Growth in the household and personal care sector
Delivering margin and cash flow improvement
Delivering margin and cash flow improvement is essential against a backdrop of rising costs for HPC companies.
With soaring input costs and slowing growth, HPC companies are continuing to focus on efficiency and productivity programs. Some companies will need to go further than targeting cost savings, instead focusing on more fundamental changes such as reinventing their processes to make their business sustainable.
“Managed effectively, the drive to reduce cost and improve cash flow can empower people within the organization to be part of value creation.”- Mark Twine, Co-Global Household and Personal Care Leader, Ernst & Young LLP (UK)
Many larger businesses have sought to gain cost advantages by centralizing procurement globally or reducing the number of suppliers. This has the advantage of reducing complexity, but exposes companies to greater risk and potential supply chain interruptions.
In our recent survey of consumer products companies globally, 25% rated themselves as “poor” at leveraging scale and 6% believed that leveraging scale would enable them to deliver the most positive margin mix improvements over the next 10 years.
Collaborating effectively with third parties and retailers
Collaboration with third parties is giving many HPC companies an edge. In order to innovate without breaking the bank, more and more companies are looking to collaborate with third parties and retailers, reaping benefits for both.
Managing retailers’ demands
Retailers continue to exert heavy pressure on consumer products companies, especially when it comes to negotiating on price and supply terms.
It is key for HPC companies to effectively manage this changing behavior. Raised expectations are a major cost driver for consumer products companies, particularly in high-cost, fast-growth markets.
Increasing the pricing power of brands
Consumers expect more and want to pay less — as do customers, putting pressure on trade investment and cash flow. There is concern about the extent to which companies can raise prices in a value-sensitive environment, especially with retailers aggressively competing for shoppers on price.
How we can help
We have a proven record of helping businesses in these areas all over the world — and knowledgeable local teams to provide support in all key markets. We can advise on:
- Increasing efficiency and productivity
- Reinventing processes to reduce cost
- Leveraging scale
- Collaborating effectively
- Increasing the pricing power of brands