Financial Impact
Turning the Tide: How a company’s financial overhaul sparked global success.
At A Glance
United Alliance (UA) collaborated with a client during a critical period of its financial instability, helping to halt the losses by executing high-impact projects. The execution of these initiatives stopped the economic hemorrhaging and became the basis of a robust performance management system. This approach strengthened the Company’s financial health and ensured it could continue supporting its mission while reinvesting in its business growth.
The Situation:
A global company operating in 36 countries encountered a significant surge in product demand during the COVID-19 pandemic. However, this unexpected growth also led to a sharp increase in the cost of goods sold, severely impacting gross margins and jeopardizing the company's five-year growth plan. Financial stability became critical to ensure the firm's continued existence and pursuit of its mission-driven business.
The Ask
To address financial instability caused by global supply chain disruptions, United Alliance was engaged to assess their existing operations and develop a strategy to strengthen their financial performance.
The Solution:
To solve the Company’s financial instability due to supply chain disruptions, United Alliance implemented a comprehensive solution that engaged leadership, addressed root causes, and deployed innovative financial systems. Through these efforts, UA helped the client dramatically improve its financial position:
Root Cause Analysis and Strategy:
UA's in-depth interviews and financial data analysis exposed cost trends that were undetected by the client but would create a cash flow crisis in the coming months. UA's analysis identified a $200M value gap between where the client was and where they aspired to be in a few years time. This prompted the creation of a strategy centered on a combination of revenue generation, cost reduction, and cash flow improvements.
Comprehensive Plan and Collaboration:
UA devised a comprehensive plan with clear targets to close the value gap, focusing on the development of a project pipeline that prioritized high value initiatives. The diligence and rigor behind the pipeline created the company wide attention and cross functional collaboration needed for successful execution.
Implementation and Performance Tracking:
UA and the Company generated over 300 project ideas, prioritized the most impactful, set stretch targets, and implemented a performance management system to track financial outcomes, complemented by regular training sessions to maintain focus and foster collaboration.
Real Impact
Gross Margin (GM) Improvement
UA's intervention changed the client's financial direction. After gross margin declined to 8% in 2022, it impressively rebounded to 32% in 2023, and continued up over 40% on a trending monthly basis as UA completed its work. Importantly, the client was able to move out of crisis mode, and back to focusing on its strategy to achieve its purpose and vision.