An automotive component supplier was a market leader in bearings races in India; it had suffered a slump of ~65% in demand in its major US European and Indian markets in 2008 and 2009 recession. A private equity investor had invested in the company just before the recession and was faced with a dilemma on whether to immediately exit the company cutting its losses or salvage the situation by developing a global sales acceleration and account management strategy and aggressively implement it in next 2 years before considering an exit.
We were engaged by the management at the client and the private equity investor to develop and implement a global sales acceleration and account management strategy to recover from the sales decline and answer the dilemma on possible exit of the private equity group:
- We began the engagement by examining the reasons of the OEM specific wallet share decline in its North American, European, Indian markets and the underlying reasons thereof. We discovered that the sales decline was partly due to global recession but partly due to losing competitiveness of our client in Indian and global markets. This assessment was done based on interviews with OEM clients, our assessment of the competitive landscape with these clients and specifically the threat from low cost Chinese components.
- Our analysis also revealed that the client could more effectively utilise their pre-recession investment in a technology advanced forging machine they had made from the money received from the private equity investor since the market provided an opportunity for our client to not only make larger parts on that machine but also enter some of the forgings components competitively. This meant that the client had to address the challenge of new components making targeting current OEM clients in addition to improving their wallet share for their existing products. It also meant the change in the market position of our client from Tier II to Tier I supplier with respect to new products.
- We developed the account management strategy, wallet share enhancement strategy for current products, selective entry into forgings products, developed the prioritisation frame for short listing OEMs and specific plants in N American and European markets, developed a sales and marketing organisation structure to support the strategy, decision aiding reports for easier monitoring of progress had deined an action plan next 18 months. We recommend to private equity investor to stay invested in the client.
- Following the recommendations, we assisted the management in the implementation for the first three months; providing pre-sales pitch support to OEMs, developing the research needed to target the OEMs, redesigning order-delivery planning process to ensure on time delivery performance and certain initiatives to build and demonstrate better technological and R&D preparedness to win more business in current and new products.
At the end of 9 months of implementation of our recommendations as of now, the client has been able to not only surpass its pre-recession levels of sales, but also reach its original intended sales targets developed before the investment by the private equity group was made in our client.