Force 01
+14%
Cost floor reset
Energy, freight and resin reset the unit-cost floor over 24 months. The new floor is permanent; waiting for reversion is not a plan.
Concentrate the next four quarters on three SKUs and two plants — margin recovers to 38% without new capital.
The recommendation up front: focus the next four quarters on three SKUs and two plants. The core franchise is healthy — the gap is concentrated, and so is the fix.
Two plants and three SKU families earn 84% of contribution. That franchise is not the problem and should not be disrupted.
Margin erosion sits in a long tail of low-volume SKUs and one underloaded plant — both addressable without new capacity.
Working-capital release and mix pruning fund the program inside the year. No board capital request is required.
A fact base, not a narrative. This is the picture the recommendation is built on — four reads on where the business actually stands.
None of these reverse on their own. Left unaddressed, the 6-point margin gap widens to nine by FY27.
Energy, freight and resin reset the unit-cost floor over 24 months. The new floor is permanent; waiting for reversion is not a plan.
Demand shifted toward smaller, lower-margin orders. The product mix is quietly diluting blended margin every quarter.
Plant C runs half-loaded, spreading fixed cost across too few units. Under-absorption alone explains a third of the gap.
So what: the gap is not cyclical and will not self-correct. It is the sum of three addressable, structural drivers — which is exactly why a focused program can close it.
Capital is not the constraint; focus is. The question is not whether to act but where to concentrate a finite amount of senior bandwidth for the highest, fastest margin return.
Each bubble is a SKU family, sized by revenue. The upper-right quadrant — high differentiation, high margin — is where we under-index on price.
A 3–4% list adjustment on the upper-right families is supported by value benchmarking and carries low volume risk given switching costs.
The long tail consumes complexity cost — planning, changeovers, working capital — out of all proportion to the revenue it returns.
So what: price up where we are differentiated, prune where we are not. The two moves are independent and reinforce each other.
Source: SKU-level P&L (FY25), value-based pricing benchmark, team analysis.
The dashboard, distilled. Trajectory matters more than the point estimate — these are the eight numbers the steering committee should track monthly.
Source: monthly operations pack (Jan '24–Dec '25), finance data warehouse.
Sequenced, not simultaneous. Each move is self-contained, measurable, and funded from the savings of the one before it.
Stop subsidizing complexity.
Retire ~690 negative-contribution SKUs over two quarters with a managed customer transition plan. Releases planning capacity and working capital immediately.
Absorb fixed cost with volume.
Consolidate retained mid-tier volume into Plant C and lift utilization from 58% to 82%. No capex — the line and the team already exist.
Charge for the value we create.
Apply a value-benchmarked 3–4% adjustment on differentiated families, with a guardrail playbook for the top 20 accounts. Low volume risk, high margin yield.
Each move lands before the next begins, so management attention is never split across more than one structural change at a time.
Run-rate EBIT rebuilds quarter by quarter against a declining baseline. Cumulative cash stays positive throughout — the program funds itself.
Five real risks. Each has a named owner and a defined mitigation, tracked on the same monthly cadence as the recovery metrics.
Twelve dedicated FTE across three workstreams for eighteen months. The investment is operating expense, recovered inside the first year.
Funded from the first $6.4M of working-capital release. No incremental headcount survives the program — every role is fixed-term to the eighteen-month plan.
Approve the sequenced program — prune, reload, reprice — as the FY26–27 margin recovery plan of record.
Green-light retirement of the ~690 negative-contribution SKUs, with the managed top-20 transition guardrail in place.
Confirm the 12-FTE PMO and the monthly steering cadence, funded from working-capital release — no new board capital.
“Concentrate the next four quarters on three SKUs and two plants — margin recovers to 38% without new capital.”
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