Our clients are struggling with the complexities of understanding and harnessing the business drivers of their organization to become more focused, adaptive, and aligned. Our clients come from a variety of industry from Manufacturing to Healthcare to Financial Services. We work with clients of all sizes, with services designed to meet their project needs.
Our focus is to foster long term business advisory relationships with our clients to provide a personal continuity to support their transformation efforts over time.
Below are examples of a few of our key projects:
Our client, a 1,500+ branch regional bank, faced a serious profitability challenge coming out of the financial crisis. Like most of its competitors, it had seen its ability to improve margins limited by market volatility and regulatory changes. It wished to develop more effective ways of using the non-interest expense lever and enhance profitability by leveraging costing and expense improvement opportunities, replacing the three separate tools systems that were providing cost allocation information at various levels of granularity.
Through a collaborative approach with the bank’s internal costing group, we analyzed the costs for both front and back office by product and implemented a series of SAS models covering all of the bank’s functions, replacing the three systems that were maintained by Region’s costing group.
The delivered solution provided organization, segment level, customer, product and channel level profitability as well as process costing out of a single, transparent, and well documented system.
The development efforts were cash-flow neutral in the first year of implementation and identified $10MM of on-going annual savings.
A diversified packaging company with over 30 operations in 10+ countries around the world was facing serious difficulties in developing a solid grasp on its financial and operational forecasts in a fast changing environment. Their annual budget process took months to complete and would not allow for rapid refreshes. Additionally, their monthly forecast process was limited to a few income statement components, lacking transparency and leading to unpredictable results.
We worked together with our client to develop a light touch 15 month rolling forecast process using Adaptive Insights, focusing on the gathering and updating of key business drivers in each operations, first spearheading the process in 5 units representative of the diversity of the company. Unlike the traditional budgeting process, the new rolling forecast system gathers volume and margin information for key accounts by site and uses broad historical averages for more stable components of the cost structure. Balance sheet and cash flow statements are automatically generated based on the key business driver inputs.
RETAIL & DISTRIBUTION
This major Northeastern $8 billion/600 store chain required assistance retiring its legacy inventory system, transitioning operations to an automatic replenishment ordering/receiving process, and developing an item-based inventory management system. Over a 2 ½ year period, our team led the strategy, design and implementation of this supply-chain transformation effort.
We led a 20 person multi-functional client team through a supply-chain strategy development process resulting in the articulation of several transformational changes including, selection scanning technology for receiving and ordering, automatic replenishment based on sales, inventory movement, and seasonality cycles and the transitioning of inventory costing from the retail-method to item-based weighted-average/item-based costing method. Specific deliverables included:
-- Designed and conducted executive workshops to create 3 year supply-chain vision and specific process and technical requirements
-- Conducted supply-chain software selection and facilitated vendor contract negotiation
-- Prepared and managed a 3-year transformation plan consisting of 10 cross-functional work streams
-- Managed the design and rollout across all stores
-- Produced video-based user-procedures highlighting new technical requirements, operational policies and ordering/receiving requirements.
These efforts resulted in a marked reduction of store inventories with reduced incidence of waste and out-of-stocks, an increased ordering and receiving process efficiency, improved price-book management, fewer system mis-keys, and a solid information-based price book and promotion management. Governance Model – An internal governance committee was formed to guide the future evolution of the model and serve as a policy-making committee on costing questions.
COST MANAGEMENT & STRATEGY DEVELOPMENT
CONSUMER PACKAGED GOODS
One of the most vexing challenges for our client, the leading French pet food manufacturer, was to understand the hidden costs associated with its promotion policies, which were developed in reaction to the entry of economy brands on the market and the growth of the discount distribution sector.
Using activity-based costing (ABC) principles, we analyzed the cost of complexity in all functions of the client, purchasing, conversion, sales force and marketing, R&D, fixed assets, identifying all key cost drivers. We also developed transaction cost menus for all significant transactions. A special focus was placed on hidden cost of complexity associated with promotion practices.
We interviewed 50 customers to determine key success factors and to understand how the client was vulnerable to attack and provided recommendations for policy and process changes:
- Merging of three sales forces, with a new call plan producing a 20% reduction in sales force cost without loss of competitive relative call frequency advantage versus competitors
-- Elimination of 15% of the SKUs for which the best competitor substitute index was less than 60%, permitting a reduction in first-piece costs of 9% on a two-year horizon
-- Revised product manager reward system to reflect true prospective complexity costs
Produced revised promotion criteria to reduce hidden-cost/consumer benefit ratio
-- Introduced significantly more competitive economy segment pricing reflecting
lower manufacturing cost-of-complexity and customer cost-to-serve, reversing the erosion of market share in that segment.
Our client provides supply chain management services to more than 1,200 hospital and 25,000 non-acute care facilities. To support the successful execution of its business strategy and a far-reaching ongoing functional reorganization, it had decided to implement enhanced activity-based costing tools, processes, and skills to enable one common P&L and to create a method for better tracking revenue, costs, and profits.
Working with executive management and an internal cross-functional team, we developed and implemented a strategic costing model leveraging SAP’s PCM application. The project highlighted a significant imbalance between primary product revenue and costs and its output contributed significantly to revised strategy implementation.
Management received additional insight as to specific issues related to span of control, activity redundancy, product cost, and overall member cost-to-serve.
Following a series of downstream acquisitions across the European continent, our client wishes de develop a development and integration strategy for over 60 individual paper making and box plants operations.
We developed and facilitated a strategy development process, coordinating of the effort across four major business areas in 10 European countries. We served as facilitator and initiated and assisted several analyses to help determine key success factors across the group, including benchmarking financial performance and market position across more than 50 box plants, competitive benchmarking of more than 40 competitors, initiating activity cost analysis in representative plant and analysis of upstream/downstream integration in other industries. The process led to the development of an integrated regional strategy by the client, deemphasizing the country-centric approach that had characterized its operation and the development of more detailed pricing and costing tools for the box plants to support the new strategic focus.
Our client, a major northeast electric utility, was struggling with its budgeting and planning process. The annual budgeting process was taking too long, was consuming too many resources and too much of management’s attention while not offering a useful guide to measure business performance during the year. It wished to develop a lighter and more adaptive process that could be updated on a quarterly basis without being overly taxing.
We designed and prototyped a rolling forecast model and process to be used quarterly using UI Planner. We redesigned both the clearing accounts and the FERC accounts in the G/L to accommodate the new process and developed a new revenue forecast process. Both cost of service and revenue forecast were based on a series of economic and operational drivers translated into financial terms for the purpose of the forecast. A new overhead allocation process was put in place to trace shared service and overhead functions to the operational activities that were consuming these resources.
The North-American division of a major aluminum producer was facing mounting challenges in communicating its business strategy to the business units and measuring progress towards the company goals. The company wanted to install a company-wide performance measurement system.
We led the development and implementation of a balanced scorecard tool for all business units, starting with a pilot project within a key rolled product manufacturing facility. The scorecard identified the company vision, mission and the strategic objectives needed to achieve the overall goals. It also captured key processes and related business drivers as well as financial and non-financial key performance indicators (KPIs) and selected operational drivers, helping management communicate its strategy and monitor the effectiveness and, ultimately, the success of the organization.