This presentation will help you drastically improve your knowledge of management consulting techniques, tools and frameworks. It is designed for people who want to become management consultants, business analysts or are dealing with performance improvements as well as strategic projects in their firms. In the course you will learn 3 things:
1. What consulting techniques, tools and frameworks there are
2. When to apply each and one of them
3. How to use them in practice including examples how to calculate specific things in Excel
The presentation is based on my 14 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, performance improvement and turn-arounds in biggest companies from Retail, FMCG, SMG, B2B and services sector that I worked for. On the basis of what you will find in this course I have trained over 100 consultants, business analysts and managers who are now CEO, COO, Directors of Sales, Production, Investment Directors in PE funds, Directors in Consulting Companies, Board Members etc. Over 35 000 students have taken my course on Udemy.
2. 2
In business you have to make a lot of important decisions
Time and again you will come across problems that are seeming unsolvable. In many
cases you don’t even know how to approach them…
3. 3
In business you have to make a lot of important decisions
Luckily, there are a lot of nice management consulting tools, techniques
and frameworks that will help you solve problems.
4. 4
This presentation will show you techniques that
will help you solve problems on the level of top
management consultants
6. 6
Management consulting techniques and frameworks come in handy both at work
as well as in private life. In this presentation you will see examples from both
8. 8
Management Consulting Techniques,
Tools and Frameworks
$190
$10
What you will see in this presentation is a part of my online course
where you can find also all the calculations in Excel
Click here to check my course
11. 11
In this section we will discuss the basic tools, techniques and
framework used by Management Consultants
Bottom-up approach Top-down approach Backward logic
Compounded effect Issue Tree Priorities
Benchmarks 80/20 rule Opportunity Tree
KPIs and business
drivers
Theory of constraints
and bottlenecks
13. 13
…the one you will for sure use is bottom-up approach where
you go from single (typical) consumer to market research
First you should
imagine the
typical users
Then you should try to
guess his consumption
level
By estimating the number of
typical users you and their
consumption level you get
the rough size of the market
14. 14
…sometimes it makes sense to divide markets in segments and estimate
them separately (i.e. average and typical users, women and man, people
in different age groups or segmentation by lifestyle)
Segment A
Segment B
15. 15
…lets do a simple example. Imagine that you want to make an
application for franchised restaurants
You pick the sample
group / area you want
to estimate i.e. city
(here Warsaw)
You count the number
of all restaurants in the
area
For the chosen area
you count the
franchising restaurants
You check the population of
the whole country – here
Poland
Assuming similar density as in
Warsaw you scale up the number of
franchised restaurants
16. 16
…to make you better at this method imagine you want to sell
home made dog food….. First you have to estimate how many
dogs they are…..
First you should pick
your sample – can be
your friends or
neighbors
Next step is to calculate
how many dogs they
have
Once you have the number also
calculate how many households they
are in the sample
It is now enough to know how
many households there are in the
country
And assuming similar proportion as
in your sample you scale up the
number of dogs
+
17. 17
…with the number of dogs you just have to estimate the
number of food eaten per year by average dog…..and you get
to the size of the food market
We have the number of dogs in the
whole country. Now we have to get
from here to the dog food
This requires us to estimate additionally how much
food would average dog eat per year
In this way using annual average consumption per dog and the
estimated number of dogs we are able to estimate how much food is
eaten every year in the country
+
18. 18
Lets sum up the bottom-up approach
Bottom-up approach enables you to estimate within
one minutes the indicative size of the market
It is very good for the B2C markets
For better estimation you should segment customers
and increase the sample size
20. 20
When to use top-down approach?
You know the size of the whole market
You are interested in a specific segment of the
market
Segment is big enough
You are thinking about niche strategy or low cost
strategy (market re-segmenting)
21. 21
For a change lets see how it would work with top-down
approach
You use the total market size
to get to the size of the
segment in which you are
interested
You have to use some
sort of sample
measure
By applying the result from
the sample you can get to
the size of the segment in
which you are interested
22. 22
… let’s use the top-down approach to estimate the market for
science fiction books sold in Poland….
