Building A Robust Global Fulfillment Network:
Building Enterprise Value Through Operations Excellence

THE CHALLENGE:
The client’s success had propelled the longstanding family-owned company to a size and complexity level that required new approaches to managing the business, recently acquired by a private equity group. While inherent strengths such as low conversion costs, engineering capabilities, and deep industry knowledge would be leverageable in moving forward, apparent capacity constraints, highly variable output, limited data/information, and cost/margin pressure were all conspiring to undermine the business. In addition, an increasingly competitive marketplace and greater competitive scrutiny of the client only added to the new CEO’s challenges.

THE PARTNERSHIP:
Analysis: Working with the CEO and company management, our quick diagnostic of the manufacturing network identified a series of immediately captureable opportunities. Inconsistent run speeds suggested opportunities to increase throughput. Regression analysis suggested that speed loss was influenced by extruder selection and product characteristics. A root cause analysis of extruder downtime pointed to the need for several shop-floor process changes, while operations segmentation by customer lead time and run requirements seemed likely to ease capacity constraints by reducing changeovers and downtime. Overall, the entire operation was undermined by a lack of data and the ensuing difficulty of fact-based decision making.

Implementation Plan: Our strategy focused on addressing cost and capacity issues, with the recognition that workforce stability and a solid information base would be critical to capturing the opportunities. A key performance indicator program was developed to inculcate basic reporting and tracking across the supply chain. A $13 million material utilization opportunity was identified, as were +10% opportunities to increase throughput through process controls and operations segmentation. In addition, a multi-million dollar opportunity to rebalance the incrementally grown manufacturing network was uncovered.

Execution: Our team conceived of a 13-week, 3-phased approach that focused on enhancing information availability and utilization. Working hand in hand with shop floor personnel, our team was able to help implement a wide array of process changes and systems enablers that enabled capture of a significant portion of the identified opportunity in a rapid timeframe.

THE RESULTS:
Through the team’s work on this engagement and a series of follow-on engagements throughout the next 4 years to rebalance the North American manufacturing network, integrate acquisitions, and develop a strategy to enhance global market share – Significant EBITDA contributions were achieved and the client’s enterprise value increased threefold.