Business Strategy to Increase Profitability

By February 2, 2018Strategy

Client

$200 million consumer goods manufacturing business unit.

Business case

CEO and executive team needed to reassess their business operations and find ways to turn their low profitability into higher margins or make a decision to exit the business.

Scope

  • Review the operations of the company, specifically, assess the processes, procedures, and costing to determine adequacy.
  • Assess the current equipment and manpower to determine efficiency.
  • Compare current benchmarks and KPIs to industry standards.
  • Analyze and recommend plan to drive profitability or recommendation to exit the business.

Background

The client business unit was operating at 2 – 3% EBIT. The selling was done through distributors as this was the primary go-to-market strategy and 95% of sales was done with 4 large distributors. Distributors complained about the client’s inability to meet the 5 day lead time for shipping products. Client’s lead times varied from 10 to 15 days for various product lines.

Approach

  • Researched and interviewed customers to identify strategies to win in client’s market place.
  • Developed operating model aligned to deliver on identified key success factors.
  • Restructured operations and supply chain to deliver on those factors.
  • Implemented proprietary demand driven planning system to service key client accounts within expected lead times.

Solution

We were able to:

  • Identify strategies to win and success factors in the market place.
  • Make the necessary operational changes to deliver on those factors.
  • Restructure operations to increase volume and leveraging fixed costs.

Results

Our work:

  • Increased profitability by 2X within 9 months.
  • Increased market share driving additional production volumes.

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