Quantifying Strategic Initiatives for a Consumer Products Manufacturer
The Situation
A consumer products manufacturing company executed numerous strategic initiatives across various functions — including pricing, sourcing & manufacturing operations — and needed a profitability analysis that would link financial performance to the underlying root causes of change. Complicating factors included the existence of large amounts of data across disparate systems, lack of reports and models to enable profitability tracking at a unit level, cost accounting complexities, several one-time, non-recurring factors, and changing business dynamics. Accordion was tasked with developing a profitability analysis framework that could be transitioned to the Company to enable ongoing gross margin reporting.
Services
Stakeholder Reporting & KPI Development
Big Data Analytics
Value Creation Measurement
The Execution
- Worked closely with the Company’s supply chain, commercial, IT, accounting, and FP&A teams to develop a comprehensive framework in order to analyze the root causes of financial performance.
- Identified factors such as gross to net, pricing, volume, mix, fixed and variable cost structure changes, operational outsourcing, supply chain & sourcing initiatives, accounting changes (including reserves), etc.
- 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.
- Presented the profitability analysis framework and results to stakeholders, including the Management and Sponsor, and used the methodology as a guide to bridge to budget assumptions.
- Documented the updated processes and transitioned analysis to the Company’s personnel.
The Results
With our assistance, the Company’s FP&A team was able to quantify the root causes of profitability change and normalize for non-recurring and specific factors. We left the Company with a set of models to analyze and understand the effect of different drivers on margins on an ongoing basis.