Client Situation
The team sports division of a $200M apparel group targeting athletic leagues, clubs, and schools with distribution primarily through sports team dealers and decorators, was experiencing declining sales and customer service; excessive inventory growth; and deteriorating financial results. The apparel group management decided to replace the existing president with a new executive with extensive strategic and operational experience. The new president conducted an in-depth assessment of the overall situation and formulated a plan and execution strategy to correct these issues.
The major issues identified by this assessment included:
- Weak financial control over procurement and inventory management
- Absence of good forecasting and procurement tools
- A culture of poor performance with organizational silos that were in constant conflict
- Declining sales from a demoralized sales and customer service team that felt alienated from the home office operation
- Poor customer satisfaction due to inventory non-availability at critical times for team uniform purchase, and errors in shipping and assortment
- Several key management positions staffed by unqualified people
Solution
The company president, now a E78 partner, undertook these corrective actions:
- Transformed the manufacturing and supply chain processes, cutting overhead expense 25%
- Strengthened the leadership team and refocused on core business strengths
- Implemented an MRP system module that improved inventory control and order management
- Implemented a warehouse locator system to upgrade order picking and processing time, which reduced labor cost during seasonal demand shifts and located inventory for optimum efficiency
- Shifted manufacturing sourcing from Asia contracting to a company-owned facility in Mexico that reduced lead times and cost
- Hired a new design, merchandising and marketing team that revitalized a stale product offering, receiving accolades from customers and sales staff
- Reshaped company culture to create a customer-centric teamwork attitude by breaking down department silos and poor internal communication
Results
- Sales increased over 10% annually
- Inventory was reduced by 50% with improved turns and better availability
- Morale and culture dramatically improved with greater communication that produced major improvement to customer satisfaction
- EBITDA improved from 8% of sales to 15%
