战略分析工具-分析方法-bdp讲解课件

Author:LairdReedReviewers: SarahMillard,

JasonTrevison

bcBDPMarch1998Copyright©1998Bain&Company,Inc.1CU7030298IMBAuthor:LairdReedReviewers:BDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways2CU7122997KRABDPAgendaTheBestDemonstrateBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways3CU7122997KRABDPAgendaTheBestDemonstrateBDPDescription*WhereasanRCPalwaysdealswithcosts,aBDPcoulddealwithcostsorrevenuesBDPisusedtoidentifythebestpractices-thoseleadingtothemostrevenueattheleastcost-insideoforoutsideofacompany.BDP-practicesleadingtothemostrevenueattheleastcost*InternalExternalBetweenorganizationsHistoricalCompetitorsCompaniesindifferentindustries4CU7122997KRABDPDescription*WhereasanRCPBDPInternalvs.External

InternalBDPsaremorestraightforwardtoconductthanareexternalBDPs,buttheytendtoleadtolessdramatic,thoughoftensignificant,change.Gatheringdata:Degreeofchange:BDPInternalExternalBetweenorganizationsHistoricalCompetitorsCompaniesindifferentindustriesStraightforwardContinuousimprovementDifficultDramaticchange5CU7122997KRABDPInternalvs.ExternalInterBDPPossibleReasonsforBetterPerformance

Moreconsolidatedsupply(VMRs)LowercostrawmaterialsHigherqualityrawmaterialsMorepartsoutsourcedMorepartsmadeinlower-costcountriesProductsSimplerproductsFewerproductvariationsPlantsFewer,morehighly-focusedplantsMoreefficientproductionprocess(longerruns,lesswaste)BetterequipmentBetterqualitycontrolLaborLonger-termcontractsBetterstructuredincentivesBettersupervisor-to-laborratioFollowingisalistofpossiblereasonssomecompaniesperformbetterthanothers:PurchasingManufacturingDistributionSellingBetterdeliverymethod(truckvs.trainvs.airplane)More(orless)frequentdeliveriesLarger(orsmaller)deliverysizesBettertrainedsalesforceLargersalesforceBetterorganizedsalesforce(byregion,byproduct,byindustry)Betterstructuredincentives6CU7122997KRABDPPossibleReasonsforBetterBDPBDPinTheory

Intheory,byapplyingBDPpractices,youcouldcreateaBDPcompany.PurchasingManu-facturingDistributionSellingCorporatePurchasingManu-facturingDistributionSellingCorporatePurchasingManu-facturingDistributionSellingCorporateClientCompetitorACompetitorBBDPCompanyNon-BDPBDP7CU7122997KRABDPBDPinTheoryIntheory,byBDPBDPinPractice

Inpractice,BDPanalysisisusedonlyinareasofthecompanywhereitcanhaveasignificantimpact.ManufacturingBDPSalesforceBDPNon-BDPBDPSituation:BeforeBDP:AfterBDP:CorporatePurchasingManufacturingDistributionSelling

CorporatePurchasingManufacturingDistributionSellingManufacturingcostsareasignificantportionoftotalcosts,andtheclientisfarfromBDPinmanufacturing.Revenuepersalesrepresentativeisamajordriverofprofitability,andtheclient’ssalesrepresentativesarefarfromBDPinrevenueperrepresentative.Corporate

CorporateActions:PurchasenewequipmentRearrangeequipmenttoimproveproductionflowRecyclewasteDecreasesupervisortolaborratioIncreaseamountoftrainingReorganizesalesforcebyindustryRestructureincentivestoencouragecross-selling8CU7122997KRABDPBDPinPracticeInpracticeBDPReasonsforUsingBDP

BecauseBDPissimple,pragmatic,andpositive(itfocusesonwhattheclientdoesbest),ithelpsusachieveresults.BDPhelpsusachieveresultsSimplePragmaticPositiveSimplemethodologyEasytoexplaintoclientStraightforwardtoimplementEasytomeasureresultsFocusesonexistingbusinessFocusesonmostleveragedareasAllowsforquantificationofpotentialimprovementLeadstoconcreteactionsBuildsmoraleattheclientbyfocusingonwhatclientdoesbestProvidesaframeworkforcontinuouslearning9CU7122997KRABDPReasonsforUsingBDPBecauBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways10CU7122997KRABDPAgendaTheBestDemonstrateBDPApplications