You use the total number of books sold in your
country
Then you go to the bookstore that belongs to the biggest
chain of bookstore and check what percentage of the
shelves are take by science fiction books
If you use this proportion to the whole market you should
get the rough estimation of the science fiction book
segment
24. 24
Imagine that you were supposed to say how much you have to
spend to create a company that has revenue of $ 100 M dollar
Imagine that you were supposed to say how much you have to
spend to create a company that has revenue of $ 100 M dollar
25. 25
You could use for that the so called backward reasoning
CC: Flickr; Cycle Track
26. 26
Imagine that you were supposed to say how much you have to
spend to create a company that has revenue of $ 100 M dollar
Total Costs
$ 400 M
Cost of 1 lead
$ 2 K
# of leads
200 K
÷
% Conversion
10%
x # of customers
20 K
Average revenue
per customer
$ 5 K
Revenues
$ 100 M
x
28. 28
There are 2 types of compounding effect
Time related Operations related
Even if the growth is small applied over long period of
time gives big end-results
A lot of small changes in many areas may produce a
big end-results
# of customers Average revenue per
customer
Revenues
x
+15% +20%
+38%
= 2,6 x StartStart x (1+10%)^10
30. 30
Issue tree - general
Area of analysis
Area 1
Problem 1
Problem 2
Possible Reason 1
Possible Reason 2
Possible Reason 3
Possible Reason 4
Possible reasonsSuspected problems
Analysis to be
performed
Analysis 1
Analysis 2
Analysis 3
Analysis 4
32. 32
Issue tree - general
Area of analysis
Area 1
Problem 1
Problem 2
Possible Reason 1
Possible Reason 2
Possible Reason 3
Possible Reason 4
Possible reasonsSuspected problems
Analysis to be
performed
Analysis 1
Analysis 2
Analysis 3
Analysis 4
33. 33
Issue tree – example – chicken meat producer
Area of analysis
Transport
High costs of transport per ton of
goods
Big level of waste and breakage in
transport
Possible reasonsSuspected problems
Analysis to be
performed
Analysis of correlation between type
of packaging and percentage of
damaged
Analysis of time spent on the way and
kilometers covered in that time
Analysis of designed routes, their
length and the influence of possible
changes
Analysis of fuel usage and kilometers
covered by vehicles
Analysis of load carried on the way
back
Badly designed routes
Too big fuel usage
No shipments on the way back
Low usage of resources
Badly designed method of packaging
which makes the product prone to
damage
Speed not adjusted to the product
Badly organized work and schedule of
deliveries
Limitation on delivery time of finished
goods
Analysis of level of overtime, daily
organization of drivers work
Analysis of Clients’ preferences on
delivery time
35. 35
When you are talking about retail you should have a look a
the following areas
Retail chain development
Product Range / Category Range
Management
Pricing
Logistic / Supply Chain
Expansion model
In-store process
HR especially trainings
36. 36
Below you can see example of issue tree in Retail Chain
Development
Area of analysis
Retail chain
development
Low growth in sales
Decreasing EBITDA of new stores
Possible reasonsSuspected problems
Analysis to be
performed
Analysis of rents vs comparable
competition
Salaries growth vs rotation – comparison
with competition
Analyze the change in sales after opening
new stores / on-line introduction
Analysis of number of openings vs
availability of new places
Low LFL due to cannibalization (on-
line, new stores in old locations)
Few new openings in locations
Increasing rents due not proper usage
of purchasing power
Growing salaries to keep low rotation
High cost of building new stores
No support from the shopping malls
Not optimized formats, expensive
fixtures
Analysis of contracts with shopping malls
Analysis of cost per 1 sq. m, number of
fixtures, cost per fixtures
37. 37
Issue tree – example – chicken meat producer
Area of analysis
Product Range
Management
Low margin on Category A
Low margin on Category B
Possible reasonsSuspected problems
Analysis to be
performed
Analysis of whom we buy from Category B
and the whole value chain
Analysis of planning and allocation process
Analyze of number of suppliers and their
share in sales vs market
Analysis of Private Labels potential –
benchmarks and potential supplier
Too many supplier of Category A that
undermines your purchasing power
Lack of Private Labels
Usage of middlemen instead of direct
suppliers
Improper planning and allocation by
stores
High inventory cost
Improper planning and allocation by
stores
Non-responsive supply chain
Analysis of planning and allocation process
Analysis of lead times, deliverability on-
time, level of breakage
40. 40
Get the low hanging fruits first. By
low hanging fruits we mean things
with big impact and easy to
accomplish
41. 41
Resources needed
Impact
SmallBig
High
Low
Things with big impact that
require little work
1
How to find low hanging fruits?
