In manufacturing, small operational improvements often lead to big financial impact. That’s why private equity (PE) firms, which are known for transforming the companies they acquire, pay close attention to how factories, supply chains, and teams operate day-to-day.
But these tactics aren’t just for billion-dollar buyouts. With the right mindset, any manufacturing leader can apply the same principles to increase profit, reduce waste, and grow enterprise value.
Here are the value creation strategies PE firms rely on — and how you can use them in your manufacturing business.
Optimize Your Facility Footprint
What PE firms do:
Analyze whether multiple plants can be consolidated, capacity can be rebalanced, or production can move to lower-cost locations.
Why it works:
Reducing redundancy and fixed overhead often yields a 20-30% reduction in labor and logistics costs — all while improving communication and process consistency.
What you can do:
Start by mapping all locations, costs, and logistics routes. Identify overlap or underutilized facilities, and consider whether a shift in layout or regional focus could improve efficiency.
Streamline Your Supply Chain
What PE firms do:
They consolidate vendors, renegotiate contracts, and fine-tune inbound and outbound logistics to eliminate waste.
Why it works:
A leaner supply chain means lower cost of goods sold (COGS), improved cash flow, and faster lead times.
What you can do:
Evaluate supplier performance and payment terms. Where possible, move toward strategic partnerships that balance cost with reliability, and use data to forecast more accurately.
Embrace Continuous Improvement (Lean/Kaizen)
What PE firms do:
They promote a culture of continuous improvement, removing bottlenecks, standardizing work, and reducing waste.
Why it works:
Small, ongoing changes drive higher throughput, lower defect rates, and a lower cost per unit.
What you can do:
Implement a simple feedback system so employees can flag inefficiencies. Hold regular improvement meetings and reward teams for measurable gains in productivity or quality.
Focus on Capacity & Capital Efficiency
What PE firms do:
They ensure every piece of equipment earns its keep, maximizing uptime, maintenance, and utilization before investing in new assets.
Why it works:
This approach increases return on invested capital (ROIC) and prevents overspending on unnecessary expansion.
What you can do:
Review production data to spot idle equipment or inconsistent use. A preventive maintenance plan and better scheduling can often achieve more than new machinery.
Strengthen Back-Office Support
What PE firms do:
They centralize functions like purchasing, HR, and accounting across multiple facilities to standardize practices and reduce overhead.
Why it works:
Shared services reduce duplication, improve visibility, and cut general and administrative (G&A) costs.
What you can do:
If you operate across locations, consider consolidating admin functions under unified systems or outsourcing non-core roles to specialized providers.
Invest in Leadership & Accountability
What PE firms do:
They prioritize capable, aligned leaders and measure results through clear metrics and regular performance reviews.
Why it works:
Strong leadership drives adoption of change and ensures improvements stick long after the consultants leave.
What you can do:
Define ownership for every key initiative, track results weekly or monthly, and celebrate wins to keep momentum strong.
Continuous Improvement Is the Takeaway
Private equity firms don’t rely on luck, but on disciplined execution. For manufacturing businesses, that means continuously improving how products are made, how people are led, and how decisions are measured.
When you take a structured, data-driven approach to operations, you build the kind of business investors admire — and owners enjoy running.
Where to start? Let us help you identify your quick wins, then build a roadmap for lasting improvement.