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A Global Food Processing Company Reinvents to Grow

BCG helps a food company increase profit margins through network redesign, technology investment, and improved efficiency.

A global food processing company was struggling with chronically low profit margins. Its earnings before taxes and other factors were 5–10 percentage points lower than leading peers. In addition, the company suffered the negative effects of a fragmented, subscale network, manual batch processes, and a complex product portfolio.

To address these challenges and pave the way for performance improvements, the company turned to BCG. Together, teams launched a broad transformational program that centered on four important areas:

  • Network Redesign. Goals included dramatically reducing the number of facilities and increasing the size of remaining operations to reduce overhead.
  • Technology Investment. Through increased automation, the company reduced labor and overhead requirements, as well as improved food safety and increased production yields.
  • Improved Efficiency. Reconfiguring lines enhanced product flows and labor utilization.
  • Reduced Complexity. The company reduced the number of SKUs and formulations.

The multiyear transformation is already delivering benefits. The company is closing its cost gap of about 20% compared with a key competitor, while its profit margin doubled within five years of instituting the improvement plan.

Through increased automation, the company reduced labor and overhead requirements, as well as improved food safety and increased production yields.

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