Easy but with low impact
3
Things with big impact yet
expensive, time consuming
2
No
42. 42
Office hours
1
Low hanging fruits for a blog could look like this
2
4 3
Blog posts
Slideshare presentation
Impact
High
Low Resources needed
SmallBig
Udemy Course
Sniply
Youtube
Events
Twitter
Additional resources
49. 49
There are 2 types of benchmarks
Internal External
Based on previous execution
Extremely comparable
Very reliable
Detailed – can be put for each and every activity
Based on some external source (i.e. reports)
Not that easily comparable
They to be treated with caution
Only for chosen amount of activities
Can give you food for drastic improvements - by
analyzing them you can find totally different
method of working
50. 50
By comparing your results and benchmarks you can decide
what to improve, work on
Internal
Salary
Speed of typing
Speed of
analyzing Excel
Area Unit
Current
result
K USD
words/ minute
minute
5
40
15
4
39
10
External
7
80
12
Your salary went up in
comparison with your previous
one but you are still below the
market
Your typing speed has improved
slightly yet you are far below the
speed achieved by others
You not only improved your speed
of analyzing but also are better
than others
Makes sense to teach others how
to do it
Conclusions
53. 53
What does 80/20 mean in practice
Concentrate only on the big items
Concentrate on the big customers
Analyze the most typical cases
Concentrate on the most frequently occurring problems
Analyze problems with big impact
Your analyses should have only 20% of the variable that
generate 80% of the impact
Start with subjects where you see the biggest difference
between actual results and benchmarks
54. 54
Here are 3 examples of using 80/20 rules
Learning Visual
Basic for Excel
Checking
competitors
Salsa course
Area
Learn only the 5 most used items that will take only 20% of full course and will
be used by in you in 80% cases
You check only 20% of competitors that sales add-up to 80% of the market
Go through 20% of the course to learn the moves and the figures used in 80% of
cases
Description
56. 56
Opportunity tree
Gross Margin
Sales
% Gross Margin
% Front Margin
% Back Margin
# of transactions
ATV
Traffic
% conversion
YouTube
Ads on instagram
Affiliation with bloggers
Guest blogging
Opportunities
Long form / Short form
Reduction of delivery methods
No account
Emailing for people abandoning cart
Upselling and Cross selling
Free delivery for higher tickets
Introduction of new categories
Reducing number of suppliers
Finding new suppliers
Renegotiation
58. 58
Cost drivers are causing the cost to go or down
Cost of a Udemy course
Slide preparation
Recording and editing
# of slides
Cost of 1 hour
# of hours per 1 slide
# of lectures
Cost of 1 hour
# of minutes per 1 lecture
60. 60
To understand and analyze business you have to identify the drivers / KPIs
that a key for specific business and translate it into a model in Excel
# transactions
Average
revenue per
transaction
Total revenuex
% Fee of the
marketplace
Average
transaction value
Total searches % conversion
x
x
Total Costs
Total margin
-
Rent
People
Cost of traffic
Ratio of visitors
to searches
Average cost of 1
visit
+
x
Development
61. 61
Imagine that you have to estimate typical family spending's. You can take
into account countless number of factors…..
62. 62
…or you can limit yourself to the most important ones i.e. number of kids,
size of house, main repetitive spending like food.
63. 63
To measure the selected factors you have to use some sort of KPIs
Spending per 1
person per month
per category
# of people in
average family
Average size of the
house in sq. m
Average rent per
sq. m
64. 64
In the next lectures I will show you how to define and use
KPIs and business drivers
How to improve the results of
the Cinema
66. 66
In this section as a practice you will have to define the KPIs of
the cinema business and use it to see how we can improve
the profits of this business
67. 67
We will start with the problem. You will define the KPIs and then use it to
create the analysis in Excel as well as the slide with results
# transactions
Average
revenue per
transaction
Total revenuex
% Fee of the
marketplace
Average
transaction value
Total searches % conversion
x
x
Total Costs
Total margin
-
Rent
People
Cost of traffic
Ratio of visitors
to searches
Average cost of 1
visit
+
x
Development
68. 68
To get the most out of the examples please try to solve the
problem on your own before going to the solution
Problem set / Case
study
Pause the course and
solve the problem on
your own
Go to next lecture
where you will find the
step by step solution to
the problem set
70. 70
Imagine that you were responsible for managing the cinema. What KPIs
metrics you would look at to see whether you are doing a good job?
71. 71
Let’s see what KPIs you should look at
# sold tickets
Average revenue
per Ticket
Total revenue Total Costs
x
Total margin
-
Average price per
ticket
Average additional
purchase per ticket
Total capacity in
tickets
% Utilization
Rent
People
# of People
Average wages
+
+
x
x
73. 73
What rules should be used when building analysis in Excel
Usage of colors
Consistency between sheets
Pyramid principle
1-source rule
Repetition of variables
Shortcuts
No mouse
Description
Data source
Master sheet
74. 74
The most useful functions
Basic functions Financial / Mathematical Others
SUMIF / SUMIFS
COUNTIF / COUNTIFS
HLOOKUP
VLOOKUP
MATCH
SUMPRODUCT
IF
AND / OR
IFERROR
AVERAGEIF
LEFT / RIGH / MID
FIND
CONCATENATE
YEAR / MONTH / DAY
ROUND / ROUNDUP /
ROUNDDOWN
TODAY
VALUE
WEEKDAY
RAND / RANDBETWEEN
MOD
NPV
IRR
ABS
MAX / MIN
CORREL
Pivot
Slicer
Relative addresses
Formats
Hyperlink
Remove Duplicates
Filters
Sorting
Data Validation
Trace Dependents / Precedent
Analysis Tool Pack
75. 75
Essential Excel for Business
Analysts and Consultants
A practical guide
presentation
Check also my other presentations
77. 77
What rules should be used for Power Point Presentations
Use the template
1 slide = 1 message
Agenda
Executive summary
Excel analysis for every
slide
Sources
Dates
Backup
Next version rule
Show money
82. 82
Management Consulting Techniques,
Tools and Frameworks
$190
$10
What you will see in this presentation is a part of my online course
where you can find also all the calculations in Excel
Click here to check my course
85. 85
In this section we will discuss the intermediate tools, techniques and
frameworks used by Management Consultants
Rankings Scenario Analysis
Representative
element analysis
Decision Tree
Analysis
Critical Chain
Theory of constraints
and bottlenecks
Lean Manfuacturing
87. 87
Quite often you have options that you want to somehow compare and
rank them
Option 1
Option 3
Option 4
Option 5
88. 88
Thanks to the ranking you not only give points but you can sort them
from the most wanted to the least desired
Option 5
Option 3
Option 1
Option 4
89. 89
You may use ranking for many things
Pick the best option from
available options
Create priorities for further
actions
Rank people / team members
Rank business ideas
Motivate
Create benchmarks
90. 90
Rankings are done in 5 steps
Create criteria and
weights for the
ranking
Gather data
Calculate the points
and create the
ranking
Pick the preferred
option
At least 3-4 criteria,
preferably
independent
Every criteria
should have a
weight – not all
criteria have to
have the same
importance
For defined options
gather data on the
criteria so you are
able to calculate
the points for every
criteria and option
Define the rule /
function that
assigns points for
every criteria
Calculate the score
for every option-
criteria
Using weights
calculate the total
score
Use the total score
to rank the options
You can use
additional criteria
Using the ranking
and additional
criteria you can
pick the preferred
option
Define options
You have to define
all options that you
will be choosing
from
91. 91
In the next lectures I will show you how to create and use the
rankings in practice. I will be talking about 2 examples
DIY (Home Improvements)
Expansion strategy for foreign
markets
93. 93
Let’s have a look at milk producer that wants to expand its product
range
Leader in milk
2nd place in butter
25 products considered
94. 94
There are things you should consider when selecting the right
products to be developed within the same brand
Is the product consistent with the
current brand?
