Transforming supplier relationships to infuse innovation and create value 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 leverage their existing supply chain to create a platform for growth
- Want to work in partnership with brand owners to sustain growth for the future
The Challenge
This contract manufacturer to the personal care and beauty industry was looking to drive substantial growth through acquisitions. 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 organization needed to transform the speed and efficiency of its supply chain. While leadership understood the benefits of an end-to-end supply chain transformation journey, they needed to begin by making direct cost savings to increase cash flow and drive growth in the business.
An endorsement from the company’s CEO, who was already familiar with Maine Pointe’s step-by-step Total Value Optimization™ approach to supply chain transformation, combined with our track record for delivering measurable results fast, convinced leadership that we were the right partner to deliver on their strategy.
The first step on a supply chain transformation journey
Following Maine Pointe’s TVO analysis, the company’s leadership identified procurement as the greatest opportunity to generate the self-funding momentum they required to continue with the transformation journey.The business needed good quality people, suppliers and a resilient, sustainable supply chain that could grow and scale with them. Initially, the business decided to focus on developing, implementing and formalizing procurement process across all stakeholder groups.
To support this goal, Maine Pointe:
- Engineered and delivered a supplier forum that pulled together sixty-five packaging suppliers to begin conditioning and messaging them for the competitive RFP process
- Implemented a packaging RFP to focus on areas of opportunity
- Encouraged customer interaction on directed spend issues that are key for long term success
- Trained and developed the employee base in standardized procurement processes
- Released cash by freeing up working capital and aligning payment terms to 60 days
- Used data analytics to deliver visibility to spend that the CFO didn’t have and create a compelling business case for change
- Introduced a dynamic, collaborative procurement system which enhanced the relationship between the organization, its suppliers and customers by helping all stakeholders to see the potential benefits to themselves
- Developed a step-by-step TVO journey map to guide the company’s continued transformation
The impact both in terms of working capital reduction and improved time to service customer orders has already been felt across the organization and has helped cement the partnership between the client and Maine Pointe as they move to the next stage of their TVO supply chain transformation journey.
"The initiative improved our standing not only within the supplier community, but has also awakened new and promising partnership discussions with our current customers and brand owners. This is of more value in the long-term than the short-term savings that have been generated as we can now leverage our growth not only with cost but more importantly around total supply chain efficiency.” - Client CEO
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
- Aligned payment terms to release working capital
- Delivered packaging, MRO and standardized chemical cost savings in excess of 10%
- Achieved savings as high as 25% in some categories
- Consolidated suppliers in MRO from over 700 to less than ten
- Delivered a ROI of 3.8:1 for this phase of the supply chain transformation journey
- Encouraged customer interaction on directed spend issues that are key for long term success
- Trained and developed the employee base in standardized procurement processes
Lessons learned for other executives
- Many executives are not aware of how much power the supply chain can have in impacting the customer experience
- Elevating a select number of tactical suppliers to strategic suppliers can help infuse innovation and add significant value to your product mix
- It is possible to build a collaborative strategic relationship where customers see the advantages innovation offers to them