Overview:

Manufacturer Outsources Merchandising Work, Improves Execution from 90% to 98%, Saves $750,000 to $1,250,000 (estimated*):  Associate led team that took over $25 million in merchandising work for the manufacturer.   Associate conducted analysis that showed that manufacturer was overlooking significant costs.  Salary and benefits for 3,000 reps were reduced by 20%+ (estimated.)  Entire program was deployed in 90 days.  Manufacturer was confident enough in the Associate's team that it provided up-front cash to fund the initiative.  Goal was to provide the same or greater levels of service at a reduced cost.  Program continued successfully for many years.

    Problems / Challenges Faced:

• Manufacturer faced rising cost of in-house merchandising team - was considering outsourcing

• Manufacturer was concerned about certain problems related to outsourcing the work:

  • Loss of control

  • Confidentiality

  • Knowledge of reps

  • Ongoing training

  • Span of control of rep supervisors

  • Quality of work done

     Solution:

• Manufacturer hired big consulting firm to analyze outsourcing alternatives

• Associate had already established his expertise and reputation with the manufacturer

• Manufacturer trusted Associate enough to ask him to help educate the consultants on industry and the issues

• Associate educated the consulting firm        

• With consulting firm's input, manufacturer decided to outsource. 

• Manufacturer put out invitations to present a "capabilities review"

• Original proposal was for grocery, drug and mass merchandising channels.  Actual outsourcing contract grew to include the convenience store channel

• Re-setting Unreasonable Cost Savings Expectations:  Initially, manufacturer had unrealistic expectations on cost savings with the Convenience store service solution.  Manufacturer was currently spending approximately $8 million per year and wanted to reduce the overall cost of the program.  Associate worked with Manufacturer's VP of Finance on a full service analysis, which revealed that Manufacturer was not including all costs in their analysis. 

• Associate's firm met with the majority of manufacturer's retail service personnel that were to be displaced by the outsourcing.  Approximately 65% of manufacturer's people signed on to work with Associate's company

Results:

• Improved Execution from 90% to 98% (estimated)

• Saved $750,000 to $1,250,000 (estimated)

• Salary and benefits for 3,000 reps were reduced by 20%+ (estimated.)

• Helped manufacturer discover that another bidder was withholding the fact that the bidder was doing work for the manufacturer's major competitor

• Program was developed from scratch, up and running in 90 days