Does it require the same
distribution?
Do you have strong players on
the market you enter?
What is the potential of the
market?
Are there customers who already
think that you have the product?
What is the growth rate of the
market for the product?
96. 96
After we have gone through research we got the following results.
This suggest that we should start with yoghurt and yellow cheese
0
50
100
150
200
250
300
350
0 0,5 1 1,5 2 2,5 3
Market size
In mln USD
Attractiveness
(1-Low;3-High)
Cheddar
Cottage cheese
Yoghurt
Milk Desserts
(i.e. Monte)
Yellow (swiss)
cheese
Ice cream
Feta
97. 97
Management Consulting Techniques,
Tools and Frameworks
$190
$10
For more details on the case study go to my online course. You will
find there all details and Excels with calculations
Click here to check my course
99. 99
Let’s imagine that you were to create an expansion plan for
expansion into new countries for a fashion brand
100. 100
As you remember we have create a ranking of countries
Define criteria and
weights for the
criteria
Gather data on the
markets
Create the ranking
of markets to enter
Define limits that
you have
Set priorities
4-6 criteria on the
basis of which you
will value specific
markets
Ranking on the
basis of criteria and
weights created
Money for
expansion
People for
expansion
Logistics
Lead time due to
your supply chain
Limitation in stock
101. 101
For this we will use 4 criteria and we will estimate the size of
the markets in standard stores
GDP per capita PPP
Similarity in product range
Competition level
Franchising infrastructure and the
Criteria for
measuring the
attractiveness of
the market
Potential of the
market
Potential was measured using the size of the markets in terms of
potential number of standard stores
102. 102
Potential markets for expansion – Ranking vs Potential – region
2,2
2,3
2,5
2,6
2,7
2,7
2,9
3,0
3,3
3,3
3,4
3,4
3,5
3,6
3,9
4,3
Philipines
North America
Australia
Turkey
South America
Indonesia
China
Africa
ex USRR
Western Europe
India
Middle East
Malaysia
Thailand
Eastern Europe
Poland
Ranking of market attractiveness
(1-low; 6-High)
Potential of countries / regions to capture
assuming achieving share like in Poland
In standard stores
579
2 215
76
324
1 870
1 255
4 287
4 944
534
1 136
6 288
208
134
209
215
100
Philipines
North America
Australia
Turkey
South America
Indonesia
China
Africa
ex USRR
Western Europe
India
Middle East
Malaysia
Thailand
Eastern Europe
Poland
103. 103
Potential markets for franchise – Ranking vs Potential – region
0
500
1 000
1 500
2 000
2 500
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0
Poland
Middle East
Philippines
Eastern Europe
Russia + Asian
ex USRR
Thailand
Malaysia
Indonesia
Australia
North America
South America
Turkey
Western Europe
Potential
In number of standard stores
Attractiveness
(1-Low;6-High)
105. 105
Future is pretty difficult to figure out. You don’t know what will happen.
In those cases it is a good idea to consider a few different scenarios
106. 106
Future is pretty difficult to figure out. You don’t know what will happen.
In this cases it is a good idea to consider a few different scenarios
107. 107
Imagine that you are ice cream producer and you have to decide how much
ice-cream to produce for the next day without knowing what will be the
weather. Therefore, you have to consider different scenarios
Scenario 1 Scenario 2 Scenario 3
100 70 30
108. 108
The scenario analysis consists of 5 steps
Define the thing
(goal function) you
want to analyze
Define which drivers
are the least certain
Define the scenarios
Define your
behavior / policy
Check the goal
function for every
policy
You should be
analyzing the things
that are threatened
by different
scenarios and are
important for your
business
It can be profit,
NPV from new
investment,
inventory you
should have etc.