AlargeEuropeanpaperboardmanufactureroperatedsevenplantsthroughoutEurope.ABainteamanalyzedunitcostsateachplantandidentifiedanumberofbestpracticesworth$20MMor40%oftotaloperatingexpenses.ASpanishsteelproducer’smarginswerecomingunderpressurefromfallingtradebarriers.ThecompanyaskedBaintoconductananalysisofthetechnologyandpracticesofitsglobalcompetitors.TheBDPresultedindramaticcutsinlaborcostsandareductioninthecostperkilogramofsteelof20%.TheCEOofanItaliansupermarketchaindemandedcostcutshismanagementteamcouldnotdeliver.ABainBDPrevealed10-15%productivitygapsbetweendepartmentsinthechain’s200stores.ThefullscaleBDPledtoanaveragecostimprovementof10%perstore.BainhasusedBDPinhundredsofcasesandindozensofindustries.Someexamplesofourworkinclude:11CU7122997KRABDPApplicationsAlargeEuropeBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways12CU7122997KRABDPAgendaTheBestDemonstrateBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparable

organizationsforBDPDisaggregateorganizations

intomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”in

leveragedareasDevelopanactionplanImplementOrganizationsshouldproducesimilarproducts/servicesundersimilaroperatingconditionsLayoutmajor(3-5)processesGatherdataIdentifybestpracticeorganizationforeachprocessAdjustdataforuncontrollableelements(e.g.,laborrates,productmix)toensurean“apples-to-apples”comparisonCalculatepotentialimpact(revenueincreaseorcostsavings)byunitandbyprocessFocusonorganizationsandprocesseswiththemostpotentialDeterminedriversofdifferencesatamoredisaggregatedlevelSetaBDPtargetEstablishadetailedscheduleAssignresponsibilitiesObtaincommitmentatalllevelsoftheorganizationCommunicategoals,deadlinesandresponsibilitiesCelebratesuccessesalongthewayDoingaBDPanalysisinvolvesseveralsteps.13CU7122997KRABDPBDPStepsProcessStepKeySBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways14CU7122997KRABDPAgendaTheBestDemonstrateBDPStickyTape*-Background*DisguisedclientcaseSituation:Theclient,StickyTape,isthethemarketleaderintheadhesivetapeindustryandhasfourplantsmakingducttapeandmaskingtape.ThereissignificantcostsharingbetweenthesetwoproductsComplication:TheCEOisconcernedthatStickyTape’scostadvantagemightbeerodingandheiseagertofindwaystocutmanufacturingcostsQuestion:HowcanStickyTapeidentifythemostleveragedareasforcostreduction,thecostreductionpotential,andwaystoimplementthecostreductionopportunities?BainusedBDPtohelpourclient,StickyTape,reduceitsmanufacturingcosts.15CU7122997KRABDPStickyTape*-Background*DBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementOrganizationsshouldproducesimilarproducts/servicesundersimilaroperatingconditions16CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-ComparableOrganizationsAcrossthemostimportantscreeningcriteria,StickyTape’sfourplantsanditscompetitors’plantsareroughlycomparable.ComparableorganizationsSimilarproducts,productmixes,andvolumesSimilarcustomerrequirementsandbusinesspracticesSimilartechnologySimilarproductdesignsSimilaraccountingpractices17CU7122997KRABDPStickyTape-ComparableOrBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementLayoutmajor(3-5)processes18CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-MajorProcesses

Makingtapeinvolvesthreemajorprocesses:RewindingSlittingPackagingBasematerialrunsfromacorerollAdhesivematerialisaddedandcuredBasematerialplusadhesiveisfedontoamasterrollMasterrollisslitintofinalwidthsVarioussizedunitsarepackaged19CU7122997KRABDPStickyTape-MajorProcessBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplement

GatherdataIdentifybestpracticeorganizationforeachprocess20CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-OverallCostPosition

