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    Specialty Paper Products Manufacturer Success Story

    Driving measurable results in a low margin, specialized industry 

From due diligence to improved competitiveness in a mature procurement environment

The challenge

Having successfully delivered on a number of engagements for this private equity firm, Maine Pointe is a trusted operational improvement partner. As such, they called on us to assist with pre-acquisition operational due diligence at a manufacturer of specialty paper products. The information we provided regarding potential opportunities for value creation, specifically in the procurement organization, gave the PE firm the analytical insights to put in a competitive bid.

Post-acquisition, in a highly-competitive process, Maine Pointe’s deep industry and global sourcing experience led the CEO to select us to help realize the improvement opportunities identified.

This story is for private equity firms and company CEOs who:

  1. Are in the process of due diligence and want to achieve measurable value in the first few months of ownership
  2. Operate in a highly-specialized industry with a consolidated supply base and minimal supply optionality
  3. Want to drive additional value from a fairly advanced procurement function
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Taking procurement to the next level in a low-margin, specialized industry

With slim margins and fierce global competition (particularly in their finished goods business) the client was somewhat skeptical about Maine Pointe’s ability to add value. The procurement function was relatively mature but, with a limited US supply base, they needed to take action to protect margins and increase competitiveness. To help achieve this, Maine Pointe deployed its global sourcing expertise to drive high-value activity, such as value engineering, and identify and fill specific maturity gaps. Specifically, we:

  • 'Conditioned’ the supply base for improved responsiveness in service and price
  • Worked closely with the client to explore product specifications, reduce cost and expand markets
  • Developed and installed a Procurement Management Operating System including procurement strategic sourcing training
  • Negotiated lucrative and sustainable incumbent and new supplier relationships
  • Expanded the raw material supply base to include non-traditional competitive-cost countries and leveraged anchor pricing domestically

As a result, the risk of clients going direct to suppliers has been greatly reduced and, with less pressure on margins, the company has been able to cross the profitability threshold and enter new markets.

The results

Working in close partnership with our client, Maine Pointe’s industry and practice experts delivered the following results:

  • Reduced procurement costs by 5% in a low margin environment. This helped the firm cross the profitability threshold to enter new markets
  • Provided a roadmap to drive further benefits
  • Improved supplier relationships to drive value engineering and improve competitiveness
  • Created supplier optionality both domestically and internationally
  • Achieved a ROI of 3:1
 
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 Delivering on our promises

Maine Pointe promised us industry experts and delivered. They promised us savings and delivered. They promised to leave us with a sustainable process that would continue to yield benefits years down and they delivered. All of this was done while maintaining and strengthening supplier relationships that we have had for more than 20 years.” CEO

 

Lessons learned for other executives

  • You can drive additional value out of incumbent suppliers in a limited-supply market
  • Conducting operations due diligence helps improve bid confidence and accelerate improvements post-acquisition
  • There is a real opportunity for companies with relatively mature procurement to use external expertise to drive high-value activity and fill specific maturity gaps 

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