It is good to define
3-5 different
scenarios
In every scenario
the main drivers
will have different
value
You should assign
certain probability
to every scenario
Scenarios do not
depend on you but
your behavior does.
You can define a
policy / behavior
that helps you in a
specific situation
Concentrate on
drivers that have
big impact and big
volatility
The aim of this step
is to pick the right
policy, given the
scenarios and their
policy
The best policy is
the one that gives
you highest
benefits (highest
goal function)
109. 109
In the next lectures I will show you how to create and use
scenario analysis in practice using an example from airplane
industry
Which price formula is the best
for my profits
111. 111
Now we will try to see which price formula is better for aircraft
maintenance service company
2 sites – in Poland and
Croatia
Consider 4 different
formulas
Consider 3 different
scenarios
112. 112
Now we will try to see which price formula is better for aircraft
maintenance service company
Materials
Scenario 1
$ 30 K
Number of
manhours needed
3 000 man-hours
Probability of the
scenario
30%
Scenario 2
$ 20 K
3 400 man-hours
25%
Scenario 3
$ 15 K
3 800 man-hours
45%
113. 113
Now we will try to see which price formula is better for aircraft
maintenance service company
Materials
Times & Materials
Cost of Materials
increased by 15%
markup
Labor
$ 50 per 1 man-
hour
We look at the real
man-hours needed
Fixed Fee
$ 25 K
$ 140 K
Mixed Option 1
$ 25 K
Fixed: $ 140 K
On top of that 15%
of the labor cost
calculated using
Times & Materials
formula
Mixed Option 2
$ 25 K
Fixed: $ 140 K
On top of that for
all man-hours
above 2 800 we
use the Time &
Materials formula
but using the price
of $ 90 per 1 man-
hour
115. 115
Now we will try to see which price formula is better for aircraft
maintenance service company
2 sites – in Poland and
Croatia
Consider 4 different
formulas
Consider 3 different
scenarios
116. 116
It seems that the Mixed Option 2 price formula is the best
solution
Gross Margin
In thousands of USD
90
58
84
117
Times & Materials Fixed Fee Mixed Option 1 Mixed Option 2
117. 117
Management Consulting Techniques,
Tools and Frameworks
$190
$10
For more details on the case study go to my online course. You will
find there all details and Excels with calculations
Click here to check my course
119. 119
In many cases there are a lot of options that you can consider. For simplicity you
want to limit the options and get down to 1-5 representative elements
120. 120
There are usually 2 main ways to use representative element analysis
Average 3 options
121. 121
Thanks to representative element analysis you can achieve a
lot of interesting things
Compare different solutions and
decide which is better
Compare different offers and
decide which is better
Find optimal solution
Create benchmarks
Plan & Forecast
Do the segmentation
122. 122
In the next lectures I will show you how use the
representative element analysis in practice
Analysis of tariffs in a
convenience store
124. 124
Now we will analyze tariffs used by a Retailer operating chain of
convenience stores
Area of analysis Possible reasonsSuspected problems
Analysis to be
performed
Transport
High costs of delivery to points of
sales
Discrepancies in tariffs
Comparison of costs of delivery and its
components for different regions
Lack of unified tariff / method of
calculating tariffs
Data needed:
Tariffs charged for each and every region
Number of points of sales
Average length of a route, average number of points of sales per route, average number of newspapers
delivered to a point of sales
125. 125
Now we will analyze tariffs used by a Retailer operating chain of
convenience stores
Introduction:
You were employed by a company which distributes newspapers and FMCG goods to around 36 thousands
of small convenience stores.
Company consists of 18 virtually independent entities linked to regions.
Each and every entity uses different way of setting tariffs for delivering goods
Tasks:
Figure out a way to compare costs and try to estimate in which region costs are the lowest
Estimate current costs of distributing to points of sales
Estimate savings provided that you manage to lower costs to the level equal to the average of 3 lowest
tariffs
126. 126
He is using different formulas in different regions
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
Fixed fee per
Point of
delivery
Fixed fee per
day for
allocating
newspapers
Fixed fee per
route Fee per km
Fee per
allocated
newspapers
127. 127
In order to be able to compare the results we will have create 2 typical
routes
Parameters of a typical city route:
Average length (km)
Number of Points od delivery
on a typical route
Newspapers allocated in pieces
31
21
9 000
Average length (km)
Number of Points od delivery
on a typical route
Newspapers allocated in pieces
124
29
3 000
Parameters of a typical rural route:
129. 129
After we have done the calculations we got the target to which more
expensive regions should strive
City route
Average daily cost per Point of Delivery in EUR
Rural route
Average daily cost per Point of Delivery in EUR
5,5 5,3 5,4
6,0
5,2 5,4
Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
6,6
9,5
7,6
6,4
7,5
6,3
Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
5.4
7.6
weighted average for 3 leas
expensive regions
130. 130
If we renegotiate the contracts we can get significant savings both for
city and rural routes
Current weighted average cost per Point of
Delivery
In EUR per 1 visit in Point of delivery
Targeted weighted average cost per Point
of Delivery
In EUR per 1 visit in Point of delivery
Number of Point of
deliveries
City routes Rural routes
5.39 7.57
5.26 6.47
24 828 10 829
1 064 3 729
Estimated annual savings
In thousands of EUR
City routes
131. 131
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133. 133
Quite often you have to make important decision faced with uncertainty. In those
situation it is very useful to apply the so called decision tree
134. 134
Let’s have a look at example. You are to build a chocolate factory. You
have to decide on the size of it.
