FOCU$ Analytical Services
Product/Service Organization and Analysis
Our analytical services will create solutions to improve your financial situation. We start with an assessment of your current tools, using our proven FOCU$ methodology. Through professional rationalization and financial analyses you will discover the opportunities and how to take advantage of them.
Learn to implement organizational solutions to supply chain issues and warehouse management. Target your markets and see how your sales growth and cash contribution impacts your ROI.
Areas of Impact
Products & Services Rationalization
Longview Fibre Paper & Packaging
Industry: Paper & Packaging
- Company: Longview Fibre Paper & Packaging
- Situation: Following the sale of the company to a private equity firm, the company was split into a timber management company and a $700 million paper and packaging manufacturer. This revealed that the paper and packaging company had been losing money for several years and had to be corrected for the new company to stay in business. The private equity firm set a minimum target of $70 million in annual EBITDA.
- Role: President & COO
- Analysis: A profitability evaluation of current markets, products and related equipment was initiated concurrent with a review of the mill and box plants leadership teams.
- Findings: The traditional financial reporting of the company made profitability evaluations of market, products and equipment very difficult. The reporting was redesigned to provide clearer visibility. This showed that there were a number of markets, products and paper machines that were consuming rather than generating cash. A plan was developed to reconfigure the mill to support only the cash generating products. The review of the mill and box plants leadership showed that the group was primarily oriented to steady consistent execution of past practices and were risk averse and heavily dependent of direction from top management. The sales team was primarily focused on account management and care-taking rather than generating new business.
- Solution and Result: As planned, the mill was reconfigured to concentrate on cash-positive products. This allowed for the reduction of over 600 salaried and hourly employees. The company and mill leadership teams were restructured to reflect the streamlined operation. The sales teams in the box plants were also restructured to include more aggressive business development talent. The company exceeded the $70 million EBITDA target after the first year and has continued to increase returns since then.
Pacific Gas & Electric
Industry: Nuclear Power Generation:
- Company: Pacific Gas & Electric’s Diablo Canyon Nuclear Station
- Situation: The Nuclear Station was one year from entering a new open-market environment where it would have to compete on price as opposed to the historical Cost-Plus environment that had been in place since the Plant’s inception. The senior executive of the Power Generation Division estimated that the annual operating costs would have to be reduced by 40% to be competitive and sustainable. The Leadership Team had been built to assure consistent safe operation in the Cost-Plus market.
- Role: Lead Consultant
- Analysis: There were three aspects of the initial analysis: a plant life-cycle analysis, a function and staffing analysis and a Leadership Team assessment.
- Findings: The plant life-cycle showed that the plant was solidly in the Operate and Maintain portion of its useful life. However, it was still being managed as if it were in the Design phase with constant costly upgrades and additions being made. This led to a functional analysis which showed the necessary functions for the Operate and Maintain phase and the excess functions and staffing of Design Engineering, Purchasing and the use of contractors. The Leadership Team analysis, using a series of Behavior and Value assessments, showed the primary orientation of the team was to maintain the Cost-Plus status quo and continue to “gold-plate” the plant with ongoing upgrades.
- Solution and Result: Following the Plant life-cycle analysis, the client executive prioritized Operations as the primary decision-making department, using safety and reliability as the guiding principles. The Engineering department was down-sized significantly to focus on Operations and Maintenance support. Most contractor usage was eliminated except as supplementary to the onsite Maintenance department. All remaining contracts were competitively bid using highest total value as the selection criteria. Finally, the leadership team was restructured to reflect the streamlined organization and to achieve a balance of Safety and Operations expertise along with more business and cost-oriented leaders in the support areas. $200 million of annual operating costs was reduced from a budget of $500 million.