ChemicalMetalCo*, a global supplier of metal products, had executed a series of acquisitions that were difficult to integrate into the business. Additionally, relationships with key customers were deteriorating during an industry-wide downturn. The newly-appointed management team contacted us to help conduct a full-scale cost and top-line transformation to put the company back on the path to profitability.
Transforming the cost base
The engagement’s initial focus was on cost management. During this phase, it became apparent that ChemicalMetalCo’s team members were siloed across many countries, as well as by function. It was clear that centralization would be an important element of this transformation.
To start, we helped optimize the company's footprint by streamlining fixed costs and curtailing uncompetitive capacity, increasing flexibility and utilization. We then co-developed consistent ways of working, including improved data reporting and systems integration. In parallel, we examined ChemicalMetalCo’s procurement operations, helping the company to centralize them and implementing enterprise-wide analytical tools. The changes were deployed in plants across the company, many of which were legacy acquisitions that faced integration challenges operationally and culturally.
Better inventory management and the improvement of receivables were key to releasing $80—$100 million in working capital. To make this significant accomplishment sustainable, we supported ChemicalMetalCo in instilling new ways of working around cash and working capital management. The company developed data flows and dashboards to closely monitor accounts payable, accounts receivable, and inventories, while also establishing governance to make faster and more informed decisions.
A new focus on customers
Repairing deteriorated client relationships was also a high priority for ChemicalMetalCo. Customer-facing teams were siloed in different locations throughout various functions and countries, with scattered information, inadequate coordination, and limited planning. We supported ChemicalMetalCo in strengthening those relationships by developing a target portfolio prioritization and structured account planning with the integration of new digital tools. These digitally-enabled tools and processes boosted the commercial function to a new level of performance. Co-developing these tools with the main stakeholders maximized uptake and functionality. We also helped the company introduce a re-designed product manager role, charged with creating customer value and acting as a consistent source of information.
The path ahead
What started as an urgent turnaround led to a broader transformation. Since we began collaborating with ChemicalMetalCo, it has achieved between $170-210 million in cost reductions. The improvements came not a moment too soon, enabling the company to weather several concurrent global crises, including supply chain disruptions, the war in Ukraine, and the EU energy crisis. ChemicalMetalCo can now focus on expansion to achieve its ambitious goal of almost doubling EBITDA in the next decade.
These critical operational, financial, and commercial actions enabled ChemicalMetalCo to right the ship and turn its attention to sustainable growth. Reorganized and more efficient than ever, the company is now well-positioned to exert its leadership role and seize market opportunities in higher-value segments over the coming decade, even as it continues to make operational improvements and bolster its resilience.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.