Company
A-brand and PL food manufacturer, with large network of factories in Europe. Active in the Benelux for food retail and food service customers.
Situation
A growing variety of customer requirements, and its own need for further differentiation, increased operational complexity. This impacted indirect costs and thus the bottom line. As these indirect costs became disproportionately allocated across individual SKUs, it became clear that the competitiveness of the core range was coming under increasing pressure.
Our mission was to objectify complexity in order to make better decisions based on the true cost of SKUs.
Approach
Gwynt’s team worked with the client to uncover key complexity factors within the integrated process. Following this, weighting factors were determined based on importance, in indirect costs so that a complexity number could be determined for each SKU.
This complexity number has been normative for a so-called 9-box analysis which brought concrete portfolio issues into focus. In addition, a complexity framework was established for structural assurance of complexity in strategic portfolio choices and better allocation of indirect costs.
Results
The client got a clear picture of which SKUs add high complexity and therefore disproportionate indirect costs, so that specific actions could be deployed. The complexity framework now provides guidance for a balanced allocation of indirect costs, allowing for better portfolio decisions as well.
