Re-thinking Strategies for a Dynamic Market
The past few years have highlighted how Private Equity (PE) Portfolio Companies (PortCo) can swiftly adapt to shifting market conditions, capitalizing on opportunities. Amid ongoing uncertainty, these companies face mounting pressure to enhance business value at speed – cutting costs while focusing on revenue growth.
Balancing top-line growth with cost optimization requires PE firms to re-think strategies, differentiate and embrace innovative new approaches. This is particularly true for the dynamic, tech-led Consumer Packaged Goods (CPG) and manufacturing industries. Investments in consumer businesses rebounded last year after peaking at USD 219 Billion in 2021.1 Investments in manufacturing, meanwhile, are growing significantly: PE firms funneled roughly USD 262 Billion into manufacturing companies between 2020 and 2023, driven by digital innovation and supply chain strengthening.2
Driving Efficiency at Scale
Time is a scarce commodity in the PE world. With typical ownership periods of three to five years and dealmaking accelerating, firms must swiftly achieve operational efficiency. The need to enhance performance is driven by opportunities and the imperative to mitigate risk.
This digital and Artificial Intelligence (AI)-fueled era offers PE portfolio companies a chance to achieve efficiencies and cost savings while improving top-line growth by deploying automation, advanced analytics and the latest in emerging technologies. Here are the key strategic levers portfolio companies are leveraging to drive efficiency:
Process Re-design: Eliminating Inefficiencies
Disconnected and inefficient processes hinder operational excellence, scalability and cost optimization. A structured process re-design approach eliminates redundancies, enhances cross-functional coordination and standardizes workflows. By mapping out end-to-end processes, manufacturing and CPG organizations can identify bottlenecks, streamline handoffs and introduce leaner workflows that improve speed and accuracy. Process excellence methodologies such as Six Sigma, Lean and Business Process Re-engineering (BPR) help optimize operations across procurement, manufacturing, sales and customer service, ensuring each function operates with greater precision and fewer inefficiencies.
Embedding clear governance structures and performance measurement frameworks enables continuous process improvement, reducing costs and setting the foundation for scalable growth and adaptability.
AI & Automation: Reducing Costs, Increasing Speed
Once a robust digital framework is in place, PE firms can harness the full potential of AI and automation to streamline operations, enhance decision-making and drive significant cost savings. Automating high-frequency, rule-based tasks with AI-powered tools and automation ensures faster execution, greater accuracy and reduced operational overhead.
Data-driven Insights: Using Analytics for Smarter Operations
Leading manufacturing and CPG firms extensively collaborate with strategic partners to consolidate fragmented data sources – from portfolio performance and customer behavior to Environmental, Social and Governance (ESG) compliance metrics – creating a single source of truth across their ecosystems. Advanced analytics and big data models can enhance operational efficiency, particularly in supply chains. AI-driven demand forecasting and inventory optimization improve supply chain resilience by predicting demand shifts, managing stock levels and reducing excess inventory. The outcome is a leaner, more agile organization capable of responding dynamically to market conditions.
Global Sourcing & Shared Services: Scaling Operations
Strategic simplification and consolidation of operational functions can unlock significant cost efficiencies and scalability. A globalized approach to sourcing lowers procurement costs while onshoring and nearshoring provide greater supply chain flexibility, reducing lead times and minimizing excess inventory. Additionally, centralizing critical business functions – such as finance, procurement and human resources – through shared services hubs creates economies of scale and improves operational resilience. AI-powered process mining in Order-to-Cash (O2C) and Procure-to-Pay (P2P) workflows helps identify inefficiencies, streamline operations and optimize Selling, General and Administrative (SG&A) costs, enabling firms to allocate resources toward high-impact growth initiatives.
Supply Chain Digitization: Ensuring Resilience
Digitizing the supply chain is key to unlocking efficiency, reducing costs and improving responsiveness to market demand. AI-powered demand-driven replenishment minimizes working capital lock-ups by aligning inventory levels with real-time sales forecasts. Machine Learning (ML) algorithms can anticipate demand fluctuations and prevent overstocking or stockouts, ensuring optimal product availability without excess inventory costs. Additionally, automation can streamline order management, vendor collaboration and fulfillment operations, boosting supply chain resilience and accelerating order-to-shelf speed.
Cost-to-Serve (CTS) Optimization: Cutting Hidden Costs
Understanding the true CTS per Stock Keeping Unit (SKU), channel and customer segment is vital for profitability-driven decision-making. AI-driven cost analytics tools can identify hidden inefficiencies in procurement, logistics and warehousing, allowing PortCos to pinpoint areas of cost leakage. By aligning CTS analytics with pricing and trade spend decisions, PE-backed firms can cut waste, improve margin structures and enhance supply chain agility.
Unlocking Revenue Growth
Efficiency alone isn’t enough – growth is the other half of the equation. Smart PortCos are leveraging AI, analytics and digital-first strategies to expand their revenue potential.
Smarter Pricing & Trade Promotion: Maximizing Impact
A robust pricing strategy is foundational for revenue growth. Predictive analytics can support dynamic pricing strategies based on factors, including demand elasticity and competitor actions. At the same time, cost-plus or value-based pricing approaches can also be embraced to maximize profitability. Similarly, data-driven trade promotion and product mix optimization enable organizations to strategically discount low-margin, slow-moving products while expanding high-growth categories, ensuring efficiency and revenue maximization.
