FMCG Manufacturer


Summary:

Turnaround to bring the company back to sustainable profit performance.

Date:

1995 – 1996 (13 Months)

Assignment:

FMCG Manufacturer Turnaround

Role:

Interim General Manager

Assignment Length:

13 Months

Background:

The company was established by a Swedish and an American family in the mid 1980s to make FMCG items as the UK market started to enjoy a very rapid growth phase. By the mid 1990s, the home market had matured, worldwide competition was stabilising with the main global players being Proctor and Gamble, plus Kimberly Clark, both with significant production capacity in the UK. Kimberly Clark was late into the UK market and was aggressively buying market share.

As the largest UK based ‘own label’ producer, the business had sales of c. £20m, produced on two sites with about 10% of turn over being for export. The largest customer was Boots.

The business was very short of cash and running monthly losses. The management accounts were not available until the end of the following month and the manufacturing processes were very inefficient. The main raw material, a traded commodity, was starting a periodic climb in price of c. 15% per quarter. This trend is usually held for about 18 months, plateaus for a short while followed by a similar decline.

Over 350 product variants (SKUs) had been accumulated which represented a very large number compared with industry norms.

 

Assignment Brief:

To perform a complete review of the business to identify where cost savings could be made, procedures changed and commercial advantages identified. The work received full board approval and the action plan was implemented over the 13 month period of the assignment.

 

Outcomes:

  • Managed the introduction of new key clients such as Tesco and Safeway and increased export activity from c. 10% to 20% of a rising output.
  • Identified strengths and weaknesses in the management team. Re-structured the team, brought in fresh talent and led the work to find cash generative projects.
  • Massive industry margin (c.5% inside 6 months) erosion at the selling price level had to be offset. Product variants were reduced from 350 to 250. Overall raw material purchasing savings of 6% were made, stock holding was lowered by £0.42m and stock turns were lifted to 26.
  • Saved £0.6m/yr by improving product recovery & workflows. This was achieved after workflow assessment and the application of continuous improvement principles. Process utilisation was raised by 23%.
  • Reduced short deliveries from 14% to < 1% within 6 months.
  • Reduced the time to produce the monthly management accounts from 1 month to 2 weeks by improved resource allocation and procedural simplification.
  • Over an 8 month period progress was made from significant losses to break even and neutral cash flow.
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