Supply Chain Management

The integration of key business processes across the supply chain
for the purpose of adding value for customers and stakeholders.

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Business Issue: Pending carve-out acquisition by private equity firm presented interesting twist

A mid-market private equity firm requested due diligence on a pending acquisition with an interesting twist — the company would be a carve-out and the manufacturing and logistics portions of the business would not come with the acquisition. The question for Flow Consulting — should the new carve-out spend money on capital and infrastructure to replicate manufacturing and distribution, should manufacturing be outsourced, and/or should distribution be outsourced?

Approach Used by Flow Consulting:

Ric Schildwachter worked with the potential carve-out to completely understand and estimate the costs of replicating a lean version of their manufacturing and distribution, while Troy Bourgeois worked with potential suppliers to obtain multiple quotes on outsourced solutions so the two manufacturing solutions could be compared financially. Flow Consulting also brought in an experienced logistics professional to develop a cost model for outsourced logistics so the two distribution models could be compared financially.

Results:

After exhaustive analysis, the clear direction pointed to investing in a new lean manufacturing operation versus outsourcing, and the delta was approximately 15 percent greater profits; a significant, and somewhat surprising conclusion. The logistics analysis indicated break-even for internal distribution versus using a third-party logistics provider, so Flow Consulting recommended keeping distribution and logistics internal to reduce the amount of change that would be introduced as the company transitioned to the new model.

Business Issue: Inadequate leveraging of volumes

Different purchasing teams in different business units were not leveraging their volumes across a division.

Approach Used by Flow Conulting:

Led management through QFD to identify course of action. Setup commodity teams, trained commodity team leaders and supported leaders in their kickoff commodity team meetings.

Results:

Cost Improvements 15 percent after the first year.

Business Issue: Identify potential sourcing savings of merger

Two companies were considering merging; both were Equity owned. Identify potential sourcing savings due to leverage.

Approach Used by Flow Consulting:

Sourcing data collected and organized by Flow. Facilitated leverage and best-price discussion with representatives from both companies.

Results:

Identified 6 percent in potential savings based on nearly $100M in spending, and approximated timing of implementation by quarter.