Overall,StickyTapeisthelowestcostmanufacturer.21CU7122997KRABDPStickyTape-OverallCostBDPStickyTape-First-CutBDP*CompetitorsBandChadnoBDPsAlthoughStickyTapeisalreadythelowestcostmanufacturer,noneofitsplantsisBDPineveryprocess,andCompetitorAistheBDPinpackaging.BDPCompetitorAPlantDPlantsAandCStickyTape$0.15$0.05$0.10$0.10$0.07$0.15$0.10$0.10$0.10$0.08$0.02$0.15$0.10$0.05$0.20$0.02$0.05$0.1022CU7122997KRABDPStickyTape-First-CutBDPBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementAdjustdataforuncontrollableelements(e.g.,laborrates,productmix)toensurean“apples-to-apples”comparison23CU7122997KRABDPBDPStepsProcessStepKeySBDPControllablevs.UncontrollableCosts

Foranalysistobemeaningful(andbelievable),costsmustbeadjustedforthosethatarebeyondthecontrolofoperatingmanagers.ControllableUncontrollableRawmaterialscost/unitusageQualityLaborhoursOverheadstaffingSpaceutilizationProductmixLaborratesUnion-imposedcostsRentalratesUtilityratesInsuranceTaxesAccountingprocedures24CU7122997KRABDPControllablevs.UncontrollBDPStickyTape-UncontrollableCosts

Differentplantshavedifferentuncontrollablecosts.“Anunadjustedcomparisonisunfair.We’vegotthehighestlaborratesinthecountry.” -Supervisor,PlantA“We’remakingmaskingtapeover30%ofthetime.Thatstuffripsallthetime.LetmerunducttapealldayandI’llbeatanyplant.” -Rewinder,PlantC“We’reaunionshop.Ourworkrulescreatecoststheotherplantsdon’thave.” -Plantmanager,PlantD25CU7122997KRABDPStickyTape-UncontrollablBDPStickyTape-Adjusted*BDP*Adjustedforlaborandutilityratesandproductmix**Inthisparticularcase,theoverallBDPdoesnothappentochange.Thecomponents,however,dochange.Adjustingforuncontrollablecostshasasignificantimpactonthecostsforeachplant.BDP(adjusted)BDP(unadjusted)RewindSlitPackagePlantAPlantBPlantCPlantDCompetitorA$0.15$0.05$0.05$0.07$0.10$0.15$0.10$0.05$0.07$0.07$0.15$0.18$0.10$0.08$0.10$0.08$0.10$0.09$0.08$0.05$0.02$0.03$0.15$0.12$0.05$0.05$0.10$0.09$0.20$0.18$0.05$0.03$0.02$0.09$0.10$0.0526CU7122997KRABDPStickyTape-Adjusted*BDPBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementCalculatepotentialimpact(revenueincreaseorcostsavings)byunitandbyprocess27CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-PotentialSavings

StickyTapecansaveanaverageof$0.08perroll,or$5.6MMoverall,byimplementingbestpractices.Rollsperyear:20MM18MM6MM27MMPotentialSavingsperRollPotentialTotalSavingsAveragepotentialsavings=$0.0828CU7122997KRABDPStickyTape-PotentialSavBDPStickyTape-BackupforPotentialSavings

Totalpotentialsavingsbyplant:Totalpotentialsavingsbyprocess:PlantAsavingsperrollXNumberofrolls=()+PlantBsavingsperrollXNumberofrolls()PlantCsavingsperrollXNumberofrolls()+PlantDsavingsperrollXNumberofrolls()+=($0.10x20MM)+($0.13x18MM)+($0.08x6MM)+($0.03x27MM)=$5.6MM=Rewindsavingsateachplant+Slitsavingsforeachplant+Packagesavingsforeachplant=($0.06x20MM)+($0.09x18MM)+($0.03x27MM)+($0.04x20MM)+($0.04x18MM)+($0.05x6MM)+($0.03x6MM)=$5.6MMRewindsavingsateachplantSlitsavingsforeachplantPackagesavingsforeachplant++=29CU7122997KRABDPStickyTape-BackupforPoBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementFocusonorganizationsandprocesseswiththemostpotentialDeterminedriversofdifferencesatamoredisaggregatedlevel30CU7122997KRABDPBDPStepsProcessStepKeySBDPPriorityMatrix

UnattainablesBackburnerHighLowLowHighAbilitytoImplementImpactQuickhitsToppriorityFocusonthoseareasthatwillyieldthegreatestbenefits.31CU7122997KRABDPPriorityMatrixUnattainablBDPStickyTape-TopPriorities

