Upscaling and profitability
The Directors were targeting 25% business growth, but needed to ensure that this was achievable and profitable.
The client is a supplier to most supermarkets and DIY sheds, plus many independent retail outlets. Covid-19 has resulted in an expansion of the E-Commerce side of the business and sales turnover has risen by around 30% over the previous two years. A freshened-up marketing team has been recruited and there are now plans to grow sales by a further 25% over the next 3-5 years. The company manufactures finished products and also imports merchandise from around the globe.
The business has been run on very traditional lines and many of the staff have been employed for most of their working lives. Consequently, they are keen to improve but lack the vision. Covid-19, along with current supply chain issues have also skewed the purchasing model and stock levels were very high, far too high for the level of sales turnover. Nevertheless, the business is expanding and the Directors were keen to expand the company, albeit with a similar or better level of profitability. An independent and impartial view was required to pinpoint immediate savings and to plot a route forwards - hence the need for the consultancy input.
The project entailed examining the entire supply chain from purchasing through to despatch and recommending how profitability could be improved within the current model. In addition, establishing the requirements for the scale-up of the business. Staff were very keen to help. The vast majority of people from supervisors upwards were involved and their input provided a further insight into the pinch-points and obstacles that were restricting business growth.
The final report contained more than 40 recommendations and included a plan of action for the implementation that will result in savings of more than £350,000 pa; an improvement in current operating profits of around 50%. The increase in business performance can also be translated into extra capacity, meaning that much of the anticipated growth predictions should be achievable from the current resources.
DIRECTOR - "I am really happy with the project, £350,000 of savings is a realistic target over the next couple of years."