Our client, a Private Equity-owned global Consumer Products Company, planned to consolidate US assembly operations with its China operations to leverage under-utilized buildings, equipment, and people. The objective was to reduce the high US and China fixed overhead costs to improve profitability in their respective markets. Unfortunately, the product fell under trade tariffs imposed by the US on Chinese imports which offset all planned savings.
Vaco’s original engagement changed from off-shoring to China, to remaining US-centric with EBITDA uplift. Vaco was well suited for this initiative and implemented a proven strategy in COGS and supply chain cost reduction models, along with profit and loss program management. In addition, Vaco’s unique approach to Bills of Materials analytics and benchmarking competitive product costs provided insight to the business to improve product gross margin with high confidence.
Within a year, Vaco was successful in delivering 2.5% margin expansion and EBITDA uplift earlier than the original program, with one-tenth of the cash outlay, and without disruptions to operations.
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