Company Overview
An innovative company specializing in the amusement and casino gaming industry, it has had a global imprint since the 1980s.
The Company offers both a leisure and competitive experience with its diverse product portfolio, which includes pay-to-play video games, home entertainment, and coin-operating machines.
Engagement Overview
The Company's customer demand depends on consumer spending and a public environment experience. Consequently, COVID-19 slashed revenues from $96MM in 2019 to $47M in 2020, with a rebound in 2022 of $89M.
After years of successful gaming product (cabinet) launches, in 2020, the Company was unsuccessful in capturing consumers' taste with their products, while competitors thrived. Failed sales, unanticipated cabinet returns, and supply chain disruptions would exponentially increase costs. Eventually, inventory increased by 52% between 2020 and 2022.
The gaming industry recognizes enormous lead times in their purchasing and sale process. In addition to budgeting and forecasting, FDP's strategic and tactical planning included:
- Increasing parts prices by 70% and charging for the remote and physical maintenance service
- Consolidating inventory from two warehouses into one over two months to eliminate lease and storage costs; consolidating the third warehouse would occur in 2023
- Cancelling over $10MM in open purchase orders and shifting selling efforts to existing underperforming and excess assets
- Reducing product cycle life from 7 years to 3 years to combat unfavorable costs and potential liability
- Outsourcing specific production parts and performing the labor in-house to eliminate the purchase of a complicated cabinet
- Streamlining procurement and supply chain activities, as well as adjusting staffing levels for anticipated production and sales projections to drive efficiency in labor costs
Results
FDP engineered a capital budgeting tool that would give visibility into profitable and unprofitable leased products, allowing for the option to recall or convert an asset to a sale to assist with cash flow.
FDP created an annualized potential profit improvement of approximately $1,120,000 for 2023.
A correlated summary metric quantified product profitability relative to the Company's performance every year, allowing for the development of a product with a 13% higher margin than what was made in 2022.