Quantifying the Impact of Strategic Initiatives
A consumer products manufacturing company had executed numerous strategic initiatives across various functions—including pricing, sourcing and manufacturing operations—and was trying to design a profitability analysis framework that would link company financial performance to the underlying root causes of change. Complicating factors included: the existence of large amounts of data across disparate systems, the lack of reports/models that enabled profitability tracking at the unit level, cost accounting complexities, several one-time and non-recurring factors, and changing business dynamics. Our Accordion team was tasked with the development of a profitability analysis framework that could be transitioned to the Company to enable ongoing gross margin reporting.
Stakeholder Reporting & Strategic KPI Enhancement
Actionable Business Analytics
Budgeting & Forecasting Process Improvement
We worked closely with the Company’s supply chain, commercial, IT, accounting, and FP&A teams to develop a comprehensive framework to analyze the root causes of financial performance. Identified factors included: gross to net, pricing, volume, mix, fixed and variable cost structure changes, operational outsourcing, supply chain & sourcing initiatives, accounting changes (including reserves) etc.
Our team also developed analytical models that could quantify summary drivers, as well as various drill-downs including:
- Product and brand level deep-dives – including revenue changes and margin impacts
- Customer and brand level pricing and volume change analysis
- Plant level fixed and variable cost analysis
- Gross to Net conversions at the divisional, brand and customer levels
- Year-over-year profitability bridges
We presented the profitability analysis framework and results to stakeholders, including management and sponsor, and used the methodology as a guide to bridge to budget assumptions. From there, we documented the updated processes and transitioned analysis to Company personnel.
With our assistance, the FP&A team was able to quantify the root causes of profitability change and normalize for non-recurring and specific factors.