ThetopprioritiesforStickyTapeareplantsAandBandrewinding.WhatdoPlantsCandDdodifferentlythatresultsinlowercosts?Whatdrivesrewindingcosts?PlantDPlantCPlantBPlantAPackageSlitRewindByplantByprocess$5.6MM$5.6MM$0.0$2.0$4.0$6.0PotentialAnnualSavings($MM)PotentialTotalSavings32CU7122997KRABDPStickyTape-TopPrioritieBDPStickyTape-RewindingCosts*Utilities,occupancy,supplies,supervisionPlantCistheBDPinrewindinglaborandrewindingrawmaterials,plantDinrewindingoverhead.PlantDPlantCPlantC33CU7122997KRABDPStickyTape-RewindingCosBDPStickyTape-DriversofRewindingCosts

TheBainteamdeterminedthedriversofrewindingcostsinordertosuggestconcreteactionsteps:RuntimeMasterrollload/unloadCoreload/unloadFirstqualityDefectsEaseofmovingspoolsoftapearoundtheroomEaseofloadingandunloadingspoolsoftapeTapetearsAdhesiverunsSuggestconcreteactionstepsLaborRawmaterialsOverheadRewinding34CU7122997KRABDPStickyTape-DriversofReBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementSetaBDPtargetEstablishadetailedscheduleAssignresponsibilities35CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-ActionPlan

BuylargerinternaldiametercorestoslidemoreeasilyintoplaceMoverewindingroomwallstoprovidegreaterclearanceforloading/unloadingUselowercorebinstomakecorestorageeasierReducetensionto122toreducetapetearsInstallairconditioningsystemtoreduceadhesiverunsCost$72K$17K$130K+$40KperyearAverageSavings/MasterRoll$16$10$4$28$22AnnualSavings$0.8MM$0.5MM$0.2MM$1.4MM$1.1MMTimingThreemonthstodrawdowninventoryTwomonths

forconstructionNowNowThreemonthsforinstallationResponsibilityPurchasingPlantmanagerLinesupervisorLinesupervisorTechnicalmanagerDevelopinganactionplaninvolvedsettingtargets,establishingaschedule,andassigningresponsibilities.36CU7122997KRABDPStickyTape-ActionPlanBBDPBDPSteps

ProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementObtaincommitmentatalllevelsoftheorganizationCommunicategoals,deadlinesandresponsibilitiesCelebratesuccessesalongtheway37CU7122997KRABDPBDPStepsProcessStepKeySBDPStickyTape-Implementation

Successfulimplementationinvolvesobtainingcommitmentatalllevelsoftheclientorganization;communicatingclearlyaboutgoals,deadlines,andresponsibilities;andcelebratingachievementsmadeinreachinggoals.CommitmentMoraleboostingAtseniormanagementlevelAtoperatingmanagementlevelAtoperatingnon-managementlevelAnnouncementsasmilestonesarereachedArunningtallyofcostsavingsRewardsforsuperiorachievementsCommunicationGoalsDeadlinesResponsibilities38CU7122997KRABDPStickyTape-ImplementatioBDPStickyTape-LessonsLearned

CompaniesthatareBDPsinanaggregateviewarenotnecessarilyBDPsineverythingTheycanoftenlearnfromexaminingtheirownoperationsaswellasothers’Itisnecessarytodisaggregatecostelements(“PeeltheOnion”)andgetdowntocostdriverstodetermineappropriateactionstepsActionstepsmustbeagreeduponandcommittedtoatalllevelsoftheclientorganization39CU7122997KRABDPStickyTape-LessonsLearnBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways40CU7122997KRABDPAgendaTheBestDemonstrateBDPKeyTakeaways

BDPisusedtoidentifythebestpractices-thoseleadingtothemostrevenueattheleastcost-insideoforoutsideofacompanyInternalBDPscanbedonebetweenorganizationsoragainsthistoricaldata.ExternalBDPscanbedoneagainstdirectcompetitorsoragainstcompaniesinadifferentindustry.InternalBDPsaremorestraightforwardtoconductthanareexternalBDPs,buttheytendtoleadtolessdramatic,thoughoftensignificant,changeBDPOverviewBDPStepsKeySuccessFactorsKeysuccessfactorsinclude:understandingtheclientoperationsatadetailedlevel,lookingatrelevantinternalandexternalcomparables,focusingonthemostleveragedareas,gatheringandanalyzingdata,obtainingcommitmentatalllevelsoftheclientorganization,andcommunicatingclearlyThereareeightstepsindoingaBDP:SelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplement41CU7122997KRABDPKeyTakeawaysBDPOverviewBBDPTakeawaySlides(1)

