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Why the Merger of 5 Factories Reduced Production and Sales Cycles by 300% in 4 Months

We unlocked additional value creation potential for a multinational chocolatier and enabled them to streamline operations and boost sales growth.

Sectors : Manufacturing Retail
Services : , , , ,

Why the Merger of 5 Factories Reduced Production and Sales Cycles by 300% in 4 Months 1
Goals

Goals

The Seven Wise Men was assigned with the goal of increasing operating efficiencies in 5 sister factories that were home for a staff of 231 people and 26 administrators working to meet demand from 92 franchisees in 35 countries. Revenues amounted to USD 24 Million at factory cost.

Situation

Situation

The client is a multinational manufacturer, retailer, and franchisor of gourmet chocolates. Their group of companies included 5 independent factories: chocolate, ceramics and glassware, printing press, joinery, and silverware. The factories were run as separate entities selling goods and services to each other in order to get the finished products ready.

Analysis

Analysis

The overwhelming volume of sales orders coming from international branches was putting excessive pressures on sales processing and production scheduling.
The smallest bottleneck anywhere along the supply and value chains was causing extensive delays in production and deliveries.
Before our involvement, sales backlogs extended to 6 months ending with many franchisees cancelling their orders. This lead to mounting client dissatisfaction, loss of sales opportunities, internal friction, and finger-pointing culture. More importantly, they potentially compromised the value of the franchise network and the brand’s sterling reputation.

Actions

Actions

  • Proposed to merge the 5 factories into 1 company with 5 product lines, and lead the companies’ merger.
  • Brought in an ERP system to automate the supply chain, order processing, production scheduling, warehousing, outsourcing, delivery and shipping and costing.
  • Reduced order-to-delivery times by 300% in 4 months by eliminating wastage in hours needed to complete any particular task, properly scheduling demand and safety stocks, as well as discontinuing the production of slow-moving items and excessive work-in-progress.
  • Raised production capacity in 3 divisions by an average of 35% by optimizing long and short production-runs, machinery setups, scheduling and storage.
  • Reduced costs by 20% by removing transfer pricing.
  • Decreased costs of carrying inventories by disposing of obsolete materials, discontinuing slow-moving items and keeping safety stocks for high-turnover items.
  • Researched the tastes and preferences of customers in Southeast Asia, and then triggered the design of new products that appealed to those specific markets.
  • Hired new product designers who had the right qualifications and oversaw the production of prototypes before approving mass production.
  • After our involvement, orders were delivered in 2 to 3 weeks only. We revamped all of the business processes from design to sales through manufacturing and delivery.
  • Improved quality control over packaging design, manufacturing, and safe packing (to minimize the damages and costs resulting from poor handling, transportation and shipping conditions).