When acquisitions exacerbate inefficiencies

A large food company had grown through a series of successful acquisitions. But then it encountered a perfect storm of challenges. The company struggled to integrate some of the companies it had acquired. That led to operational inefficiencies, sub-optimal product portfolios, and challenges with growth. At the same time, the company faced tougher competition from rivals that were building scale, along with pricing pressure from suppliers. A failed attempt at another new acquisition, plus some balance sheet issues, triggered a significant drop in share price, worsening the situation.

Management wanted to tackle these challenges head-on, and quickly.  They wanted to re-ignite profitable growth in their core product lines and with their key channel partners.  The executive team decided to launch a strategic program aimed at boosting profitability and financial returns —and brought in AlixPartners to help.

End-to-end operational transformation achieves positive trajectory

We led a transformation program for the company that comprised multiple major work streams: procurement, manufacturing productivity and footprint optimization, distribution, trade-spend optimization, customer/product profitability, and innovation.

For example, on the procurement front, we helped to structure and then negotiate more favorable contracts and pricing with key suppliers.  On the manufacturing front, we streamlined production processes and raised output.  In marketing and sales, we helped increase returns on investments in promotion and new product development.

We also worked with the finance function to generate deeper and more actionable insights into which customers and products were profitable—and which weren’t.  We also improved performance metrics and reporting.

When it really matters

In just six weeks, we identified nearly $100 million in margin-improvement opportunities. The total included significant cost savings in areas such as raw materials, manufacturing, and distribution, as well as new incremental growth initiatives.  By the end of the year after the program was rolled out, gross margin had increased by 500 basis points. Share price doubled during the course of our work, and ultimately, the company was sold in a successful transaction to a strategic buyer.