Laying the Groundwork for Rapid Growth (CS230)
Creating a unified supply chain across eleven affiliated entities for a packaging products and services provider.
This story is for CEOs who:
- Benefit from a common strategic procurement platform but maintain the individual identity of acquisitions
- Get better value and service from their suppliers
- Achieve rapid growth in a decentralized company without causing significant unrest within affiliated organizations
This leading PE-owned packaging products and services provider was built through acquisition of a number of family-owned businesses over a period of more than twenty years. The company has remained decentralized in nature with each add-on maintaining its unique identity to allow Sales to be responsive to specific customer requirements.
The decentralized, customer-centric organization had resulted in a fragmented, uncoordinated supply chain which was preventing the organization from leveraging the size of its spend as well as increasing complexity. The owner recognized that the business needed a more strategic, coordinated, enterprise-wide model to capture the value hidden in this rapidly-growing company without damaging the organization’s ability to provide customized solutions to its customers.
Maine Pointe’s challenge was to deliver cash and cost benefits and build a platform for growth while causing minimal disruption within the individual organizations.
Creating a center led procurement and logistics model that fits within the client's cultureTo help achieve leadership’s goals Maine Pointe deployed its procurement, logistics, data analytics and leader and organization improvement (LOI) specialists. Taking a Total Value Optimization(TVO)™ approach, we designed a customized strategic supply chain organization to unlock unaddressed value across the decentralized, siloed business groups and align leadership behind it. We applied data analytics, industry intelligence and strategic sourcing processes to inform business negotiations, leading to improved costs and stronger relationships with key suppliers.
Maine Pointe's TVO digital supply chain solution included:
- Placing people, processes and information at the core of the organization, asking people to think differently about the way they work and adopt different behaviors
- Identifying preferred suppliers and taking a strategic approach to categories
- Generating category specific approaches for key items that are aligned across all divisions
- Helping suppliers see the future benefits of working with a growing, dynamic organization
- Making use of the skills and knowledge of divisional presidents (former company owners) to ensure they support the new strategy and take ownership of the results
- Migrating procurement from tactical to strategic (increasing the maturity of the procurement function)
- Using advanced data analytics to provide visibility to category management across the entire company and provide centralized, actionable information
- Putting in place dashboards to enable the business to run the analytics process autonomously in the future
- Using the intelligence gained from data analytics to mitigate price increases
- Training supply chain teams in strategic sourcing methods
- Training the operations group in logistics management of 3PL, private and dedicated fleets
The company has developed and implemented a set of common, core processes and capabilities which can be applied to future acquisitions as they continue to grow. The CEO and leadership team have overcome their misgivings about consulting firms and are now on board with the transformation process and considering taking the next steps on their TVO journey.
The ResultsWorking closely with the client’s teams and divisional presidents across eleven business entities, Maine Pointe helped design and implement a customized strategic supply chain organization which delivered the following results:
- Improved EBITDA by 20%
- Provided 5% savings across the enterprise
- Delivered common processes and controls through the installation of a procurement management operating system (PMOS) and a logistics management operating system (LMOS)
- Trained procurement, logistics and other key stakeholders to effectively implement and utilize these management operating systems
- Installed a sustainable organization to support continued growth
- Implemented data analytics tools and processes for better and faster decision making
- Delivered a project ROI of 3.5:1
Lessons learned for other executives
- CEO sponsorship, effective communication and thorough planning are key to successful supply chain transformation
- With the right approach to people and processes, you can achieve business evolution and retain the unique identities of acquisitions
- You can add significant value to your organization by using data analytics to understand market dynamics and base-line spend