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12% EBITDA growth for a Manufacturing PE PortCo achieved in 3 months
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8-week Operations optimization sprint to reach deal thesis savings for a merged PE PortCo
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Optimized plant capacity loading for packaging manufacturer, increasing OTIF
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| PROBLEM A Private Equity company was looking for rapid value creation initiatives for its recently acquired carve-out entity. The company had a decentralized sourcing and procurement team, focused on tactical procurement. The PE firm believed there was no value in strategic sourcing because the buying power of the PortCo had been significantly reduced after the carve out, but they were open to new ideas on sourcing and procurement. | PROBLEM A medium-sized manufacturing company had acquired a competitor and needed to turn around operations quickly in order to recover from a COVID-induced business slump. Part of the deal thesis was an increase in contribution margin (hence EBITDA) from the transfer of SKUs from higher-cost plants to lower cost plants. The company needed project management and cost analytics support to achieve deal thesis savings in a quick timeline. | PROBLEM A packaging manufacturer did not have a formal planning system and relied on plant schedulers to collaborate and balance demand and capacity across a network of 3 plants in the US. One of the plants had a very poor OTIF of less than 60% and complained that it was overloaded with demand. |
| SOLUTION APPROACH We quickly identified Strategic Sourcing of Direct Materials as an opportunity area based on the age of the existing contracts, the market trends in the sourced commodity feedstocks, and the supplier competitor analysis. We conducted a 12-week sourcing process of the top 3 commodities, including RFPs and one-on-one negotiations for incumbents and challengers. We ensured new pricing was based on feedstock pricing indices in order to drive price transparency and spend forecast accuracy. | SOLUTION APPROACH We quickly verified an updated deal thesis savings based on cost data of the legacy and acquired companies. We designed a capacity and demand model to enable the plants to meet customer demand while the SKU transfer project was going on. Based on this capacity and demand model, we worked with Quality and R&D to conduct tech transfers, worked with the Operations team to ensure proper training and staff support, and completed SKU production transfer of multiple SKUs in 8 weeks. | SOLUTION APPROACH We created an “IBP-Light” project to map out demand and estimate supply. We created a process to get sales to commit to forecasted demand, and created tools to then turn that demand into supply plans based on plant capacity and capability. The tool was rolled out in collaboration with a joint IBP monthly process, with the sponsorship of the CEO and VP of Operations. |
| RESULTS We reduced costs of all 3 key commodities, increasing EBITDA by 12% annually. The PE company leveraged our results to refinance the company within a year of original purchase at 1.5× original purchase price. | RESULTS Deal thesis savings exceeding $40M annual contribution margin increase achieved within 8 weeks of the deal close date. This quick win was used to drive momentum and culture change for the rest of the integration activities. | RESULTS On-Time-In-Full (OTIF) for the problematic plant was increased from less than 60% to over 95%. The company got a data-based approach to planning in the short term and long term, which also helped inform capital decisions. |
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“The team combined strategic insight with hands-on leadership, helping us achieve deal thesis savings faster than expected.”
“Their data-driven approach brought clarity to complex operational decisions and replaced assumptions with facts.”
“Their data-driven approach brought clarity to complex operational decisions and replaced assumptions with facts.”
