Sustainable Franchise Chemical Sales: Optimal Use & Packaging Reuse

Role: Consultant

Industry: Franchise Chemical Company

Situation:

The company has over 40 franchises and has hundreds of millions in sales. The competitors offer the same product option and the competition is mainly based on the relationship with the sales rep and their ability to recommend the most optimial use of the product. They are based in the united states. They have a unique product that reuses packaging saving the customer on disposal of large amounts of plastic containers. The customers include car washes, food and beverage manufacturers, and concrete suppliers.

Question to Marcus:

“

They have never done a procurment analysis before and want to make sure all of their spending is optimized they are also intrested in an audit of accounts payable.

Supply Chain Analysis

A comprehensive procurement analysis for the Franchise Chemical Company would involve examining the entire supply chain to identify areas of inefficiency, waste, or potential risk. This analysis should scrutinize supplier relationships, contracts, and the overall cost structure for raw materials and packaging.

Given the unique selling proposition of reusable packaging, ensuring that suppliers align with this sustainability goal is critical. The analysis could also reveal opportunities for bulk purchasing or longer-term contracts to reduce costs. By implementing strategies such as Just-In-Time (JIT) inventory management, the company could minimize holding costs and optimize inventory levels to match production with demand, particularly for high-rotation products used by car washes and food and beverage manufacturers.

Financial Analysis

Performing a financial analysis on accounts payable will offer a clear view of the company's current payment processes, highlighting areas where changes could lead to cost savings or better cash flow management. This might involve renegotiating payment terms with suppliers or taking advantage of early payment discounts.

Additionally, benchmarking the company's payment cycles against industry standards can reveal potential improvements. A thorough financial analysis might also uncover instances of duplicate payments or overpayments, as well as opportunities to consolidate purchases across franchises to achieve better pricing.

Procurement Strategy

Developing a robust procurement strategy is vital for the Franchise Chemical Company to ensure it's getting the best value from its suppliers. The strategy should evaluate the balance between cost, quality, and service to optimize spending.

Given the competitive nature of the industry, where relationships are key, the strategy could include assessment of supplier performance and risk, negotiation of better terms, and diversification of the supplier base to reduce dependency on single suppliers. The company should also consider strategic partnerships with key suppliers to drive innovation, especially for the unique reusable packaging product.

Operational Excellence

Introducing operational excellence initiatives will enable the Franchise Chemical Company to streamline processes, eliminate waste, and enhance productivity. This includes reviewing manufacturing operations, logistics, and distribution channels for inefficiencies.

Implementing lean manufacturing principles and continuous improvement methodologies like Kaizen can help in achieving these goals. A focus on operational excellence will not only improve the bottom line but also ensure that the franchises are delivering consistent product quality and service, which is important in an industry driven by sales rep relationships.

Cost Reduction Assessment

Conducting a cost reduction assessment is an important step in optimizing spending. The assessment should cover all areas of the business, from procurement to production to logistics.

It can help identify non-value-adding activities and potential areas for cost savings without compromising product quality or customer service. For instance, by analyzing the lifecycle cost of the reusable packaging, the company might find ways to increase its longevity or reduce logistics costs, which could be a significant competitive advantage.

Risk Management

Establishing a comprehensive risk management framework is critical for the Franchise Chemical Company to proactively identify and mitigate risks associated with financial operations, supply chain disruptions, and regulatory compliance. The chemical industry is subject to stringent environmental and safety regulations, and the company must ensure that its products, including its unique reusable packaging, adhere to these standards.

A risk management plan should include regular audits, risk assessments, and the development of contingency plans for critical areas.

Business Transformation

Embracing business transformation can set the Franchise Chemical Company apart from its competitors. This includes evaluating and adopting new technologies that can improve product offering and customer service, such as advanced analytics for predicting customer needs and optimizing product use.

Transformation efforts could also focus on digitalizing certain business processes for improved efficiency and transparency, particularly in the area of accounts payable and procurement, which the company has highlighted as needing an audit.

Sustainability

With a unique product that focuses on reusing packaging, sustainability should be at the core of the company’s strategy. This not only includes the direct benefits of the product itself but also the company’s operations and supply chain practices.

The Franchise Chemical Company should assess its environmental impact and look for ways to further reduce its carbon footprint, waste, and energy use across the franchises. This could involve implementing more eco-friendly production processes or adopting renewable energy sources where feasible.

Stakeholder Management

Effective stakeholder management is essential for the Franchise Chemical Company as it involves various parties, including franchisees, suppliers, customers, and regulatory bodies. A strategic approach should be taken to manage these relationships and ensure alignment with the company's goals.

Communicating clearly with stakeholders about the benefits of the reusable packaging and how it adds value can also foster stronger partnerships and customer loyalty. Engaging with stakeholders can provide valuable feedback that can be used to improve products and services further.

Change Management

Introducing changes, whether in procurement practices, operational processes, or financial management, will require a structured change management approach to ensure buy-in from all levels of the organization. This includes communicating the need for change, involving key personnel in the planning process, providing necessary training, and managing resistance.

Successful change management will ensure that the company's efforts to optimize spending and audit accounts payable result in sustainable improvements.