Big Factory
(Invest $50 M)
What factory you
should build?
Small Factory
(Invest $30 M)
Big Demand
(EBITDA= $100 M)
Small Demand
(EBITDA= $20 M)
Big Demand
(EBITDA= $50 M)
Small Demand
(EBITDA= $30 M)
50
Outcome
In M USD
-30
20
60%
40%
60%
40%
0
135. 135
Once you have the outcomes for each and every option it is time to
calculate the expected value for both decisions
Expected Value = Outcome 1 x
Probability of
Outcome 1
+ Outcome 2 x
Probability of
Outcome 2
Expected Value for
Big Factor
= 50 x 60% + - 30 x 40% 18=
Expected Value for
Big Factor
= 20 x 60% + 0 x 40% 12=
136. 136
Once you have the outcomes for each and every option it is time to
calculate the expected value for both decisions
Big Factory
(Invest $50 M)
What factory you
should build?
Small Factory
(Invest $30 M)
Big Demand
(EBITDA= $100 M)
Small Demand
(EBITDA= $20 M)
Big Demand
(EBITDA= $50 M)
Small Demand
(EBITDA= $30 M)
50
Outcome
In M USD
-30
20
60%
40%
60%
40%
0
18
12
138. 138
* Sort,Set,Shine,Standardise,Sustain
** Total Productive Maintenance
*** Overall Equipment Efficiency
Kanban Kaizen Poka Yoke Nested
Production
Zero defectsOEE***TPM**SMEDJust in time
Process
mapping
Continuous flow
management
Standardizing
work
Heijitsu box
5S*
Lean Manufacturing is a philosophy of working with little waste and highest
quality. It consists of many techniques that should be gradually mastered
141. 141
Overall Labour Efficiency how much work there is in the work
? Workday
Time that you can devote
Time left for real workLack of work
100%
54%
OLE =
100 %
54 %
x
x
98%
Work
98%
37%
No work due to
organizational
issues
Movement
70%
Work well done
70 %
Liczba
dostępnych
godzin
lalka Stawka Godzinna
Dodatkowe
przychody
144. 144
What is the throughput of every system and where
is the bottleneck?
Example 1
7 5 7
Example 2
5 10 20
Example 3
5 5 3
x Stage capacity
145. 145
The are 4 rules that you should follow when it comes to
bottlenecks
Identify what is the bottleneck
Increase its throughput by lowering the time needed for
everything that goes through the bottleneck
Add new resources to bottleneck
Adjust everything to the bottleneck – so it works at the
same pace
146. 146
Imagine that you are working in a company working in a
content marketing
Research topics for a
post
Write a post Create illustration
Edit and modify
post, add illustration
and schedule
20 5 7 10
# of post that can
be done in a week
by 1 person
Speed up the writing process (faster typing,
better tools, shortcuts for the most popular
words)
xx
20 8 7 10
10 9 10 10
Make the researcher do also par time
writing and making illustration
We have almost doubled the production of post with the same resources
The same principles would apply if all the activities were done only by you – in this case it would mean that you
should not do too much research and illustration but rather improve the typing speed and match the number of
illustration and researches to your capacity in writing
If you have no impact on the process (you are one of the guys above just doing his own part and your boss does not
want to listen to you then simply do less – identify the bottleneck and adjust your speed to his speed.
On the other hand if you are the bottleneck then speed up because the whole team depends on you.
148. 148
One of the biggest problem for efficiency is the so called Parkinson’s Law –
Work expand so as to fill the time available for its completion
149. 149
People when asked to evaluate the time certain things will take build in
buffers
A B C
A + B + C
A + B + C
A B C Central buffer
Declared time
Buffer time
Real execution
150. 150
Management Consulting Techniques,
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153. 153
In this section we will discuss the basic tools techniques and
framework used by Management Consultants
Simulations Feasibility Analysis Sensitivity analysis
Decomposition
Analysis
155. 155
Future is pretty difficult to figure out. You can use scenario analysis or
you check ALL the potential options and see which is optimal
156. 156
Imagine for a second that you have a small bakery trying to decide what is the optimal
number of cakes that you should bake. You want to use simulations to find out
157. 157
For the producer of cakes that at the same time can bake from 1 to 10
cakes using the simulation to find optimal production batch would
entail calculating the costs for all options
158. 158
There are plenty of things you can do thanks to simulations
Find optimal solutions
Carry out sensitivity analysis
Plan & Forecast
Test the boundaries of the system
Find weak spots
…..
