The increasing preference for U.S. beef, driven by improved consumer perception and cost-effectiveness, has resulted in steadily growing imports. Beyond the food service sector, U.S. beef is gaining traction in household consumption, particularly with affordable offerings of popular cuts (e.g., ribs, short ribs) tailored to Korea's grilling culture. This strategy has significantly boosted the consumption of U.S. beef.
However, domestic beef distributors face challenges in securing allocated volumes of U.S. beef while managing the risk of unsellable inventory (e.g., less popular cuts such as knuckle), creating vulnerabilities in inventory management.
One such distributor, focused on U.S. beef imports, was grappling with excessive inventory and unrecovered receivables, leading to a liquidity crisis. Historically, the company had addressed cash flow issues by increasing sales and leveraging debt, an unsustainable approach requiring a comprehensive review of purchasing, inventory, sales, and collection processes to establish stable working capital management.
Looxent partnered with the client to address these challenges by diagnosing issues across the value chain, from procurement to receivables, developing actionable solutions, and implementing management frameworks for sustained improvement.
Short-Term Liquidity Solutions: Sales Activation and Execution Planning
To address immediate cash flow pressures caused by growing procurement volumes, Looxent prioritized sales activation to reduce inventory levels.
- Sales Goals and Monitoring: Inventory and sales performance analysis enabled segment-specific consumption targets, with top-down sales objectives allocated quarterly to individual sales representatives. Workshops facilitated detailed discussions on sales strategies.
- Performance Tracking: Daily, weekly, and monthly performance monitoring helped track sales and collections. Weekly sales meetings led by executives addressed underperformance and established catch-up plans, ultimately increasing revenue and reducing cash flow risks.
Establishing a Procurement Decision Framework Linked to Sales Plans
The client's cash flow challenges stemmed from excessive inventory levels, forcing sales expansion under discounted terms, thereby eroding profitability. The core issue was purchasing volumes that exceeded sales capacity, compounded by the lack of a robust management framework.
Looxent developed a structured approach to manage procurement volumes:
- Optimal Inventory Standards: Defined inventory levels aligned with quarterly sales plans, incorporating factors like lead times and order cycles. These standards established a logic for procurement decisions, reflected in an Excel-based model for operational application.
- Procurement Committee: An "Offer Committee" was introduced to finalize purchase quantities, considering market conditions, supplier relationships, strategic sales plans, and liquidity requirements.
Sales KPI Framework for Targeted Inventory Management
In the imported beef market, the inherent challenge lies in the bundled procurement of popular cuts alongside less desirable by-products. Effective management requires continuous menu development and new customer acquisition to prevent surplus by-product accumulation.
To address these issues, Looxent implemented a comprehensive sales KPI framework:
- Incentive-Linked KPIs: Defined key metrics to maintain optimal inventory levels for all cuts, aligning with sales plans. These KPIs were rigorously tested through two months of simulations before full implementation.
- Monitoring Tools: Developed tools to track sales, inventory, receivables, and collections, providing real-time insights for executives. Regular reporting encouraged sales activities aligned with profitability goals.
Results and Impact
This project enabled the client to overcome chronic challenges in managing procurement volumes and unsold inventory. Newly established processes stabilized liquidity risks and facilitated the adoption of an ERP system for systemized management.
By adopting these innovations, the client has achieved a competitive edge in the imported beef distribution industry and is positioned to become a market leader. The framework developed through this collaboration serves as a benchmark for enhancing working capital management and operational efficiency across the sector.
The increasing preference for U.S. beef, driven by improved consumer perception and cost-effectiveness, has resulted in steadily growing imports. Beyond the food service sector, U.S. beef is gaining traction in household consumption, particularly with affordable offerings of popular cuts (e.g., ribs, short ribs) tailored to Korea's grilling culture. This strategy has significantly boosted the consumption of U.S. beef.
However, domestic beef distributors face challenges in securing allocated volumes of U.S. beef while managing the risk of unsellable inventory (e.g., less popular cuts such as knuckle), creating vulnerabilities in inventory management.
One such distributor, focused on U.S. beef imports, was grappling with excessive inventory and unrecovered receivables, leading to a liquidity crisis. Historically, the company had addressed cash flow issues by increasing sales and leveraging debt, an unsustainable approach requiring a comprehensive review of purchasing, inventory, sales, and collection processes to establish stable working capital management.
Looxent partnered with the client to address these challenges by diagnosing issues across the value chain, from procurement to receivables, developing actionable solutions, and implementing management frameworks for sustained improvement.
Short-Term Liquidity Solutions: Sales Activation and Execution Planning
To address immediate cash flow pressures caused by growing procurement volumes, Looxent prioritized sales activation to reduce inventory levels.
Establishing a Procurement Decision Framework Linked to Sales Plans
The client's cash flow challenges stemmed from excessive inventory levels, forcing sales expansion under discounted terms, thereby eroding profitability. The core issue was purchasing volumes that exceeded sales capacity, compounded by the lack of a robust management framework.
Looxent developed a structured approach to manage procurement volumes:
Sales KPI Framework for Targeted Inventory Management
In the imported beef market, the inherent challenge lies in the bundled procurement of popular cuts alongside less desirable by-products. Effective management requires continuous menu development and new customer acquisition to prevent surplus by-product accumulation.
To address these issues, Looxent implemented a comprehensive sales KPI framework:
Results and Impact
This project enabled the client to overcome chronic challenges in managing procurement volumes and unsold inventory. Newly established processes stabilized liquidity risks and facilitated the adoption of an ERP system for systemized management.
By adopting these innovations, the client has achieved a competitive edge in the imported beef distribution industry and is positioned to become a market leader. The framework developed through this collaboration serves as a benchmark for enhancing working capital management and operational efficiency across the sector.