Service Segments

Revenues, as the starting point for delivering the business’ profit, is a major potential source of margin enhancements. This can be achieved through revenue, volume and mix productivity planning and optimization over a company’s customer categories, its asset base, and capacity to produce and serve customers in its markets

• Some businesses can generate 100%-150% of their current profit margins from less than 50% of their customers’ base.
• Product line/asset base focused on the generation of greatest economic value can help some companies transform their business performance and results.
• Implementing a revenue plan with the right product and service mix, short & long term, can significantly contribute to a greater profit level.

Capacity should be a central theme in how a company designs, builds and operates its business strategy and productive capacity.  This is critical, not only in terms of its output productivity, but also, the amount of revenues, customer mix, volumes and ultimately margins generated.

• Companies practicing similar technologies and/or using similar asset bases can exhibit as much as 50% difference in profitability.
• Capacity planning, optimization and management can be a major catalyst in contributing to greater profits.
• Focus on capacity, at the center of an operating company’s strategy and judicious resource deployment, is critical for its delivery of competitively superior profits.

A company’s cost structure is critical to its margin performance especially as the company’s business grows more complex, over the years, in terms of volume, mix and service, over allocated assets. Disciplined cost management is imperative for all businesses, as it is a source of cash preservation also.

• Companies that focus on closely monitoring and driving optimum cost and cost structure performance tend to realize as much as 7%-10% margin improvements.
• Improvements gained through supplier classification, consolidation, disintermediation and engagement can yield cost productivity in the double-digit range.
• Even greater performance can be had by engaging suppliers to collaborate on significant transformational cost performance initiatives through specialized product/service use and supplier technology know-how.

Capital expenditures are required to maintain asset reliability, thereby, at a minimum, sustaining profitability levels from prior periods. Capex is also required for capacity expansion, to organically grow the business within the same site or at alternate site with same or new customers.

• Capital is critical to the survival and growth of any business. Discipline in the capital planning, use & deployment processes can yield significant margin improvements over the life of the asset, higher return on investment (ROI) in the planning period and lower Total Installed Cost (TIC).
• Project execution training & support at all levels in the organization is critical in avoiding scope creep, schedule delays and budget overruns.
• Transformational capital is the third dimension of capital investment. One that is focused on empowering the company to deliver greater than competitively expected returns by transforming the way it does business, as compared to other market players.

In the words of the legendary Management Consultant and Author, Peter Drucker, “Culture eats strategy for breakfast.”

• While it is challenge to correlate the value of a talented leader and management team to business results, it is impossible to ignore the fact that talent is the predetermining factor for greater performance.
• A company that invests in talent management will always drive greater business performance.
• A company that has reinforcing planning and strategy setting and implementation processes will inevitably displace competitors who do not.

A successful company grows rapidly, expanding its technological and asset base, adding customers, suppliers and employees of various experiences and talents. It becomes challenging to grow without sacrificing some decisions related to some dimensions of business performance. After years of success, taking time to evaluate where the business is and what future success will look like and what it will take to deliver it, is invaluable. It becomes an imperative.

• Companies that understand that agility and adaptability are key determinants of their greater performance success will outperform its competitors who do not invest in achieving those competencies. This adaptability could be in the form of a focused R&D program that develops next generation products & technologies, that will enhance future revenue and margin mix.
• Renewal can also be had through inorganic sources; namely Mergers, Acquisitions and also Divestitures, with the goal of providing a planned strategic and capital efficacious basis for sustaining and growing future business performance results.
• As importantly as M&A programs, renewal in the form of a well- designed transformational program for a company to deploy, to reinvent its assets and services to exceed customer expectations or unmet market needs is critically important in the process of developing a “moat” around the businesses from competitive market forces and also increasing the company market penetration.