Resetting the cost base and transforming the culture at an iconic food & beverage producer.
This story is for CEOs who:
- Are leading a company steeped in traditional processes which is embarking on an enterprise-wide transformation
- Need to drive product innovation, adoption of industry best practices, streamline execution and regain market share in a legacy company
- Want to build and install new strategic relationships in a deeply embedded, hierarchical culture
The Challenge
This iconic food brand and company has been in business as a growers’ cooperative for more than 100 years and is the world’s largest producer in its category. With concerns about stabilizing its industry, the cooperative brought in a new CEO two years ago. The CEO was tasked with overhauling the brand’s image and helping it gain recognition for a broader range of products. The business is now on a growth trajectory to extend its reach in the “better for you” snack industry. The CEO decided to enlist external support to help transform the business into a 21st Century organization capable of competing with newer, more agile brands.
Maine Pointe was selected based on its wealth of experience driving value across the CPG/food and beverage supply chain. Our objective was to help create business value and impact EBITDA by resetting the cost base to build a strong foundation for growth. To achieve this, we focused on improving procurement and logistics processes and strategy while changing the culture from a farm cooperative to an innovative, consumer and market-driven organization.
Breathing new life into an iconic brand
Over the years, the organization had grown stagnant and was operating as a farm cooperative rather than as an innovative, market-driven business. There had been very few changes in people, process, and information over the last 20 years, with little investment in examining commercial practices, business processes, continuous improvement, or product extensions. Similarly, the organization was not operating collaboratively to plan and make decisions. As a result, there had been little or no outside influence to introduce new sourcing, procurement and product ideas. At a time when technologies, consumer behavior and markets are changing fast, these legacy structures had become a burden and were detracting from the company’s ability to innovate and evolve.From the client’s perspective, the engagement was as much about changing this culture as it was about introducing new processes and structures..
Solutions:
- LOI experts worked with the client’s leadership to help shape the company’s purpose, vision, mission and values
- Built a matrix to show growth in cultural maturity and developed a tool to measure and track cultural transformation
- Improved leadership abilities by adding structure to align executives to ensure each division worked towards delivering excellence while maintaining their core values
- Data analytics created the company’s first ever spend cube and packaging specifications library, allowing leadership to turn data into actionable insights
- Created a digital repository for commodity specifications allowing the client to regain control of supplier management
- Launched a strategic sourcing initiative that focused on using the six-step sourcing process to expose the team to both new capabilities and competitive pricing
- Introduced a sustainable packaging initiative to help modernize the brand image
- Added capacity and prepared for growth through intense training on new capabilities within procurement and logistics
- Removed functional silos within divisions by creating cross-functional teams that worked together to resolve complexities in areas such as quality assurance, service levels and non value-added activities
- Utilized strategic tools to leverage and consolidate volume spend by exposing them to suppliers with much more ability, agility and enthusiasm to work with the client’s brand
- Improved working capital position by re-engineering accounts payable terms and making it cross-industry best practice while keeping excellent service levels and maintaining the high status of the company
The results in terms of savings and business value have exceeded expectations. The tools, processes and best practices the company now has in place will create a sustainable platform to work from as it continues its transformation journey.
The Results
Maine Pointe’s industry, practice, data analytics and leader and organization improvement (LOI) experts worked closely with the client to help develop and implement the right skills and tools to overcome capacity issues and facilitate growth:- Achieved a 20% EBITDA improvement
- Developed a road map to drive millions in unexpected additional synergies that will result in a further 10% EBITDA improvement
- Delivered a 20% reduction in addressable material spend and an 18% reduction in overall addressable spend
- Reduced transportation costs by 13% despite industry headwinds
- Improved working capital position while keeping excellent service levels
- Removed functional silos within divisions by creating cross-functional teams to resolve complexities in areas such as quality assurance, service levels and non-value added activities
- Delivered a 4:1 project ROI
Lessons learned for other executives
- If you don’t regularly assess your business processes, effectiveness and efficiency will atrophy and the company may lose market share as a result
- In a legacy organization you sometimes need to ‘unlearn’ accepted behaviors, systems and processes
- The agenda for cultural change needs to be based on executable, workable purpose, vision, mission and values and requires ongoing executive commitment, enhanced communication and enterprise-wide collaboration