Review of the Korea road to market for a food manufacturer
This business model transformation project has improved the subsidiary’s profitability.
01
Problematic
Korea is identified as a high potential market for this cheese manufacturer. This potential was limited by the subsidiary’s organization, which was entirely based on local distributors. They would take charge of the products leaving the group’s European plants until they were delivered to end customers. In order to improve the profitability and the quality of customer service, the group’s top management wanted to review the organization of its subsidiary throughout the value chain.
02
“Value chain analysis has provided local teams with better visibility into actual margin levels by SKU and by customer.”
Process
We first conducted a value chain analysis from the time the products left the factory to the delivery to customers. This work enabled us to define with the client the target set up of the subsidiary, the expected level of profitability and the prerequisites necessary to start the implementation. This work was carried out by mobilizing a transverse project team including the group finance, sales, legal, quality, supply chain and purchasing functions.
We then supported the client in the implementation of the project: workstreams coordination, follow-up of the business case, support for commercial negotiation, selection of a logistics and transport service provider.
35%
volume growth
25%
cost reduction
20%
decrease in inventories
Result
03
Result
This project has significantly improved the subsidiary’s level of profitability.
The Korean subsidiary’s direct handling of product import, logistics and distribution has enabled it to improve product availability and to have greater independence from local distributors.
Value chain analysis has provided local teams with better visibility into actual margin levels by SKU and by customer. A customized tool has been developed to support value chain and prospective P&L analysis.