Data Requirements by 2t1gEC


									Data Requirements

      1.      Copy of current budgets/ operating plan
      2.      Copy of most recent long term/strategic plan
      3.      Current forecast of P&L for the current year
      4.      Copy of P&L statements for last 5 years
              -        Elements to include: revenues, COS, variances,
      G&A, R&D, S&M, taxes, other charges
      4.      Breakout of cost structure for the last five years
              -        COS - Direct labor
                               Direct material
                               Dther direct costs
                               Variable overhead
                               Fixed overhead
              -        Please list top 5 elements in each category and their %
      of the total for those periods
              -        Please breakout variances under COS to include:
                        -      Rework
                        -      Other labor var
                        -      Scrap
                        -      Mat'l price
                        -      Mat'l usage
                        -      Overhead variances
                        -      Obsolescence/reserves

      5.     P&L breakout by product line if appropriate

      6.     Quality costs by quarter for last 3 years
             -      Rework
             -      Scrap
             -      Quality dept cost
             -      Other quality related labor
             -      Training costs
             -      COS +/- change in WIP inventory
             -      COQ = quality cost/ (cos +/- change in inv)

      7.     Headcount - by major dept/group, last 3 years
             -     Breakdown between direct/indirect labor within groups

      8.     Actual annual cost per employee including benefits (exempt &

      9.     Actual expenses vs. budget for last year by major function dept.

      10.    Balance sheet - current and last five years
       11.     Inventory trend - by month or quarter, last 2 years
               -      Total $/£
               -      Weeks of Inventory
               -      Obsolescence/excess
       12.     Accounts receivable
               -      Total $/£ billed
               -      Any amounts not yet billed, and why
               -      Aging

       13.     Fixed assets
               -      Total $/£
               -      Direct amount vs. any allocated

       14.     PEI trend for last 3-5 years
               -      Total revenues/total people costs

       15.     What is historical trend (5 yrs) on overhead rates?


1.      Please define your terms and acronyms for clarification. Particularly      tell us
what items are included in various components.


1.     When are revenues recognised?
2.     Is this the same time as billing occurs?
3.     If not, please describe the difference.
4.     Are there any concerns around data integrity?
5.     What are the key financial criteria that managers are measured/       rewarded
6.     What control procedures are in place for expenses, direct materials,
       capital? Describe approval process and authorisation limits.
7.     What are the organisations financial goals?
8.     What is the pricing mechanism? Who determines prices?
9.     Describe your costing system
       -        If working with std. costs, how are stds. set? (both labor & mat'l)
10.    Is there any other information that you believe is appropriate to our
       understanding of the total financial picture?
Developing Financial Benefits

¥      Headcount reductions
       $/person/year x headcount reduction (range) = savings          range

       - Reductions based on:          UR's prior experience
                                       prior ratio's at client
                                       specific identified improvements
                                       knowledge of competitive structures

¥      Asset Reductions
       - Inventory
               - WIP reduction based on:     cycle time decreases
                                                     change in work stations
                                                     capacity modifications
               - other inventory based on: change with vendors on
                              timely delivery
                                                     systems management
                                                     inventory alignment

       - Accounts receivable based on:        reductions in days
                                                     improved systems
                                                     timely processing of

       - Can measure above based on one-time $ reductions to                       cash
flow or in annual cost of money savings
               ($ reduced x COM)

        - For inventory reduction, can use inventory carrying cost
                x total inventory reduction( but test with client, it is           much
less precise than cost of money plus other                     specific savings)

¥ Cycle Time Improvements
      - Revenues achieved sooner
             - $ revenue brought forward x cost of money x
      - Lower cost of errors
             - $ scrap or rework impact

¥ Unit Cost Reduction
       - Production volume/year x $/unit    or
       - Sales volume x cost decrease as % of sales
Financial Analysis Techniques

¥        Trends
         -      Revenues
         -      Profits
         -      Profits as % of sales
         -      Inventory levels, turns
         -      Gross margin %
         -      Headcounts, direct & indirect
         -      Scrap , yield %
         -      Cost of quality
         -      People effectiveness index (revenues / people costs)
         -      Elements of cost of sales
         -      ROI
         -      Variances

         -      Look at for the entire business
         -      Break down for business segments where applicable

¥        Paretos
         -       Cost elements
                 -      Material, labour, overhead, G&A
         -       Revenues by product line, customer
         -       Margins by product line, customer
         -       Variances ( labour, material, overhead, scrap)
         -       Inventories

¥ Ratios
       -        Profitability ( ROI, ROS, etc)
       -        Liquidity ( current ratio, acid test, interest coverage,   etc.)
       -        Asset utilization ( inventory turns, days rec., days       pay,

¥        Return on Investment
         -      Compare to competition
         -      Decompose equation
                -      P&L, elements of cost
                -      Assets, liabilities

¥        Sensitivity Analysis
         -       ROI, if change an element by 1%,5%,10%,20%, what is       impact
to ROI

Examples of Intangible Benefits
¥   Improved customer satisfaction
¥   Improved employee morale
¥   Improved price leadership
¥   More effective management ( enhanced skills)
¥   Enhanced market recognition
¥   Improved competitive position
¥   Clearer communications
¥   Design stabilization
¥   Revitalized team-work
¥   Clearer roles & responsibilities
¥   Clearer accountabilities and authority levels
¥   Better management discipline
¥   Development of co-consultants skilled in:
    -       Project management
    -       Planning
    -       Implementation
    -       Team building
¥   Information available at critical times
¥   Improved organization structure
¥   "Change model" for migration
¥   Alignment of top management vision
¥   Heightened cost awareness
¥   Improved management control systems
¥   Effective problem management
¥   More effective interfunctional interfaces
¥   Better cultural integration
¥   Streamlined procedures
¥   Shared vision & commitment throughout organization
Examples of Tangible Benefits

       ¥      Inventory reduction
       ¥      Accounts receivable reduction
       ¥      Cost of money of asset reductions
       ¥      Overhead reductions
       ¥      Direct labour reductions
       ¥      Direct material reductions
       ¥      Revenue enhancements
       ¥      Profit improvements
       ¥      ROI improvements

       ¥     Schedule reduction
       ¥     Manufacturing cycle time reduction
       ¥     Labour efficiencies
       ¥     Quality measures ( yields, rejects, etc )
       ¥     Percent on-time delivery
       ¥     Direct labour/Indirect labour ratios


        ¥      Impacts resulting from secondary effects of direct       efforts in one
of the above areas
               ( ex: direct labour reductions due to material process          flow
        ¥      Any of the quantifiable measures that cannot obtain      data
        ¥ Potential revenue enhancements resulting from:
               -       Earlier introduction of product to market
               -       Increased market share, available market size
               -       Additional products in the marketplace
               -       Extended product life cycle
        ¥ Savings to future products and product lines

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