result, people could see the impact of their contributions and track their progress.

Using the KPIs to influence performance required coaching clients from the executive level to the front line. We helped executives and managers learn to ask the right questions about progress and to develop an environment where their people felt empowered to take action and course correct, as required. We coached front-line supervisors on conducting motivational pre-start meetings that set clear targets for the day, engaging with their teams in the field in insightful but supportive ways, and acting on team suggestions.

Results

The transformation equipped the client to reach the $1 billion target. In just three months, truck utilization exceeded its stretch goal of improving 5% within three years.

The client was so pleased with the results of the transformation that the managing director decided to embed its disciplined approach to managing performance — using KPIs to identify opportunities and effective performance conversations to capture them — across the organization as part of the ongoing business model. We supported the design and implementation of the revised process, which has generated more than $500 million of further improvement since McKinsey’s departure.

Such success would not have been possible without strong cooperation between the client and the blended McKinsey team. Our implementation consultants stayed on the ground, working closely with clients at all levels of the organization, long enough to win acceptance as trusted advisors who could help develop and implement solutions to seemingly impossible business problems like adding $1 billion to the bottom line.

More Impact Stories

Transforming a 5,000+ person sales organization to deliver profitable growth

A year-long transformation of the sales force boosted annual gross profit more than $50 million.

Implementing change in IT to improve cost, service and organizational health

A multiyear transformation of IT has secured $180 million in bottom-line savings to date.

More about this practice

How we help clients

Find out how we work on site with clients to help them achieve long-term improvement and measurable, bottom-line results. We help strengthen leadership, transform processes, and build capabilities. Learn how we work intensively with clients across all industries and topics to improve performance and produce results: rapid, significant, measurable improvements in productivity, cost, quality, sales, and other metrics.