Our client is a major supplier of building supplies. Originally operating as an importer and wholesaler, they commenced manufacturing their own products.
Background
The company had 25 years of growth, which stalled in 2016–17.
The Opportunity
Our client required financial services to assess stock management, logistics, funding, cash management, reporting, and risk management.
The Solution
Strategic Specialists Group placed an experienced CFO with manufacturing experience in the business to oversee the transition to enterprise reporting. The CFO was engaged intensively for three months to introduce new systems and reporting, and to upskill the existing team. Engagement continued for another three months to simplify requirements across the SBUs, and a further three months for advisory services and team mentoring.
The Process
A rapid financial assessment of the entire business was undertaken by the CFO to quickly understand the overall financial position and identify key financial priorities for rectification.
Key issues defined for immediate attention included:
- Below industry rate stock-turns and pressure on working capital
- No formal structure for short-term and long-term business funding
- Substandard cash flow
- Lack of internal finance systems and reporting to inform decision-making
Improving stock-turn rates and working capital required developing holistic business recommendations rather than simply reducing stock levels. The inventory management approach aligned finance, operations, marketing, sales, and customer experience. Managing stock lines ensured minimum product quantities were maintained while accounting for lag times in manufacturing, freight, and distribution. Consultation with marketing supported campaign development for demand generation, lead management, and sales pipeline management.
Other financial priorities involved analysing data, systems, and processes; reviewing people and capabilities; and developing recommendations to improve cashflow, financial reporting, and risk management.
The Outcome
Key results for the business included:
- Continued reduction in stock and increase in inventory management efficiencies
- Funding improvements through negotiation of better supplier trade terms and identification of alternate funding sources
- Improved business reporting with reliable, timely financial data and tighter budget and cost management for more accurate decision-making
Engagement continues with a focus on preparing the business to scale.
