Performance Improvement: Injection Molded Plastics Manufacturer

Client

Injection Molded Plastics Manufacturer

After being put on probation by customers and asked to meet weekly by its senior lender, the executive management team of a plastic processing company engaged BlueWater Partners Turnaround Consulting. With our help, the company started generating positive cash flow, strengthened its balance sheet, and improved its operations. The key to success? A comprehensive performance improvement plan. As a result, the company made its first profit in two years while making sustainable changes to its culture and processes.

Problem

  • Sales 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
  • No cash or working capital

Solution

  • Implement a 30 Day Plan: immediate cost and cash burn reduction and 13-week cash flow model
  • Implement a 100 Day Plan: improve profitability and cash flow
  • Develop five daily key process indicators (KPIs)
  • Create three processes and metrics to manage inventory and support delivery to customers: days on hand, deliver on time to warehouse, and ship on time
  • Employ 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
  • To ensure a positive return on investment and help our client’s cash flow, we proposed a small retainer plus a success fee based on profitability.

Results

  • Cut labor, manufacturing overhead, and SG&A 24.4% (excluding material, but including scrap reduction)
  • Improved on time delivery performance to 99% or more
  • Reduced inventory 26.7% with minimal write-offs
  • Realized first profit in two years despite a 24% drop in revenues
  • 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