Collinson Grant helped McBride to reduce complexity in its European business. An excessive proliferation of products and materials was adding unnecessary costs and potentially reducing competitiveness.
Our work started in the UK. Once all the complexity and costs in operations were understood, the analysis showed that half of the products accounted for a surprisingly small proportion of gross profit; yet they had a disproportionate impact on indirect and overhead costs. At first glance materials appeared to be the biggest driver of variation but, because the mixing operation is done in batches, this did not add much complexity on its own. Investigations showed that the main culprit was further down the process during the filling operation, where a wide variety of formats was having a detrimental effect on the efficiency of the production lines.
So, we worked with the Commercial teams to select those products that it would be acceptable to cull or where packaging and materials could be standardised. Financial modelling was used to show the effect on profitability and agreement was reached to eliminate or substitute many products. The products were checked with people in all relevant departments. The associated savings were modelled and a business case was presented. The project enabled several 'tipping points' in cost to be reached, including the closure of a warehouse.
Our work stressed that a cull of products would have no long-term impact on its own: it would have to be done in conjunction with a plan for substitution and growth together with controls on the introduction of new products to ensure more standardisation. So, we worked with a cross-functional team to define and implement these controls.
We were asked to adapt the lessons learned in the UK to the group's operations in Western Continental Europe (WCE), covering operations in France, Belgium, the Netherlands, Spain and Italy. Later in the work we reviewed the Polish operations, the capacity for expansion and the options for moving some production to another factory. A series of workshops was held to involve people from all relevant departments, including commercial and plant managers, in building a plan of which products to tackle - by region, market, category and customer. The business case suggested a significant payback so implementation commenced swiftly.
Tony Barwise, Group Supply Chain Projects Director explains:
"At a time when the business was demanding a growth in sales, getting the Commercial teams to consider the prospect of culling products to reduce complexity presented a very difficult project. Collinson Grant provided a robust and proven process methodology together with expertise in financial modelling and data manipulation beyond what we had in-house. The independent challenge, done in a professional but searching manner, cut across the business silos. The outcome was a robust business case to which all stakeholders were fully committed."