Plastics Manufacturing Case Study: 23% Profit Increase in 90 Days
How a struggling plastics manufacturer transformed their operations and achieved a 23% profit increase through strategic financial optimization and operational improvements.
Mendel Schapira
Team leader of Finance
January 20, 2025
6 min read
Discover how a mid-sized plastics manufacturer reversed declining profits and achieved a 23% profit increase in just 90 days through a focused turnaround strategy led by Schapira CPA.
At a Glance:
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The Challenge: A Struggling Plastics Manufacturer
The client, a $30M plastics manufacturer, faced declining margins, rising costs, and cash flow bottlenecks. Despite strong sales, profits were eroding and the CFO was under pressure to deliver a turnaround.
- Inventory bloated by 28% over 12 months
- Production inefficiencies and high scrap rates
- Accounts receivable aging 60 days
- Unclear cost structure and lack of real-time reporting
Root Cause Analysis: Identifying the Core Issues
Financial
- • Lack of cash flow forecasting
- • Unapplied credits and missed early payment discounts
- • No clear product-level profitability
Operational
- • Inefficient scheduling and downtime
- • High scrap and rework rates
- • Inventory management gaps
Strategic Intervention: Our 90-Day Turnaround Plan
Key Actions
- • Implemented weekly cash flow forecasting and reporting
- • Reduced inventory by $1.2M through JIT and cycle counting
- • Negotiated new supplier terms and captured early payment discounts
- • Launched daily production huddles and real-time KPI dashboards
Implementation & Results: The 23% Profit Increase
Financial Impact
- • EBITDA margin up from 8% to 12.5%
- • $1.2M working capital released
- • 23% profit increase in 90 days
Operational Impact
- • Scrap rate reduced by 18%
- • On-time delivery improved to 97%
- • Real-time reporting enabled proactive decisions
Key Lessons & Takeaways
- Weekly cash flow reviews drive accountability
- Inventory discipline is critical for cash and profit
- Real-time KPIs empower teams to act fast
- External advisors accelerate turnaround results
Conclusion: From Crisis to Opportunity
The right financial and operational interventions can transform even the most challenging manufacturing situations. Download the full PDF for a detailed breakdown and actionable insights.
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