Case Studies
Adding Value in a commodity business

Summary
Prices dropping - volumes plummeting!
Stripping out the fat
Take advantage when your winning!
Consolidate operations and go beyond your national borders
Invest in the right commodity business


Prices dropping - volumes plummeting!
The traditional business was viewed as the jewel in our portfolio, but it had all but been destroyed by the previous management's decision to accept lower prices at a time when volumes were going down.


Stripping out the fat
The board of directors was reduced from eight to just three. We downsized the middle management teams and got rid of group positions. Employee headcount remained at roughly the same size, as our strategy was to push more volume and value-added services through the plants.

Waste levels were too high in this high material content business. The employees were encouraged to lead the war on waste. They didn't let us down (they seldom do), and material yield levels increased substantially. Reduced waste levels led directly to an increase in manufacturing performance.

Take advantage when your winning
Although waste levels, productivity and costs improved, more needed to be done to achieve decent profits. Prices in the traditional business had been falling for several years. However our improved service, quality and lower waste levels gave us the leverage to negotiate a substantial price increase and new performance related financial incentives were agreed with the customers.


Consolidate operations and go beyond your national borders
Within a year another large long-term contract was won with a major European customer. The traditional business still thrives today and recently moved into a new, larger super-plant, winning additional long-term contracts. Under-utilised businesses were consolidated into the new larger core with much improved profitability and cost structure.


Invest in the right commodity business
Profitability was re-established in this cash-positive business and new value added revenue streams introduced. The previous senior management had suffered from inertia and chose to accept lower pricing and volume rather than compete. This commodity business is once again an attractive investment and excellent cash generator.


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