CASE NO. 51
Performance improvement of a traditional consumer products manufacturer
INITIAL SITUATION
A traditional German producer of famous consumer goods had failed to account for the concentration in retail and the rise in store brands. Revenues and margins had been eroding over years. When revenues were dropping by 10 % in the current business year, suddenly double-digit losses were to be expected. The family owners replaced the managing directors and initiated a programme to focus on and improve the performance of the core business.
CHALLENGE
The historically grown range of products of the medium-size company comprised more than 2000 articles . A reliable and consistent product profitability calculation was not available.
SOLUTION
First of all, a product profitability calculation was conceived and implemented as a basis for all further decision making. The new quantitative framework allowed systematic product line trimming and specific capacity adjustments in production, marketing and sales. A site assessment and several factory visits revealed that a production plant abroad could be closed. Branding and marketing were unified across Europe for the streamlined range of products and a sales initiative was launched.
RESULT
Within one year the long-established company was making profits again. As 80 % of all articles were faded out and eliminated, the complexity of the business was reduced tremendously at much the same revenue level. All business processes were greatly simplified. Now there was sufficient financial scope to redefine the strategic position of the company.