BDP-practicesleadingtothemostrevenueattheleastcostInternalExternalBetweenorganizationsHistoricalCompetitorsCompaniesindifferentindustriesInternalandExternalBDPsReasonsforBetterPerformanceBDPStepsProcessStepKeySuccessFactorsSelectcomparableorganizationsforBDPDisaggregateorganizationsintomajorprocessesConstructfirst-cutBDPConstructadjustedBDPQuantifyimpact“PeeltheOnion”inleveragedareasDevelopanactionplanImplementOrganizationsshouldproducesimilarproducts/servicesundersimilaroperatingconditionsLayoutmajor(3-5)processesGatherdataIdentifybestpracticeorganizationforeachprocessAdjustdataforuncontrollableelements(e.g.,laborrates,productmix)toensurean“apples-to-apples”comparisonCalculatepotentialimpact(revenueincreaseorcostsavings)byunitandbyprocessFocusonorganizationsandprocesseswiththemostpotentialDeterminedriversofdifferencesatamoredisaggregatedlevelSetaBDPtargetEstablishadetailedscheduleAssignresponsibilitiesObtaincommitmentatalllevelsoftheorganizationCommunicategoals,deadlinesandresponsibilitiesCelebratesmallsuccessesalongthewayBDPBarChartProcessCProcessBProcessACBACBACompanyZCompanyYCompanyXCompanyXCompanyYCompanyZBDP$$$$$0.00$0.10$0.20$0.30$0.40DollarperUnitMoreconsolidatedsupply(VMRs)LowercostrawmaterialsHigherqualityrawmaterialsMorepartsoutsourcedMorepartsmadeinlower-costcountriesProductsSimplerproductsFewerproductvariationsPlantsFewer,morehighly-focusedplantsMoreefficientproductionprocess(longerruns,lesswaste)BetterequipmentBetterqualitycontrolLaborLonger-termcontractsBetterstructuredincentivesBettersupervisor-to-laborratioPurchasingManufacturingDistributionSellingBetterdeliverymethod(truckvs.trainvs.airplane)More(orless)frequentdeliveriesLarger(orsmaller)deliverysizesBettertrainedsalesforceLargersalesforceBetterorganizedsalesforce(byregion,byproduct,byindustry)Betterstructuredincentives42CU7122997KRABDPTakeawaySlides(1)BDP-pBDPTakeawaySlides(2)

AdjustedBDPPriorityMatrixPotentialImpactActionPlanUnadjustedAdjustedUnadjustedAdjustedUnadjustedAdjustedUnadjustedAdjusted$$$$$$$$$0.00$0.05$0.10$0.15$0.20$0.25$0.30$0.35DollarsperUnitCompanyXCompanyYCompanyZBDPUnattainablesBackburnerHighLowLowHighAbilitytoImplementImpactQuickhitsToppriorityStepImpactTimingResponsibility$$$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TotalImpactImpactperUnit43CU7122997KRABDPTakeawaySlides(2)AdjusteAuthor:LairdReedReviewers: SarahMillard,

JasonTrevison

bcBDPMarch1998Copyright©1998Bain&Company,Inc.44CU7030298IMBAuthor:LairdReedReviewers:BDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways45CU7122997KRABDPAgendaTheBestDemonstrateBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways46CU7122997KRABDPAgendaTheBestDemonstrateBDPDescription*WhereasanRCPalwaysdealswithcosts,aBDPcoulddealwithcostsorrevenuesBDPisusedtoidentifythebestpractices-thoseleadingtothemostrevenueattheleastcost-insideoforoutsideofacompany.BDP-practicesleadingtothemostrevenueattheleastcost*InternalExternalBetweenorganizationsHistoricalCompetitorsCompaniesindifferentindustries47CU7122997KRABDPDescription*WhereasanRCPBDPInternalvs.External

