Consumer Products Company

Issue Faced. Leveraged buyout/merger of manufacturing company with marketing/distribution company unexpectedly began losing money and hemorrhaging cash, revealing to investors that underlying deal was based on incorrect information and assumptions. Strategy, operations (19 facilities in 5 states incorporating plastics molding, sub- and final assembly, and warehousing), finance, and culture elements of the business were all in disarray. CEO and CFO were quickly terminated by investors.

Industry. Consumer products

Location. Midwest, USA

Size Of Company. $100 million

Who Brought In The Team. Investors and primary owner brought in two-man turnaround team, my role being focused on operations and IT/finance while the other professional focused on strategy, marketing, and culture.

Goal Of Assignment. Revamp or replace aged manufacturing, warehousing, and distribution processes with efficient value-added designs; reduce and consolidate facilities and overhead; gain control over inventory particularly in high dollar value plastic parts production and assembly; improve quality and speed of production, covering all aspects of supply chain up to and including quick response/continuous replenishment delivery to customers; implement changes to reduce warranty costs and other customer deductions/chargebacks; restore quality, integrity, and timeliness of all financial and management reporting, restore relationships with banks

Actions Taken. Formed over fifteen teams during turnaround process for: development and implementation of MRP II and JIT systems, Random Access Warehousing systems, DRP and Logistics systems; re-engineering of manufacturing processes focusing on yield, extensive redesign of plastics manufacturing, and warehousing floor plans; improved purchasing, management, and control over all raw materials, WIP, and Finished Goods; implementation of new product and process quality standards; renegotiation of supplier contracts for raw materials, especially raw or pre-molded plastics, wood, and fiber components; improving departmental interaction and development of critical core competencies; implementation/redesign of accounting and reporting systems and IT infrastructure/applications responsive to new strategies; renegotiation of all bank loan terms and conditions

Results. Restored positive EBITDA and brought free cash flow (after capital expenditures) to breakeven, positioning the company for 15-20% EBITDA the following year; teams assumed full control and responsibility for completion of all team chartered deliverables including all systems installations; financial reporting was fully GAAP compliant with new management dashboard reporting of all critical performance metrics of the business; investors and banks could now expect solid, but more realistic ROI.

Assignment Duration. 10 months