NOTABLE OUTCOME

3PL Wine and Spirit Distributor

NOTABLE OUTCOME

3PL Wine and Spirit Distributor

Novo Advisors’ analytical rigor helps companies set the stage for lasting success

Situation

A third-party logistics (3PL) provider to wine and spirits distributors serving the New York area was significantly impacted by the COVID shutdowns in NYC. Delivery volumes fell as customers sought new sales opportunities in other regions less affected by the shutdowns. Further, the company’s largest customer notified it that it was departing at the conclusion of its contract. Without significant modifications to the business plan, the company faced significant losses in 2022.

Novo was engaged by the company in October 2021.

The Novo Approach

Novo advised the company on managerial realignment, performance improvement, and data-driven analyses to right size the business to its new sales volume.

The company’s CFO was unable to provide analytical insight and its CEO was not privy to operational effectiveness and customer experience. The CFO was let go and Novo took over this role. The CEO was removed at the end of 2021, elevating the company’s COO into the role.

Results

Novo determined that the company could exit one of its five storage locations, consolidate volume, and saving $2.5 million in annual rent, labor and insurance costs.
Novo conducted a detailed customer profitability analysis that led to targeted price increases, resulting in $2.5 million of revenue improvement from the remaining customer base.
Working with the new CEO, Novo developed an inventory control team that yielded 4x ROI and implemented a detailed process roadmap to research and resolve 70 percent of exceptions same day, realizing $1.2 million in annual cost savings.
Word of FDL’s return to operational excellence resulted in $7.5 million in credible new customer opportunities.
The company’s 2023 budget forecasted $5 million+ in EBITDA in 2023 that would allow the business to service its debt for the first time in three years.

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