Addressing inadequacies in the supply chain to recover long-term corporate financial health

Following an aggressive capital investment program and a series of debt financed international acquisitions, a leading global provider of food products saw its debt quickly doubled and profits plummet by 30%.

The client partnered with REL, the working capital division of The Hackett Group, realizing that effective working capital management was the fastest road to long-term financial health.

REL benchmarked the client against its peer group, to determine the potential value from a working capital program. Following an initial investigation into five subsidiaries with the greatest potential benefits, we compared current practices against best practices, establishing specific working capital targets and actionable steps.

To reduce the amount of working capital tied up in inventory, we improved sales forecast accuracy and introduced quantitative tools for inventory planning. In Accounts Receivables, we introduced processes to reduce dispute resolution and ensure customers paid on time.

As a result, REL freed up $111 million for debt repayment, ensured that the balance sheet received the necessary organizational focus and improved the client's operational efficiency and profitability.