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How we helped
A merger left a multi-billion dollar chemical company with 25 global manufacturing facilities and 200 contract manufacturers to manage without the margins to make it work—the targeted merger savings didn’t materialize. The macro environment was also tricky; raw material prices had spiked and supply-chain issues had exerted pressure on margins, pushing costs up by $1 billion.
The company asked AlixPartners to review everything from product pricing and procurement costs to the manufacturing footprint, manufacturing operations, and technology and cybersecurity effectiveness. Competitors were outperforming the company. The leadership team wanted to know why, and how to fix it.
AlixPartners developed a value-chain digital twin to visualize the impact of raw material cost inflation and identify pragmatic and real pricing opportunities to pass costs through. We also installed an inflation control tower to manage cost headwinds and accelerate the effects of cost improvements.
Next, we completed a manufacturing footprint strategy to assess strategic options for the largest manufacturing site. The company’s decision to exit the site was supported by detailed financial projections and strategic market and divestment option scenarios.
Our planning work also set up the company to develop zero-based manufacturing cost capability and reset internal conversion spend. The company rolled this out across its largest sites, working one-on-one with plant managers to execute the change. Our team also supported the company in developing a digital and technology operating model and third-party contractor spend optimization.
Ultimately, we drove $250 million in margin improvement across procurement, cost-to-price actions, and reduced technology provider costs.
We also developed a disposition strategy to generate $200 million from an aging site, and established a system of metrics and governance to drive sustained improvements in all financial arms of the company.