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Overcoming significant financial distress and accelerating the total cost of ownership savings (CS292)



This story is for PE owners who

  1. Face financial distress and pressure to reduce costs

  2. Want to leverage spend across locations or functions

  3. Need to reshape the culture after a change in ownership

The Challenges 

A paper products manufacturer, having recently completed recapitalization and a change in ownership, sought to markedly reduce their direct marketing spend. Despite closure of a troubled operation they struggled to improve profitability. Further steps needed to be taken in their supply chain to restore confidence in the company in the marketplace. They turned to SGS Maine Pointe to create actionable visibility of their spend, realign the supply chain, re-energize their workforce, and design and train their sourcing team.

Reducing addressable spend, increasing visibility of spend, and realigning the culture

SGS Maine Pointe:

  • Developed proof of claim methodology, identifying potential EBITDA impact
  • Established industry-leading agreements and frameworks that enable the company
  • to extract value from and secure its supply base
  • Created a repeatable spend cube
  • Provided digital tools that improved visibility and transparency and that enable the company to manage its spend
  • Raised procurement process maturity with optionality, adaptability, and competition

Lessons learned for other executives

  • Companies going through financial hardship must go beyond recapitalization to re-establish themselves with suppliers, customers, and employees
  • Companies that address issues early on using Total Value Optimization (TVO)TM strategies can potentially avoid a costly restructuring
  • Digital strategies like spend cubes and dashboards give executives greater visibility into the supply chain for data-based decision making

The Results

  • 45% improvement in EBITDA
  • 8% to 27% improvement in savings by category
  • Exceed high-end saving expectations by 31%
  • Cash impact of $1.98M through improved payment terms
  • 6:1 ROI
  • Repeatable strategic procurement processes
  • Post-distress turnaround


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