The client asked for our "quick turnaround" insights about a division whose profits were in steep decline before deciding whether to put the division up for sale. We found that the company’s centralized finance and accounting function fundamentally misunderstood the behavior of the division’s costs under certain circumstances, and that this had led the division to unilaterally pursue a destructive-- but easily reversible-- pricing strategy, which had chased away business, and reduced division profits by more than 30 percent in the previous three years.
As part of a strategy project, we analyzed the underlying profit drivers of the business, including segmenting the customers in ways the company had not considered. We discovered a segment of fewer than 2000 customers that collectively accounted for over 100 percent of the company’s profits, but that one third of those customers would have no choice but to leave within five years.
As part of a strategy project, we noted that items were ordered months in advance, but that its demand forecasting process was problematic. Our subsequent analysis showed that not only was the process prone to large errors (averaging over 140 percent of a product’s actual demand, and resulting in both rampant stock-outs and “fire sales” of unwanted items), the analysis also proved that under the current design, the process could literally never improve its accuracy. We developed a new forecasting methodology and organizational model that could be implemented in a few months which would initially reduce errors by over 60 percent, and continuously self-improve thereafter.
The client was very proud of its "air tight” asset tracking, billing and physical audit systems that "ensure we are paid every dime we are owed". However, it was also under-performing its potential, and could not figure out why. Our one-week analysis demonstrated that the systems and processes of the company —with no one in either the client or its customers acting badly — led to the unrecognized conversion of substantial numbers of assets from “rental” status to “client-owned” status. In addition to the company losing the rental income, the error (again, with no one recognizing it) resulted in an obligation for the company to repair and/or replace the converted assets for no compensation – in perpetuity.
An industrial products company was plagued with huge tort payments for a small product line it had offered many years before. We demonstrated that the company’s litigation strategy was predicated on fears of certain legal results, that were unfounded, and that its resulting strategy had actually had the effect of fully funding the litigation firms’ increased search for additional plaintiffs—resulting in total payouts that were multiples of the worst probable case associated with its fears.
For a member of the Board of Directors, we analyzed standard Board documents, and identified how the company’s CEO and CFO were misleading both the franchisees and the Board to surreptitiously engineer additional revenues and profits at the expense of the franchisees. The CEO and CFO were fired.