Delivering high EBITDA impact for PE-owned engine manufacturer

Delivering high EBITDA impact for PE-owned manufacturer through a post-transaction Procurement Value Creation and Cost & Value Engineering program

Client Challenge 

Following acquisition, the new PE owner recognised the potential for value creation through procurement, targeting an immediate EBITDA improvement, more longer-term step-change cost reduction and a need to further develop procurement capability. 

H&Z Approach  

Post-transaction value creation was delivered in three stages; An immediate, post-transaction Rapid Re-negotiation Program with a focus on price and payment term improvements, delivering immediate cashflow and EBITDA improvement. In parallel, the development and implementation of a comprehensive Value Creation Plan, addressing all spend areas and leveraging strategic sourcing, process optimization and, in particular, product cost optimization through cost & value engineering.  Transformation to a new Procurement Target Operating Model, to optimise how procurement engaged with all business functions.

Results

• Rapid Sourcing re-negotiations on payment term & prices with EBITDA and cash impact in Year 1 
• A comprehensive Value Creation Plan to deliver > 100 m€  
• 300+ “should cost” calculations conducted as basis for fact-based negotiations  
• Full Value Potential Plan incl. Savings potentials in commodity groups, product cost optimization and implementation, leading to over > 100 m€ savings  
• Cost Value Engineering and Tear Down Workshops for range of products  
• New Target Operating Model, including  organizational structure, and  collaboration models with interface functions