Performance Improvement: Injection Molded Plastics Manufacturer

Client

Privately owned Injection Molded Plastics Manufacturer, on probation with multiple customers and required to meet weekly with senior lender.

Situation

  • Sales had declined 24% year over year
  • Wrote off inventory equal to 16% of sales
  • Missed multiple shipments to major customers
  • Lost a key customer due to financial performance
  • Projected large cash flow deficits for the coming year
  • Running out of working capital

Solution

  • Engaged BlueWater to help implement a 30 Day Plan: immediate cost and cash burn reduction and 13-week cash flow model
  • Followed by a 100 Day Plan: to improve profitability and cash flow
  • Developed five daily key process indicators (KPIs)
  • Created three processes and metrics to manage inventory and support delivery to customers: days on hand, deliver on time to warehouse, and ship on time
  • Employed a monthly sales and operations planning (S&OP) process to predict next month’s financial results
  • Put into practice a Management Advisory Board to address major strategic and financial issues on a monthly basis

Result

  • Client began generating positive cash flow, strengthened its balance sheet, and improved its operations
  • Client generated its first profit in two years, despite a 27% reduction in sales
  • Cut labor, manufacturing overhead, and SG&A 24.4%
  • Improved on-time delivery performance to 99%
  • Reduced inventory 26.7% with minimal write-offs
  • Management is now able to predict financial results and make real time operational adjustments to avoid after-the-fact surprises
  • Senior lender’s renewed confidence in management provided the foundation for the relationship to continue through the recession