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Product & Innovation

Product Portfolio Optimization for a US Appliance Manufacturer

An outdoor appliance manufacturer wanted to reduce value-chain complexities to improve profitiability. Applied Value was asked to rationalize 70% of all products across four business units and helped address related Fixed COGS.

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Situation

A US outdoor appliance manufacturer was undergoing a company-wide transformation in hopes of achieving better focus, and reducing value-chain complexities to ultimately improve profitability and working capital. The client had recently performed an organizational restructuring and had identified product complexities and Fixed COGS as the next improvement opportunity. Applied Value was asked to rationalize 70% of all products across four business units and help remove related Fixed COGS.

Approach

Applied Value performed two assessments: a strategy impact analysis to determine business and product criticality and a product profitability analysis to evaluate products by business unit, product line and family. AV also built a cost model to identify the required inventory disposition and impact on working capital.

Results

We removed 70% of the client’s entire product portfolio across four unique business units and identified portfolio optimization actions to mitigate $70M in revenue losses. AV delivered an initiative roadmap to take out $9.0M of Variable and $2.5M of related Fixed Costs. 

$11.5 MUSD million USD

cost savings

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