Situation
A company that produces home furnishing products was confronted with headwinds. Housing construction stagnated and increasing international competition put results under pressure.
Assignment
Management asked us to carry out an overall improvement assessment focusing on costs and revenues. To subsequently define the most value-adding improvement initiatives.
Activities and results
After collecting and analyzing the financial and operational data, we determined the improvement strategy and initiatives in collaboration with the stakeholders (workshops).
The main cost categories were purchased products, services, staff and energy.
Purchasing volumes and expenses were not forecasted, expenses were fragmented, contracts incomplete and no tenders took place. Based on this have implemented a spend analysis and various purchasing tools.
It also turned out that products were produced to order. Which lead to small batches and high changeover times. We have recommended a S&OP meeting structure that leads to better coordination between sales and production. Resulting in larger production series, lower production costs and the possibility of a different margin strategy.
Finally, different sales channels were used to a limited extent. In particular, direct channels were used to a lesser extent and sales abroad was limited. Moreover, it turned out that the best sales and margins were achieved on unique designs. Based on these conclusions, we have recommended to expand the design capacity, set up new network-business-model sales and channel strategy. Leading to a better sales mix and margins.