159. 159
In the next lectures I will show you how to use simulation in
practice. I will be talking about 2 examples
What will be the effect of the
price increase
Simulation of the whole
Logistics System
160. 160
What will be the effect of the
price increase – Introduction
161. 161
The impact of the price change on your profit will depend on
a few factors
How big the increase is
What your competition
does?
How aware of prices are the
customers?
Price sensitivity
The role of the product you
are increasing the price
Components of the average
basket
162. 162
Imagine that you want to estimate the price change impact for a small
chain of local coffee shops
20 location in Poland
Sell coffee, cakes,
sandwiches and quiches
3 different motives for
going there
164. 164
Imagine that you want to estimate the price change impact for a small
chain of local coffee shops
20 location in Poland
Sell coffee, cakes,
sandwiches and quiches
3 different motives for
going there
165. 165
If we look just at coffee gross margin we should increase the price of
coffee by 9%. If we take into account total gross margin 4% would be a
better choice
0
2 000
4 000
6 000
8 000
10 000
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%
0
5 000
10 000
15 000
20 000
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%
Gross Margin – Only for Coffee vs price increase
In thousands of USD
Gross Margin – Coffee and Cakes vs price increase
In thousands of USD
166. 166
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168. 168
Let’s imagine that you have to optimize the distribution system of a
juice producer located in Serbia
Introduction:
You were employed by a producer of local brand of Cola to carry out an operational audit.
The producer located in Serbia where it has a significant market share. Currently, apart from warehouse next to the production facility
in Subotica, it has two additional distribution centers in Novi Sad and Belgrade.
Currently, the goods are collected from the distribution centers by shops
Tasks:
Calculate the cost of the current system assuming that you have warehouses in all locations
Assume that you use 24-tonnes trucks for transportation
169. 169
Let’s imagine that you have to optimize the distribution system of a
juice producer located in Serbia
Subotica
Novi Sad
Belgrade
Niš
Kragujevac
Prijepolje
171. 171
At the end thanks to the simulation we get the optimal distribution
system
1 611
1 480
1 838
2 431
2 788
2 657
3 015
1 254
Warehouse only in
Subotica
Warehouse only in
Novi Sad
Warehouse in
Subotica and Novi
Sad
Warehouse only in
Belgrade
Warehouse in
Subotica and
Belgrade
Warehouse in Novi
Sad and Belgrade
Warehouse in all
locations
No warehouses
Total cost of end products distribution system
In thousands of USD
172. 172
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174. 174
Revenue Growth
Decomposition analysis shows you what are the components, driving
forces behind certain phenomena. Imagine for a second that we are
analyzing revenue growth of a FMCG company
175. 175
We would like to break it down to following components. This
decomposition helps us see how we managed to grow the
revenues
New customers
New products
Increased sales in existing customers and products
Others
Increased price
176. 176
Decomposition analysis helps you achieve a lot of goals
Pick the biggest contributor
You will know what to focus on
to get the required effect
Check to what extent you were
dealing with one-offs
Create a business model based
on drivers and KPIs
Forecast / Plan the future
results
Evaluate the business / business
unit
177. 177
In the next lectures I will show you how to create and use the
decomposition in practice
LFL analysis for a coffee shops
chain
179. 179
LFL analysis is the analysis of the change in revenues for stores that have
been at least for 12 months. In this analysis through decomposition we try
to pinpoint the most important aspects
Average
transaction
value (ATV)
Average selling
price (ASP)
Traffic % Conversion
Items per
transaction (IPT)
Total # of
transactions
x x
Revenue
x
x
Average first
price
% of first price
Driving KPI
Indicators dependent on others
180. 180
Imagine that you identify the driving factors in LFL growth in the last
few years
20 location in Poland
Sell coffee, cakes,
sandwiches and quiches
15 stores are LFL stores
181. 181
Since in the case of the coffee shops we do not give many discounts we will
stop at the level of Average Sales Price (ASP) and not go deeper
Average
transaction
value (ATV)
Average selling
price (ASP)
Traffic % Conversion
Items per
transaction (IPT)
Total # of
transactions
x x
Revenue
x
Driving KPI
Indicators dependent on others
183. 183
Imagine that you want to estimate the price change impact for a small
chain of local coffee shops
20 location in Poland
Sell coffee, cakes,
sandwiches and quiches
15 stores are LFL stores
184. 184
LFL analysis shows that the biggest impact was from IPT increase.
Second in importance was traffic
Average
transaction
value (ATV)
Average selling
price (ASP)
Traffic % Conversion
Items per
transaction (IPT)
Total # of
transactions
x x
Revenue
x
Driving KPI
Indicators dependent on others
120%
20% 12% 50% 13%
5% Percentage growth between
2019 and 2015
185. 185
LFL analysis shows that the biggest impact was from IPT increase.
