Implementing margin improvement programme at large European dairy product producer
“By restructuring the team, the project has laid the foundations of a truly international procurement department, at the service of all the group’s divisions without distinction by geographic location. Our objectives were achieved in a good frame of mind.”
- Chief Financial Officer
Situation & challenges
Following a recent change of ownership for our client, a transformation programme focusing on international expansion and margin improvement was launched. Ayming was appointed by the management team and the new shareholders to identify and realise savings through procurement, supply chain and working capital optimisation. With a lack of communication between several European sites, issues with raw materials suppliers and substandard logistics performance processes, our client was facing a significant procurement challenge.
The first phase of this project was to perform a procurement diagnostic, an effective way to identify cost savings, as well as organisational and process improvements. The second phase was project delivery, focused on implementing the strategies defined during the diagnostic in order to deliver measurable results with bottom line impact. The objective was clear: Generate cost savings to finance international expansion initiatives.
What we did
Identify: Working closely with our client’s organisation, we were able to gain a full understanding of the status-quo, identified key areas for improvement and mobilised the organisation. By creating full spend transparency and assessing practices and processes, we identified sizeable opportunities across key spend areas such as food ingredients, packaging, logistics and general expenses, as well as working capital improvements. A detailed transformation programme was created to capitalise on these identified opportunities.
Transform: We implemented a transformation programme focused on delivering cost savings, improving working capital and designing a procurement organisation equipped with the right tools and capabilities to sustain benefits going forward. Clear results were achieved: over 8% cost savings on inscope categories and 24% reduction in stock resulting in considerable cash-flow improvements. The procurement and supply chain functions were repositioned as highly value adding operations.
And How We Helped...
€90m external spend addressed globally
€7.1m savings achieved and 24% reduction in stock
70% saving realised within the first 8 months upon project completion
As a private equity owned firm, the project also delivered considerable value for our client’s shareholders
About Our Client
European food manufacturer recently acquired by a private equity fund. The third biggest dairy product producer in Europe.