Operational Excellence and Industrial Footprint
Background
- Our client is a leading producer of confectionary products. Headquartered in Paris, the company employs 750 people in 5 manufacturing facilities spread across France.
- The company was generating some €250M revenue with an EBITDA target of some 15%.
- At the time of engagement, our client was facing head-wind as a result of declining retail sales in both the home market and internationally.
- The purpose of our engagement was to define the operational performance potential and opportunity for footprint optimization.
Business Relationship
- JENTS International initiated & conducted this opportunity in collaboration with a US-based partner.
- The Private Equity owner was a new business relationship JENTS brought to the partnership.
- The PE firm had bought a number of leading confectionary & sweets brands from a major conglomerate (‘orphan assets’) and carved-out operations and activities (license agreements in place for sweets and chocolate powder brands).
- During the course of our engagement, our client bought the activities of a competitor whom operated with one manufacturing facility – this was absorbed in our scope.
Approach
- Our Analysis and Design engagement focused on OPEX across each of the production facilities, as well as combined CAPEX through a footprint optimization model.
- Key areas of the scope included:
- Management Operating System
- Production Management (equipment utilization, yield, uptime, labor productivity, …)
- Sales & Operations Planning (add-on to original scope due to impact on production system)
- Maintenance management
- Purchasing (add-on to original scope due to impact on production system, eg. packaging)
- Industrial footprint optimization
Results
- Within four months, identified annualized savings of €7.0-9.5M (EBITDA) through enhanced operations excellence practices in each of the manufacturing facilities. Each plant had a tailored opportunity and optimization plan.
- On top, we identified and set in motion €4.0-6.6M in Cash release (inventory reduction) through improved Sales & Operations Planning.
- Developed a comprehensive footprint optimization model to evaluate potential asset consolidation scenarios (both quantitatively and qualitatively). Final recommendation was to consolidate from 6 to 4 facilities (even 3 in case of stretch).