Second in importance was traffic
12 960
3 472
2 025
8 679
2 170
29 306
Revenue 2015 Traffic Impact Conversion Impact IPT Impact ASP Impact Revenue 2018
Total LFL sales growth by KPI for stores existing since 2015
In millions of USD
186. 186
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188. 188
In feasibility analysis you want to check whether something is possible or
what are the limitations that you have to consider
189. 189
In feasibility analysis you are given the goal you have to achieve. Now
you need either to find the limitation or alternative ways to reach that
goal
Limitation 1
Limitation 2
Goal
Limitation 3
Limitation 4
Way to achieve
the goal 1
Way to achieve
the goal 2
Way to achieve
the goal 3
Way to achieve
the goal 4
Limitation 1
Limitation 2
Limitation 3
Limitation 4
190. 190
There are plenty of things you can do with feasibility analysis
Identify the limitation you have to
remove to achieve the goal
Pick the most interesting way to
achieve the set goal
Check what are the limitation behind
alternative ways to achieve the goal
Find directions in which you can to
develop your company
Build a strategy for a business unit
191. 191
In the next lectures I will show you how to create and use in
practice the feasibility analysis
How to increase the net profit
by 10%
193. 193
Imagine that you supporting a beauty saloon chain in Easter Europe in
their attempt to increase net profit
50 location in Easter
Europe
They mainly do manicure
They are looking for ways
to increase profit by 10%
194. 194
There are number of ways in which you can increase the profit by
10%
Get new customers
Convince existing ones to come
more often
Upsell and cross-sell customers
during their visit
Introduce new product
Increase prices
196. 196
Imagine that you supporting a beauty saloon chain in Easter Europe in
their attempt to increase net profit
50 location in Easter
Europe
They mainly do manicure
They are looking for ways
to increase profit by 10%
197. 197
Option 1 –
Increase price
Description
Required change to increase net margin
by 10%
Commodity is a basic good used in commerce that is interchangeable with
other commodities of the same type
We increase the price for manicure for all customers
Current price is 25 USD per visit
5% increase of the price
Option 2 –
Increase
Frequency
We increase the frequency of visiting our beauty shop
Currently, an average customer does 1.4 visit per
customer
Increase from 1.4 to 1.6 visit per
customer
Option 3 –
Increase
Customer Base
We increase customer bases size – acquire new customers
Currently, we have 60 K of customers per shop
Increase customer base from 60 K
to 68 K
Option 4 – New
product
We introduce new product
Currently we do not sell any additional product
We need 36% of our customer to
buy the new product
198. 198
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200. 200
Once you come up with an optimal solution you want to see how
sensitive it is to small changes in underlying assumptions. The solution
can be pretty stable….
Current Solution -
7%
Current Solution -
5%
Current Solution -
2%
Current Solution -
1%
Current Solution Current Solution
+1%
Current Solution
+2%
Current Solution
+5%
Current Solution
+7%
201. 201
… or the contrary very volatile
Current Solution -
7%
Current Solution -
5%
Current Solution -
2%
Current Solution -
1%
Current Solution Current Solution
+1%
Current Solution
+2%
Current Solution
+5%
Current Solution
+7%
202. 202
You want to carry out a sensitivity analysis for many reasons
Volatility means risks
You want to prepare for the risk /
hedge against the risk
In some cases you may want to
choose less sensitive option
Sensitivity analysis is basis for
managing a portfolio of projects
Sensitivity analysis helps you
manage expectations
204. 204
As you can see the revenue growth is very sensitive to changes in
IPT but not that much to changes in conversion rate
7 569 8 191 8 813 9 435 10 057 10 679 11 301 11 923 12 545 13 167 13 789 14 412 15 034 15 656 16 278
0,03 0,04 0,05 0,06 0,07 0,08 0,09 0,10 0,11 0,12 0,13 0,14 0,15 0,16 0,17
Revenue growth between 2019 and 2015 depending on the increase of IPT (Items per Transaction)
In millions of USD
Revenue growth between 2019 and 2015 depending on the increase of % Conversion
In millions of USD
10 835 10 990 11 146 11 301 11 457 11 612 11 768 11 923 12 079 12 234 12 390 12 545 12 701 12 856 13 012
0,30% 0,40% 0,50% 0,60% 0,70% 0,80% 0,90% 1,00% 1,10% 1,20% 1,30% 1,40% 1,50% 1,60% 1,70%
205. 205
Management Consulting Techniques,
Tools and Frameworks
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What you will see in this presentation is a part of my online course
where you can find also all the calculations in Excel
Click here to check my course
217. 217
5 examples of business /
financial models in Excel
Practical guide how to check whether the business makes
sense
presentation
Check also my other presentations
219. 219
What is an issue tree and how
to use it?
Practical guide with examples
presentation
Check also my other presentations
220. 220
Excel shortcuts for Management
Consultants and Business
Analysts
Practical guide how to work fast in Excel
presentation
Check also my other presentations
221. 221
Financial Modeling for Business
Analysts and Management
Consultants
Step by step guide
presentation
Check also my other presentations
230. 230
Click to check my course
Management Consulting
Productivity Hacks
$45
$15
If you need more detailed version on productivity hacks you can check
our course on productivity hacks
231. 231
Start and run consulting
company
A practical guide
presentation
Check also my other presentations
232. 232
How to open a successful
restaurant
A practical guide
presentation
Check also my other presentations