Case Study - Manufacturing
International Efficiency Gains & Cost Reduction – Case Study
Global industrial manufacturer and distributor
Production in Texas, Costa Rica, Germany (JV), Vietnam (JV)
Distribution and Sales globally, largest market outside the US: Brazil
Private company, family owned
Length of Engagement: 24 months
Type of engagement / service: Global CFO (consulting basis) reporting to the Board
Pain Point A. Working Capital inefficiencies in Inventories resulting in lost sales and low ROA on international inventories in the US, Costa Rica, France, Germany, and Vietnam.
Solution: Analyzed inventories, sales, and production for all sites. Implemented new processes to integrate them. Developed new sales and production plans to take advantage of market realities and increase sales and cash flow. Developed plan for millions of Euros of slow-moving and not-moving inventory in Europe to recover working capital and reduce risk of further losses.
In so doing improved the Balance Sheet, Cash Flows, and related KPIs.
Pain Point B. Stalled Go / No Go Decision for Greenfield in India leading to Board frustration
Solution: Analyzed risks, resources, bottlenecks, and project plan. Proposed a new strategic approach taking advantage of existing assets to greatly reduce risk and reduce time to market.
Pain Point C. Management confusion about the use of “loss leaders” and actual product margins resulting in operating losses and low cash flow.
Designed analysis involving participation and data from Sales, Operations, Manufacturing and Finance. Calculated real profit margins by SKU and identified actual products being sold at a loss as well as high margin products with unmet current demand that could be met in current year.
Conclusion: Millions of dollars and Euros were saved / recovered in Year 1, with recurring gains in future years of products lives. Board able to see accurate KPIs and Free Cash Flows by segment and region.