Turnaround & Market Share Growth: Construction Products Manufacturer
- The business had an established name in a demanding B2B market in which securing an order required next day delivery from stock.
- The business was losing £100k/year.
- A newly acquired business had not been integrated and had a distinct cultural divide.
- Inventory was slow moving and working capital was 30% of revenue.
The engagement was to improve business performance to 10% of profit before tax (PBIT), to integrate the newly acquired business unit, and to reduce working capital to 15% of revenue.
- Business diagnostics were run to measure transactional activity, value for money and credit terms in the supply chain, the flow in manufacturing, and the profile of customer/product profitability and draw on inventory.
- Market investigation identified the opportunity to increase sales volume at marginal cost through sales to key accounts and export markets if operating costs could be reduced.
- Bills of Material were created and a SysPro ERP/MRP system implemented to forecast and control material flow, together with SIOP to align output to demand and improved production planning.
- The product range was rationalised and re-engineered in consultation with customers so as still to meet their needs.
- Competitive supplier tendering, supplier-managed Kan Bans and faster turning rationalised inventories were implemented.
- A “One Company” culture was created through cross-skilling and engaging all employees in visual management systems and continuous improvement programmes.
- Turned around the business to make a profit of £750k (10% PBIT).
- Revenue increased from £5.2m to £7.5m.
- Annual savings of £370k were realised on £2.2m of annual purchase spend whilst improving supplier performance.
- Working capital was reduced to 15% of revenue.
The newly acquired business unit was culturally integrated and improvements made to its production flow.