Complexity Products is facing financial difficulties due to rising costs and falling sales and profits. The company's product portfolio has grown too complex, leading to inefficient operations like long lead times, excess inventory, and firefighting. This high-cost structure has made the company uncompetitive against rivals who have lowered prices. The CEO is under pressure to cut costs quickly as cash flows are tight and the last quarter saw sales decline.

1. GENNEMSIGTIGHED OG
PROFITABEL VÆKST

2. EIVIND KOLDING
Kompleksitet er en tilstand, som er let at skabe.
Det er resultatet af den nemme vej, hvor man
lader ting ske uden at tage de hårde beslutninger.
“
2

3. THE CAUSE OF
CATASTROPHES
3
Unlike linear growth, geometric
growth is the mathematical
phenomenon that causes many
aspects of our world to become
catastrophes.
TOTAL
COMPLEXITY
COSTS
COMPLEXITY

4. COMPLEXITY IS
EATING 40%
OF YOUR
PROFIT
4
REVENUE
PROFIT
LINEAR
REVENUE
COMPLEXITY
COSTS

5. THIS IS WHAT
COMPLEXITY LOOKS
LIKE IN A PRODUCT
PORTFOLIO
5

6. SYMPTOMS OF COMPLEXITY
6
FREQUENT CHANGEOVERS
Changeovers are eroding
production capacity and flow
INVENTORY
Excessive stock are consuming
working capital and adding costs
FIREFIGHTING
The company is in a constant state
of firefighting
SHORTAGES
Strained capacity are resulting in
lost sales
LONG LEAD TIME
Lead times and delivery
performance are frustrating
customers
PROFITABILITY
A large portion of products are
unprofitable
SILOED PRIORITIES
The organization are fighting over
priorities and resources
WASTE
Write-off and mark downs on
excessive stock

7. The CEO of Complexity Products is under fire to cut costs, quickly. Cash flows are tight, sales
are down in the last quarter. The product portfolio is looking bloated, and customer
satisfaction is at an all-time low because of long lead times and poor on-time delivery.
Worse, the recent downturn has exposed the company ’s high-cost structure as a competitive
liability: competitors have reduced their prices to levels that the company cannot match. It
caused many to wonder
COMPLEXITY PRODUCTS
7
When growth comes at a cost
“How did we get here?”

8. CASH FLOWS, PROFITS AND PERFORMANCE
3 Years Ago Current Situation
Total revenue 5.000.000 6.500.000
Cost of goods 2.000.000 2.500.000
Gross profit 3.000.000 4.000.000
R&D 4.000 7.000
SGA 2.000.000 3.500.000
Depreciation 100.000 200.000
Operating income 400.000 293.000
Less interest
expense 150.000 200.000
Less taxes 100.000 50.000
Net income 150.000 43.000
8

9. ABENA
65% REDUKTION
ABENA har opnået at sænke
deres restordrer med 65%
EFFEKTIVITET
ABC hjælper med at kategorisere
varerne og gøre arbejdsgangene
langt mere effektive
ØGET TILFREDSHED
Både hos medarbejdere og
kunder er tilfredsheden hos
ABENA øget.
S E V I D E O E N H E R
Koncernen har ca. 1800 medarbejdere, en omsætning på omkring
4 mia. kr.