A private label CPG manufacturer and omnichannel distributor seeks to rebuild after years of sharp decline. It's previous success and rapid business diversifications activities came with a cost: a cash flow crisis, overburdened staff, and a supply chain that threatened to reduce market share.
The founder and president knew that in order move forward the company would be required to make internal adjustments, update systems, and upgrade equipment. The company also required additional new revenue in order to begin cutting a path along the ridgeline to change. They turned to B90 Consulting to improve sales and operations.
Challenge
Change Management and Sales Approach for US ManufacturerCPG Manufacturer
The biggest challenge the company faced was generating new revenue to support the overall vision of growth. Too much of the owner’s time is spent on survival. It’s missing strategic sales initiatives to generate new private label business and only one customer produces consistent cash flow. The sole focus of business is purchasing and distributing finished commodity goods. It lost a core competency it once had. With a lack of private label customers, it is unable to accommodate large volume customer private label requirements. This was holding them back; they knew they could capture more market share if they had more sales revenue to help pay for upgrades. The work addressed three critical issues:
- Improve sales:
The company required a private label sales specialist who would focus on this category of business. A private label sales cycle is 14-24 months unless it’s a new project for a client. It also required a competitive advantage to help capture new business.
Revamp operations:
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The GM is actively managing material orders, E-commerce, manufacturing, warehousing, inbound and outbound logistics (international and domestic), customs, customer service, and accounting. It’s a one-man show overseeing 28 employees with no management structure to assist with day-to-day.
- Optimize the supply chain for the production and raw material planning:
The company is not forecasting for finished products or raw materials that typically have lead times ranging from 2 to 16 weeks considering most are imported from overseas.
Solution
The B90 Consulting strategy began with a SWOT analysis to better understand its overall core competencies and competitive advantages. The tactical plan included the addition of key vendors and creating a company portfolio. Next, it began presenting the new private-label program to past and smaller prospective clients. Once a client was sold, systems and processes had to be updated, the real challenge was updating them without disrupting the whole organization in a negative way.
The solution began with a private label sale that provided an opportunity to recruit a management team to provide relief to the GM. The team included a production manager, warehouse manager, E-commerce manager, and accounting manager.
Results
The company increased its private label and wholesale accounts. Cash flow is no longer dependant on one customer which allowed the company to boldly raise prices with only a slight loss in volume.
It vastly improved the production and purchasing planning and execution functions, created and implemented a new stock policy that accounted for specific SKUs and key variables, streamlined multiple processes, and eliminated customer stockouts.
By the numbers and changes:
- Increase overall sales by 35%
- Increase E-commerce sales 400%
- AMAZON profit increased 20%
- Increased stock for finished goods by 10%
- Designed new ANSI child-safe packaging
- Added new high-speed sealing equipment and negotiated its purchase
- Identified the need for high-speed imprint equipment and negotiated its purchase
- Recruited four new managers to accommodate growth