Valves Manufacturing Company Owned by PE Uses 80/20 Rule to Help Maximize Opportunity

December 2021


CLIENT SUCCESS STORY
 

Customer Challenge

A leading manufacturer of valves and industrial parts owned by a Private Equity investment firm was looking to improve its profitability and top-line growth while driving alignment and focus enterprise wide.
 
Some of their initial challenges included:
  • Understanding the big picture, but not the steps to get there
  • Disorganized policies and procedures
  • A lack of prioritization along with a long list of initiatives
  • Differing opinions on change and a small number of resources applied to strategic growth
  • The company knew they needed support to help them achieve their goals and decided to engage with BDO for help. 
 

BDO Solution

The company selected BDO's Management Advisory and 80/20 Practice teams to help them adopt an 80/20 framework to help drive profitable growth through product line simplification, customer differentiation, and process improvements. The company was restructured using 80/20 business segmentation strategies to help drive increased focus and resource alignment on high growth opportunities.  Additionally, BDO was able to apply its extensive knowledge of the manufacturing industry to help simplify and consolidate overlapping brands or product lines, improve service levels to critical customers, and streamline operations and supply chain functions. 
 

Results and Benefits

The company realized many benefits after implementing BDO's recommendations including:
  • First year enhancements resulted in incremental EBITDA of 11%
  • Installed Product Line Simplification process, enabling the organization to help reduce the number of active SKU’s by 52%, driving out substantial complexity
  • Implemented Customer Differentiation program leading to enhanced OTD to “80’s” from 83% to 96%; secured supply agreements with top 5 customers
  • Management team aligned and focused on the critical few things that truly drive the business
  • Developed and implemented processes enabling the ability to identify, and have the courage to say no to, unprofitable and non-strategic business
 

“We would have been buried without 80/20; we now know where we make money and can put our focus there.” – Customer Quote