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How we simplified the product portfolio and customer base to increase profitabilitiy of a leading speciality chemicals company

Case

The client was facing high inefficiencies impacting EBITDA negatively. Thus, we were asked to streamline their product portfolio to reduce complexity and to adjust the customer service leading to increased profitability.


Project Scope

Industry: Chemicals

Company size: 3,000 employees

Project duration: 3 months


Approach

Our approach was split into three distinct phases which allowed for a lean but holistic analysis of both the product portfolio and customer base. By collaborating closely with our client across different hierarchy levels, we could deliver swift value generation.

Phase 1: Top-down analysis

Product portfolio:
We conducted in-depth analyses of the product portfolio’s profitability by revising the internal cost accounting and introducing an analysis tool that enabled us to identify critical products

Customer base:
We categorized the customers according to their profitability, sales volume and CAGR. Those customers below the pre-defined thresholds were further analyzed

Phase 2: Bottom-up validation

Product portfolio:
Together with product experts and in the context of the top-down analysis, we defined product actions focusing on what products to retain, what products to optimize and what products to eliminate from the portfolio.

Customer base:
We jointly simplified sales channels organizing them per customer segment along the three categories direct sales, inside sales and indirect sales channels.

Phase 3: Implementation

Based on the insights from the top-down and bottom-up analyses, we defined an implementation roadmap including onboarding responsible stakeholders for both the product portfolio and the customer-based streams.

Results

  • Product portfolio consolidation and optimization by 15%
  • Reduced number of customers served through direct sales channels by 40% while maintaining revenues
  • Identification of future growth potential on both product and customer level
  • Enabled profitability increase and inventory reduction



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