Hyperpersonalization & Data-driven Promotions: Enhancing Engagement
Building a unified, 360-degree customer view enables CPG PortCos to shift from mass discounting to precision-targeted promotions, maximizing revenue and margin. AI-driven predictive analytics can recommend products based on browsing behavior, purchase history and contextual factors (e.g., seasonality and market trends). ML models can anticipate future needs, enabling proactive rather than reactive engagement. The result is higher conversion rates, reduced discount leakage and improved brand loyalty.
Channel Expansion: Optimizing Route-to-Market
Expanding into the right channels at the right time is critical for driving price elasticity, unlocking demand and optimizing costs. Direct-to-Consumer (DTC) models provide PE-backed firms with higher-margin sales, greater brand control and valuable first-party customer data. Meanwhile, e-commerce acceleration – through online marketplaces, subscription models and smart digital partnerships – creates scalable revenue streams. Beyond digital, business-to-business collaborations with wholesalers, food service and specialty retailers can unlock untapped customer segments and strengthen distribution reach.
Customer Experience (CX): Enhancing Retention & Loyalty
In today’s hypercompetitive landscape, seamless,
digital-first customer experiences are no longer
optional – they’re a differentiator. Revenue growth
management techniques can leverage AI, ML and
automation to deliver frictionless interactions,
personalized engagement and real-time service
optimization. From AI-powered chatbots that
enhance customer support to predictive retention
models that pre-empt churn, PE-backed firms can
rapidly scale CX capabilities to drive higher lifetime
value, repeat purchases and advocacy.
Product Portfolio & Assortment Optimization: Maximizing Profitability
For CPG and manufacturing firms, portfolio complexity can erode margins and inflate production costs. A data-driven approach to SKU rationalization and assortment planning ensures that manufacturing efforts are aligned with high-margin, high-demand products while phasing out low-performing, cost-heavy SKUs. AI-powered demand sensing and production analytics enable manufacturers to adjust product portfolios dynamically, optimizing SKU mix per market, channel and cost-to-serve metrics. Price Pack Architecture (PPA) strategies also help manufacturers develop optimized product sizes, formats and pricing tiers to maintain affordability in inflationary markets while driving incremental margin expansion. This reduces production complexity, streamlines procurement and enhances overall profitability.
Trade Spend Optimization: Enhancing ROI
Trade spend remains one of the most significant cost levers, with substantial investments in retailer incentives, promotional allowances and distributor support. However, inefficient or poorly targeted trade promotions can dilute margin without driving actual demand. AI-powered Trade Promotion Optimization (TPO) enables manufacturers to assess promotion effectiveness at a granular level, ensuring that trade spend is directed toward initiatives that generate true incremental sales rather than subsidizing existing demand. Predictive models analyze historical promotion performance, competitor reactions and consumer demand elasticity, helping manufacturers fine-tune pricing, discounting and incentive structures. By integrating retail media activation and digital-first trade investments, CPG firms can increase the ROI of trade spend while strengthening brand positioning across key distribution channels.
Preparing for What’s Next
It’s not a case of everything for everyone – there's a risk of overextending and attempting more transformation than can be effectively absorbed. To succeed, smart PortCos in the CPG and manufacturing industries are exploring the optimal combination of strategic levers and assembling the necessary capabilities to execute at pace. Many are forming alliances with proven partners to rapidly access innovative tools central to achieving the PE holy grail: Becoming leaner and more efficient while enjoying greater profitability and increased valuations.
Success also means being prepared for the next wave of emerging technologies. For example, we will see Generative AI evolving into more impactful use cases, such as agentic AI – capable of acting as autonomous agents, performing tasks and making decisions without the need for direct human intervention.
Third-party assistance can help PE PortCos reach peak performance. Crucially, help may be valuable at different stages across the investment lifecycle – from due diligence to exit. This input can enable faster transformation, upskill and accelerate the shift to new digital technologies and techniques, and provide geographic scalability.
How WNS Helps PE Firms and PortCos
For over a decade, WNS has been a trusted partner to dozens of PE firms and PortCos. We bring:
Proven industry best practices
AI-powered solutions for efficiency, profitability and growth
Tangible Outcomes:
About the Author(s)
Paul Morrison is a Practice Lead for Manufacturing, Retail and Consumer Goods in Europe. He has over 25 years of experience working with clients to achieve their long-term transformational goals, particularly covering the outsourcing and GBS strategy, operating model design and technology-led change. Paul is an expert in digital strategy, adept at harnessing the full potential of automation, analytics and AI.
Michael Mitterer is the Chief Growth Officer for Europe, overseeing Manufacturing, Retail and Consumer Goods. He brings extensive experience in helping clients optimize their operating models and establish effective global business services. Before entering the outsourcing industry, Michael held various international CFO roles in the chemical sector.
Talk to our experts today to explore how your PE-backed firm can accelerate efficiency, profitability and long-term value.
References
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Consumer Checkup: PE Investments in Consumer Rise as Pandemic Influence Fades
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Manufacturing Transactions by USA-based Investors | Jahani and Associates