Transforming the speed and efficiency of the chemicals supply chain for a contract supplier of personal care and beauty products.
This story is for CEOs who:
- Are pursuing a buy and build strategy and want to develop a truly integrated end-to-end supply chain
- Want to streamline their existing supply chain to create growth
- Want to harness the power of data analytics to deliver actionable insights
The Challenge
This contract manufacturer brings innovative personal care and beauty products to market for new and emerging brands as well as supporting many mature brands. The business had recently acquired two add-on companies and was in the process of assimilating them to form a new entity with the manufacturing capabilities to deliver innovative, responsive solutions and increased speed to market.
To achieve this goal, the business needed to transform the speed and efficiency of its supply chain. Based on a previous relationship with the company’s CEO, Maine Pointe was brought in to support this aim.
In phase one of the Total Value Optimization (TVO)™ supply chain transformation, our team identified significant savings in procurement and laid out a road map for continued change. The second phase of our work focused on implementing the phase one savings and driving further accelerated savings in the chemicals category.
Achieving transparency and alignment across the supply chain
Maine Pointe’s TVO analysis found the client team was resource constrained. The business needed good quality people, suppliers and a resilient, sustainable supply chain that could grow and scale with them. Data analytics played a key part in this engagement, providing transparency and exposing inefficiencies the CEO was previously unaware of. Focusing on the chemical category, Maine Pointe developed a multi-tiered approach across four distinct areas:- Working capital: Aligned supplier/customer payment terms to help our client manage cash better and improved tools for managing total spend and customer pricing, releasing millions of dollars.
- Distribution: Used RFQ and direct negotiation strategies to leverage current incumbent distributors and realign the distributor network without changing any origin manufacturers or needing additional product approvals. This created 10% to 15% in savings opportunities.
- Consolidation: Identified and leveraged a partner who will help drive distribution savings as part of the client’s distribution network and also act as a key consolidator, helping reduce current warehouse inventory, creating a regular and controlled order process for targeted items and spearheading a product consolidation project for targeted and duplicate items.
- Direct negotiations with manufacturers: These negotiations with targeted and direct manufacturers led to between 5-8% in initial savings and delivered a strong conditioning and partnership message that has helped align stakeholders with the client’s goals.
By demonstrating supply chain expertise, our client has improved its collaboration with suppliers and customers. The company is now in the process of developing an elite supplier program which will bring innovation to R&D. This is new for the client and unique in its space.
The Results
Working in partnership with our client, Maine Pointe’s subject matter experts took a hands-on approach which delivered the following benefits:- Used data analytics to deliver visibility to spend that the CFO didn’t have and create a compelling business case for change
- Saved in excess of 24% on the targeted chemicals category
- Aligned payment terms to release over $3.6M of working capital
- Streamlined the chemicals supply chain for growth
- Encouraged customer interaction on directed spend issues that are key for long term success
- Current ROI on phase two is 4:1 with a road map of an additional 4:1
Lessons learned for other executives
- The transparency and insights provided by supply chain data analytics are a game changer in discussions with suppliers and customers
- Many executives are not aware of how much power the supply chain can have in impacting the customer experience
- Taking a collaborative approach can uncover significant cost, cash and growth opportunities without bringing in new suppliers