Procurement and Warehousing Optimization (CS256a)

Evaluating, validating and orchestrating the optimum offshore, nearshore and onshore supply chain and operation

This story is for executives who:

• Want to rebalance their offshore, nearshore and onshore supply chain and operations in the light of change

• Need to de-risk and improve the business case accuracy, timeline, investment and confidence levels with stakeholders

• Want support accelerating the execution of the plan to ensure continuity of supply whilst releasing cash and improving EBITDA performance
  
  

The Challenge

Having successfully driven significant supply chain and operations improvement five years before, this leading global supplier of branded components to the automotive aftermarket reengaged with Maine Pointe to help them evaluate and rebalance their supply chain in light of change driven by geopolitical shifts and the pandemic.

Both the CEO and the company’s private equity owners wanted external help evaluating, validating and implementing a shift in their supply chain and operations footprint to de-risk their operations whilst releasing cash and improving EBITDA performance.

With key investors, leaders and operations misaligned on how to execute an improvement plan, the Maine Pointe team initially listened, evaluated, recommended and then aligned all key stakeholders as to the optimum way forward. This involved balancing the need to de-risk, drive efficiency and speed.

Bringing objectivity, insight and confidence when driving supply chain and operations change

Procurement

The seasonal nature of the business (about 50% product turnover each year) meant that procurement was tactical, reactive and technical, with products made to spec. The business relied heavily on incumbent manufacturers (mostly based in China). Negotiations were carried out via a personal phone call from the client’s sourcing team and leadership believed the current suppliers were the only ones capable of meeting their requirements. The business took a cynical view of potential new suppliers, often looking for reasons not to work with them.

As a result, the incumbents were in a comfort zone with no incentive to offer better pricing or service. To breathe new life and innovation into the procurement function, Maine Pointe:

• Audited and validated the original financial plan, ROI and execution in place
• Developed a detailed integration plan and analytical models to guide, track, and quantify the project’s key deliverables
• Trained cross-functional team on data analytics, planning and project management best practices
• Standardized KPI reporting and production planning meetings
• Improved stakeholder awareness, alignment and understanding of the transition requirements
  
  

"One of Maine Pointe’s strengths is their strategic oversight and their executional excellence."

                                                                   -Gary Cohen, CEO, Qualitor

Warehousing

Although, for the most part product is shipped under the direct control of the retailer (FOB), the organization has its own distribution center which was in need of management and oversight. Maine Pointe made use of the client’s legacy technology to streamline the warehouse operations through more efficient crewing/labor management, development of new KPIs and improved product flow through the facility. Our Total Value Optimization approach highlighted the connections between supplier pricing, cost to serve (operations) and final product margin.

"To move a facility in the middle of a pandemic while your demand is increasing and there’s market uncertainty with global freight and supply chain challenges is quite an accomplishment, when you think what we were able to do in a very short period of time. We would have not been able to do it without Maine Pointe’s support."

                                                                      -Gary Cohen, CEO, Qualitor

The Results

Maine Pointe helped our client evaluate, validate and implement a safe transition to a new supply chain and footprint operating model:

• Positioned client to yield up to 12% EBITDA improvement post-transition
• Identified cash increase requirement of 21.5% required for the transition to reduce overall project risk
• Client secured all funding required from banks
• Utilized inventory analytics to identify excess inventory of 15% to reduce carrying costs
• Accelerated cross-functional alignment to improve agility, drive strategic thinking and business planning
• Developed 10 analytics and project tools to continuously monitor the transition, and assist in production planning
• Achieved 100% on time schedule
• Installed predictive analytics Control Tower to enhance ongoing supply chain visibility, control and reliance

Lessons learned for other executives

• You can rebalance and de-risk your global supply chain and footprint whilst releasing cash and improving EBITDA
• An external partner can help evaluate, validate, accelerate and de-risk the rebalancing of your supply chain and manufacturing footprint
• Having an external trusted advisor with boots on the ground can be extremely valuable when
  aligning the needs of leadership, investors and staff