InternalBDPsaremorestraightforwardtoconductthanareexternalBDPs,buttheytendtoleadtolessdramatic,thoughoftensignificant,change.Gatheringdata:Degreeofchange:BDPInternalExternalBetweenorganizationsHistoricalCompetitorsCompaniesindifferentindustriesStraightforwardContinuousimprovementDifficultDramaticchange48CU7122997KRABDPInternalvs.ExternalInterBDPPossibleReasonsforBetterPerformance

Moreconsolidatedsupply(VMRs)LowercostrawmaterialsHigherqualityrawmaterialsMorepartsoutsourcedMorepartsmadeinlower-costcountriesProductsSimplerproductsFewerproductvariationsPlantsFewer,morehighly-focusedplantsMoreefficientproductionprocess(longerruns,lesswaste)BetterequipmentBetterqualitycontrolLaborLonger-termcontractsBetterstructuredincentivesBettersupervisor-to-laborratioFollowingisalistofpossiblereasonssomecompaniesperformbetterthanothers:PurchasingManufacturingDistributionSellingBetterdeliverymethod(truckvs.trainvs.airplane)More(orless)frequentdeliveriesLarger(orsmaller)deliverysizesBettertrainedsalesforceLargersalesforceBetterorganizedsalesforce(byregion,byproduct,byindustry)Betterstructuredincentives49CU7122997KRABDPPossibleReasonsforBetterBDPBDPinTheory

Intheory,byapplyingBDPpractices,youcouldcreateaBDPcompany.PurchasingManu-facturingDistributionSellingCorporatePurchasingManu-facturingDistributionSellingCorporatePurchasingManu-facturingDistributionSellingCorporateClientCompetitorACompetitorBBDPCompanyNon-BDPBDP50CU7122997KRABDPBDPinTheoryIntheory,byBDPBDPinPractice

Inpractice,BDPanalysisisusedonlyinareasofthecompanywhereitcanhaveasignificantimpact.ManufacturingBDPSalesforceBDPNon-BDPBDPSituation:BeforeBDP:AfterBDP:CorporatePurchasingManufacturingDistributionSelling

CorporatePurchasingManufacturingDistributionSellingManufacturingcostsareasignificantportionoftotalcosts,andtheclientisfarfromBDPinmanufacturing.Revenuepersalesrepresentativeisamajordriverofprofitability,andtheclient’ssalesrepresentativesarefarfromBDPinrevenueperrepresentative.Corporate

CorporateActions:PurchasenewequipmentRearrangeequipmenttoimproveproductionflowRecyclewasteDecreasesupervisortolaborratioIncreaseamountoftrainingReorganizesalesforcebyindustryRestructureincentivestoencouragecross-selling51CU7122997KRABDPBDPinPracticeInpracticeBDPReasonsforUsingBDP

BecauseBDPissimple,pragmatic,andpositive(itfocusesonwhattheclientdoesbest),ithelpsusachieveresults.BDPhelpsusachieveresultsSimplePragmaticPositiveSimplemethodologyEasytoexplaintoclientStraightforwardtoimplementEasytomeasureresultsFocusesonexistingbusinessFocusesonmostleveragedareasAllowsforquantificationofpotentialimprovementLeadstoconcreteactionsBuildsmoraleattheclientbyfocusingonwhatclientdoesbestProvidesaframeworkforcontinuouslearning52CU7122997KRABDPReasonsforUsingBDPBecauBDPAgenda

TheBestDemonstratedPractices(BDP)ConceptApplicationsBDPStepsClientExampleKeyTakeaways53CU7122997KRABDPAgendaTheBestDemonstrateBDPApplications

AlargeEuropeanpaperboardmanufactureroperatedsevenplantsthroughoutEurope.ABainteamanalyzedunitcostsateachplantandidentifiedanumberofbestpracticesworth$20MMor40%oftotaloperatingexpenses.ASpanishsteelproducer’smarginswerecomingunderpressurefromfallingtradebarriers.ThecompanyaskedBaintoconductananalysisofthetechnologyandpracticesofitsglobalcompetitors.TheBDPresultedindramaticcutsinlaborcostsandareductioninthecostperkilogramofsteelof20%.TheCEOofanItaliansupermarketchaindemandedcostcutshismanagementteamcouldnotdeliver.ABainBDPrevealed10-15%productivitygapsbetweendepartmentsinthechain’s200stores.ThefullscaleBDPledtoanaveragecostimprovementof10%perstore.BainhasusedBDPinhundredsofcasesandindozensofindustries.Someexamplesofour