Masonry & Landscape Manufacturer
Optimizing Footprint to Improve Customer Experience and Reduce Operating Costs
A leading national masonry & landscape product manufacturer, servicing over 240 dealers, faced a declining EBITDA margin due to substitutes in the market. Carpedia’s objective was to identify savings from network optimization and develop a go forward strategy to regain share.
Changing Service Requirements:
- Network volume oscillated over time
- Forecasted volume had shifted as well
- Ordering patterns of the customer base changed over time
- Customer locations and density shifted over time and was projected to continue changing into the future
- Customer expectations had changed
Bloated network costs:
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Fixed costs were increasing as a % of sales
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Plants were experiencing decreasing productivity and utilization; inventory levels were rising
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Transportation rates were increasing as customer base was moving away from the network sites
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Inventory levels were increasing
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Inconsistent span of control ratios within the network
The Network Study focused on two key themes:
Current State:
- Analyzed current data and defined financial & operational indicators
- Analyzed resourcing, scheduling and production data
- Mapped current process flow and identified gaps and inefficiencies
- Layout and space management – Identified improvements in the current warehouse layout and utilization
- Developed possible scenarios for consolidation/expansion
Transition Strategy:
- Modeled scenarios to assess feasibility and benefits
- Consolidation recommendations – Identified plants and warehouses for consolidation, expected financial benefits
- Plan for bridging production and inventory during transition
- Implementation strategy – Project management of the network transition and implementation.
- Plan for resource changes and estimated SG&A savings
- CAPEX planning – Financial spend for consolidation (machine upgrades, shifting of equipment, severance)
The Results
Carpedia analyzed network volumes, sales data, production baselines, delivery costs to identify five potential consolidation scenarios.
Combined with market insights from customer surveys, Carpedia developed a 3yr implementation plan that included consolidating 3 plants, restructuring the salesforce, realigning sales strategy and exiting non profitable product lines.
Expected results included:
- Delivery expenses decreased by 5% (Plant 1)
- SG&A decreased by 7% (Plant 1)
- COGS decreased by 13% (Plant 3)
- 8% increase in EBITDA
- $5MM in absorption savings
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