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Case Study
Pre
sident & CEO
Distributor

A $500 million multi-state distributor of hardline products, the fifth largest of its kind in the U.S., experienced significant decline in cash flow and inability to meet debt service covenants, prompting its senior lenders to seek immediate turnaround solutions.

Situation

Turnaround & Restructuring Initiatives

  • The company experienced significant cost overruns constructing a new state-of-the-art distribution center designed to improve shipping times and allow for future growth.
     

  • Contemporaneously with building the new distribution center, the company encountered significant problems implementing a new ERP warehouse management system, causing declines in customer sales, customer service, and margin performance along with creating debt service covenant defaults.

The CEO, who was brought in to turn around the company, enlisted the support of Interim Chief Information and Chief Accounting Officers to drive the following initiatives.

  • Secured a new $50 million credit facility to fully replace an existing credit facility while restructuring another credit facility with more favorable terms and conditions and providing sufficient working capital to address customer service issues and declining customer sales.
     

  • Proactively communicated with a large base of preferred customers, alerting them of the company’s issues and ensuring them appropriate measures were being applied to remedy the situation.
     

  • Realigned distribution centers, placing fast moving items closer to the loading docks and slower moving items further from the loading docks.
     

  • Implemented a new RF warehouse technology to integrate with the company’s new ERP warehouse management system to:

    • Improve order processing and inventory SKU issues;

    • Resolve customer invoicing issues;

    • Alleviate high amounts of order returns;

    • Resolve high inventory shrinkage.

Results

  • Maintained the same level of existing preferred customers.
     

  • Hired permanent Chief Information and Chief Accounting Officers.
     

  • Resolved issues surrounding distribution centers, inventory, and customer invoices while improving customer sales and overall customer service satisfaction.
     

  • Positioned the Company to attract new investors and remain in business.

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