A Middle East-based commercial recycling business, engaged in a product cycle of processing mix paper waste; packaging; then shipping recycled material to international clients was struggling operationally and required business process, sales, and cash flow optimization.
Waste paper sales and trading is a global business, where raw material and sales prices change frequently. Sales are based on current and projected raw material pricing, but by procurement, price fluctuations have a significant impact on the margins of the business. Not only did this affect margins, but cash flow, the time between obtaining raw material to selling the recycled product had to be optimized for cash flow.
Jaffer Consulting set out to identify process and performance gaps and improvements, both for the recycling company and plants, and the industry, and found:
• The plants were not operating at optimal capacity, and instead were being run at full capacity
• Processing material was based on historical reasons and not the current cost
• Alternate sources of raw material were not being investigated, to obtain higher value material at lower costs, or maximize licensing the company had to collect raw material
• Cash flow tightened along with the ability to procure raw material, and was not managed overall
• The processing facility and its design allowed for inefficient sorting and functionally needed improvement
With lengthy experience in business turnaround and capitalization, we took on the challenge to work with a business across the globe, now poised for growth and profitability. This was accomplished by:
• Defining a strong structure and process for: procurement; processing; overhead; and sales
• Enabling management and finance teams to develop weekly and monthly KPIs
• Reviewing business processes, shutting down non-performing assets, creating efficiency, and driving the product life cycle through optimized processing costs and overhead
• Identifying alternate sources of raw material
• Trading was a business that was lucrative, required no processing and was relatively risk free. We encouraged the shareholders to invest additional funds to drive that business, and create processes of separating this portion of the business for better accountability and tracking
The business started the turn around within the first three months and headed to breakeven in nine months (latency due to committed costs for processing facilities that had to either be shutdown or re-purposed). Today the business has passed breakeven, with projections of increased profitability.