This cash release case study is the first of a two-part story outlining how the triple effect of TVO™ helps clients rapidly drive cost out, release cash and fuel growth.
This client is a major agricultural retail distribution business formed by multiple acquisitions. It serves growers across the US. To achieve its goal of becoming the market leader, the company made >40 acquisitions of various sizes when the market was at its peak. The subsequent prolonged downturn in the US market put the company in a disadvantageous financial situation and exposed some inefficiencies across the distribution network.
Leadership knew that they needed to take action to fix the business but were uncertain about how to do it. They asked Maine Pointe to implement our Total Value Optimization™ approach to help with integration, to release cash, drive out cost and enable growth.
Maine Pointe carried out an in-depth TVO analysis across the entire business. This revealed a relatively immature organization (around 1.8 maturity on the 5-level TVO Pyramid™). This reflects the number of recent acquisitions and a lack of enterprise-wide synergies captured. At a subsequent presentation, senior executives were astounded both by the extent of the savings that could be delivered and by our promise to transform their business, taking them to between levels 3 and 4, in just 8 months. In order to fulfill this promise, we needed to quickly generate the cash to drive self-funding operational momentum to invest in redesigning the service and operating model for growth.
Working hand-in-hand with the client’s team across all its locations, we:
The optionality we introduced means that the client has a broader supply base to leverage as they grow, resulting in improved competitiveness. In addition, the competitive environment we have helped to create will protect our client’s savings in the coming years.
As the organization continued to move up the maturity pyramid, synchronization of procurement, logistics and operations needed to be intertwined with insights from big data and cultural change. This has driven a new “client way” operating model to provide a foundation for profitability and growth, while also laying the groundwork for a modified service model.
Working side-by-side with the client team, Maine Pointe helped deliver the following accelerated results: