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    Agricultural Retail Business Success Story

    Rapid cash release to drive self-funding operational momentum to fuel growth and profits

Delivered $18M in cash release in just eight weeks - $31M in three months

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.

This story is for PE executives and company CEOs who want to:

  1. Release cash fast to invest in transforming business growth
  2. Drive out cost and improve performance in a rapid time frame
  3. Implement world-class data analytics to gain full visibility of inventory across multiple branches
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Rapid cash release to 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:

  • Determined utilization of assets and provided insight into what could be sold
  • Built market-leading data analytics which provided previously unavailable insights into slow-moving, misplaced, and obsolete inventory
  • Strategized per customer account to collect cash, with settlement offers to receive cash and reduce administrative burden and write-offs. Introduced discipline around the credit process
  • Worked with managers to identify properties to sell without impacting future revenue. This initiative focused on identifying local buyers to accelerate sale and cash conversion
  • Deployed Sales, Inventory and Operations Planning (SIOP) to provide the necessary disciplines, tools and processes to implement market-leading planning and inventory analytics across the business
  • Put categorization systems in place to optimize the buying and selling process, as well as overall inventory management, across the network

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.

Continuing the step-by-step TVO transformation journey

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.

The results

Working side-by-side with the client team, Maine Pointe helped deliver the following accelerated results:

  • $31M in cash released in three months, $18M released in just eight weeks
  • Cash release enabled the client to come up with a pre-fill and secure pre-buy discounts, preventing stock outs that inhibit revenue growth
  • Cash generated will be leveraged into procurement with the potential to generate a 7-8% uplift in EBITDA
  • Identified an additional $9M of savings to be generated within the next three months

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Lessons learned for other executives

  • By not having clear visibility of assets across your business, you may be leaving tens of millions of dollars on the table
  • Significant cash release can be achieved by optimizing inventory, account receivables, rolling assets, fixed assets and more
  • With the right partners, it is possible to implement a self-funding operational improvement project to fuel growth and profits

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