The better the question
How do you drive your business transformation without the right engine?
The South Asian FMCG major needed to transform their operations to not only be future-ready but also create barriers of entry in the market.
One of South Asia’s leading FMCG organizations was anticipating stiff competition from multinational corporations on the back of a free trade agreement (FTA) for consumer goods in the market. Easy market access for competition in the future and deep pockets of the peer group to buy market share were primary concerns for the client.
The better the answer
We helped build business resiliency and efficiency
Strengthening systems and processes, with end-to-end procurement, supply chain and route-to-market transformation.
EY worked on a 15-month transformation journey, using a three-step approach, i.e., optimizing and addressing procurement gaps, sustaining the change and building a credible differentiator that is future-ready. The business transformation was devised with the aim to unlock greater potential across the value chain, significantly improve EBITDA and most importantly, create barriers of entry in the market.
The key initiatives of the transformation journey included:
Procurement transformation
EY helped the organization transition from a traditional sourcing and price discovery model to a scientific sourcing and procurement model by building capability across key functions such as strategic sourcing, category management, supplier relationship management and total delivered cost optimization. The initiative also helped drive defined cost savings measures such as identifying cost effective suppliers, better supplier negotiations, among others.
EY designed and implemented robust tools for production planning (to optimize finished goods inventory and working capital) and dispatch planning (for optimizing distributor inventory and reducing loss of sales).
Downstream transformation (route-to-market)
This initiative focused on driving topline growth and creating bottom-line savings through:
- Creating profitable channel partners with improved ROI
- Enabled sales force with decision making support through advanced analytics
- Customized route-to-market capability creation, focusing on specialized channels to maximize extraction
- Optimizing cost of complexity by rationalizing portfolio
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The better the world works
Positive impact on EBITDA margins with a stronger and wider distribution network
Addressing the gaps in the value chain, the organization is now ready to sustain the market disruption while increasing entry barriers for competition.
The client started to reap the benefits from the business transformation program within three months of implementation, in terms of positive EBITDA margins.
Benefits:
~600
basis points delivered to the bottom-line revenue
~250
basis points on procurement and supply chain initiatives
~350
basis points through route-to-market transformation
We were also able to consolidate the distributor base for greater efficiency and developed an empowered sales force through specialized trainings.
(Contributors include Nishit Bhatia, Karan Bhatia, Pratik Gandhi, Rahul Mukherjee, Guneet Singh and Niharika Mehta.)
