This client is a major agricultural retail & distribution business formed by multiple acquisitions which 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 agricultural commodities market put the company in a disadvantageous financial situation. It also exposed inefficiencies across their distribution network.
Leadership knew 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 release cash, drive out cost, and create a platform for sustainable 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 above level 3 in just eight months.
To deliver on our promise, we deployed teams to work simultaneously across procurement, logistics, operations, data analytics, leader and organization improvement (LOI) and sales and operations planning (S&OP). The $18M in cash we released in eight weeks helped drive self-funding operational momentum to invest in redesigning the service and operating model for growth. Maine Pointe’s teams worked closely with each other and with the client’s team, taking a highly collaborative, cross-functional, TVO™ approach.
Maine Pointe helped develop and implement a Management Operating System (MOS) which established clear metrics and a structured review process to ensure accountability for results. We also redesigned the operations organization to significantly improve productivity and bring about role clarity. We were able to reduce the operations complement by 15%, while sustaining current operations and supporting future growth. Maine Pointe worked with the client to establish a consistent set of work processes and procedures across all locations. These allow the client to leverage learnings and easily replicate operations as they continue to grow.
Maine Pointe tailored our strategic procurement approach to first achieve ‘quick wins’ in indirect categories while simultaneously developing a long-term strategy for the large Tier 1 and Tier 2 suppliers. Next, we focused on supplier relationship management and conducted negotiations which netted significant savings and improvements in contract terms. We developed a new scorecard to track and sustain the improved performance. Furthermore, we significantly reduced the number of suppliers and products carried, which supported a 15% reduction in inventory. Customizing our approach to the agricultural industry helped optimize savings and generate cash to fuel growth.
Our logistics team looked closely at the company’s delivery network and provided a 3PL solution which improved visibility of shipping cost and on-time delivery performance, in addition to providing reduced cost. Maine Pointe also provided an optimized asset model across various classes of vehicles and equipment. A supplier who provides leased/rented assets helped reduce costs and supply better quality assets.
Despite doubt and resistance to this new idea in the early part of the engagement, Maine Pointe deployed a world-class SIOP capability (similar in nature to S&OP). We jointly developed the necessary disciplines, tools, and processes to implement demand planning and inventory analytics across the business. Unprecedented aggregation of real-time information allowed for better procurement and inventory allocation decisions that helped sustain a $70M reduction in inventory YoY. It also provided information that allowed for targeted marketing and sales actions for better growth opportunities. We delivered the necessary training to establish the discipline and sustain this process.
Our Leadership and Organization Improvement experts helped develop a new staffing model to stand up the organization. This included clearly-defined roles and responsibilities (at both organization and individual employee level) with activity-based job descriptions. As a result, 77 different job titles were condensed to just four, providing the basis to build a leadership structure with clear P&L responsibility at district level. This was no easy feat; it required enhancements to the client’s change management and corporate communication abilities that it may not have been able to achieve on its own. For sustainment, we developed a scorecard to help leadership manage in a holistic way with clear visibility and performance measures.
Maine Pointe’s data analysts harnessed the client’s data warehouse to develop customized, real-time and highly visual dashboards. Actionable insights into areas such as spend data, supplier performance, and inventory reporting inform strategic and tactical decision making. Data-driven insights are now leveraged for internal and external stakeholder decisions that will support growth going forward.
As the organization continues to move up the TVO Pyramid™, synchronization of procurement, logistics and operations has been enabled by 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 implemented its TVO™ approach to help deliver the following accelerated results:
Read part one of this story and find out how we helped this client generate rapid cash for self-funding momentum.