The document serves as a practical guide for management consultants on delivering performance improvement projects, focusing on maximizing business profits through structured methodologies. It outlines the stages of project management including diagnostics, implementation, and supervision, as well as the organization necessary for effective retail performance improvements. Key sections include case studies, project types, team size, duration, and pricing considerations for consulting services.

1. 1
Performance Improvement
Projects for Management
Consultants
Practical guide how to deliver a great consulting
project

2. 2
During Performance Improvement Projects you not only have to understand
fast the business but you also have to find ways to improve it’s profits

3. 3
This presentation is organized into 4 sections
How to conduct
Performance
Improvement Projects
A Case Study in
Performance
Improvement
Performance
Improvement Projects
in Retail
Performance
Improvement Projects
in FMCG

4. 4
Thanks to this presentation you will learn how to
conduct fast and efficiently a performance
improvement project

5. 5
Performance Improvement Projects for
Management Consultants
$190
$19
What you will see in this presentation is a part of my online course where you
can find case studies showing analyses along with detailed calculations in Excel
Click here to check my course

6. 6
How to conduct Performance
Improvement Projects

7. 7
How to conduct Performance
Improvement Projects –
Introduction

8. 8
In this section I will talk about the nature of Performance Improvement
Projects and how they should be conducted. We will talk about
The aim of Performance
Improvement Projects
How to deliver
Performance
Improvement Projects
Size of the team needed
to do Performance
Improvement
Duration of
Performance
Improvement Projects
General framework for
managing efficiently a
consulting project
Pricing of Performance
Improvement Projects

9. 9
Aim of the Performance
Improvement Projects

10. 10
To put it simply the aim of Performance improvement projects is to get
higher profits from the business we have today

11. 11
To put it simply the aim of Performance Improvement Projects is to get
higher profits from the business we have today
200
50
50
50
50
50
450
EBITDA now Improvement 1 Improvement 2 Improvement 3 Improvement 4 Improvement 5 EBITDA in the future

12. 12
That’s why you have to do following things during a performance
improvement project
Find potential
improvements
Estimate their value
and costs
Show how those
improvements can be
delivered
Check whether the
improvements fit in
with the strategy
Help implement the
improvements
Make sure that the
improvements are
kept

13. 13
How to deliver Performance
Improvement Projects

14. 14
Time  1-3 months  6-12 months  12-24 months
End product  Power Point presentation
describing the improvements
 Excels with detailed analysis
 Additional tools, manuals,
procedures etc. that will help
with the implementation
 Delivered improvements their
benefits
 Additional tools, manuals,
procedures etc. that were
created to support the
implementation
 Sustained benefit from
improvements
 Additional improvements
identified
Diagnostic Phase
Implementation
Phase
Supervision Phase
Aim  Find potential improvements
 Evaluate the benefits and
costs
 Prepare the implementation
plans
 Do the implementation or
 Support the implementation
 Supervise whether the
improvement don’t disappear
Performance improvement consists of 3 stages. Consulting firm can
participate in different form in each and one of them

15. 15
Find
improvements
Test
improvements
Partial
implementation
Full
implementation
Sustain
improvements
 Find potential improvements
 Evaluate and measure them
 Rank improvements and set
priorities for testing
 Test potential improvements in
controlled environment
 Draw conclusions, learn and
modify till you reach positive
results at least on the assumed
level
 Implement the improvements in
the part of the firm and check
what results they produce
 Learn and modify
 Creating supporting tools,
procedures etc.
 Implement in the whole firm
 Creating supporting tools,
procedures etc.
 Check results periodically
 Build in mechanisms preventing
from returning to old habits
More and more performance improvement becomes a continuous
process

16. 16
Size of the team and duration of
the project

17. 17
Time  1-3 months  6-12 months  12-24 months
End product  Power Point presentation
describing the improvements
 Excels with detailed analysis
 Additional tools, manuals,
procedures etc. that will help
with the implementation
 Delivered improvements their
benefits
 Additional tools, manuals,
procedures etc. that were
created to support the
implementation
 Sustained benefit from
improvements
 Additional improvements
identified
Diagnostic Phase
Implementation
Phase
Supervision Phase
Aim  Find potential improvements
 Evaluate the benefits and
costs
 Prepare the implementation
plans
 Do the implementation or
 Support the implementation
 Supervise whether the
improvement don’t disappear
Just as a reminder performance improvement consists of 3 stages.

18. 18
That’s why you have 4 types of project that you may be doing in
performance improvement fields
Full-blown project
Limited in scope
project
Limited in duration
project
 All phases: Diagnostics,
Implementation, Supervision
 All areas
 All phases: Diagnostics,
Implementation, Supervision
 1 area or part of the area
 1 phase, usually Diagnostics
 All areas
Limited in duration
& scope project
 1 phase, usually Diagnostics
 1 area

19. 19
Size of the project will depend on the type of the project
Full-blown project
Limited in scope
project
Limited in duration
project
 All phases: Diagnostics,
Implementation, Supervision
 All areas
 All phases: Diagnostics,
Implementation, Supervision
 1 area or part of the area
 1 phase, usually Diagnostics
 All areas
Limited in duration
& scope project
 1 phase, usually Diagnostics
 1 area
Description
 24-48 months  17-24 months  1-3 months  1-3 monthsDuration
 Diagnostics: 5-8 FTE
 Implementation: 3-5 FTE
 Supervision: 1-2 ½ FTE
 Diagnostics: 3-4 FTE
 Implementation: 2-3 FTE
 Supervision: 1-1 ½ FTE
 Diagnostics: 5-8 FTE  Diagnostics: 3-4 FTENumber of
consultants

20. 20
General framework for managing
efficiently a consulting project

21. 21
Most consulting project are done in a bad manner. If you prepare properly
you can shorten them, create more value and earn more
 Project Start
Task 1
 Data Gathering
 Analysis
 Presentation & Discussion
 End of the project
2 3 4 5 6 7
 Project Start
Task 1
 Data Gathering
 Analysis
 Presentation & Discussion
 End of the project
2 3 4 5 6 7

22. 22
There are number of thing that you should prepare ahead of time
Issue tree Presentation template Data request for the customer
Teams defined Schedule of meetings
Market research
List of contacts

23. 23
Pricing of Performance
Improvement Projects

24. 24
Companies use different pricing per position. Stronger brands are obviously
more expensive
McKinsey, Bain, BCG etc.
PwC, EY, Deloitte etc.
Local smaller consulting firms
60
30
20
Price per PM per 1
months in thousands of
EUR
30
20
10
Price per BA per 1
months in thousands of
EUR

25. 25
Pricing will depend on the type of the project, stage as well as the
consulting firm
Full-blown project
Limited in scope
project
Limited in duration
project
 All phases: Diagnostics,
Implementation, Supervision
 All areas
 All phases: Diagnostics,
Implementation, Supervision
 1 area or part of the area
 1 phase, usually Diagnostics
 All areas
Limited in duration
& scope project
 1 phase, usually Diagnostics
 1 area
Description
 24-48 months  17-24 months  1-3 months  1-3 monthsDuration
 Diagnostics: 5-8 FTE
 Implementation: 3-5 FTE
 Supervision: 1-2 ½ FTE
 Diagnostics: 3-4 FTE
 Implementation: 2-3 FTE
 Supervision: 1-1 ½ FTE
 Diagnostics: 5-8 FTE  Diagnostics: 3-4 FTENumber of
consultants
 Diagnostics: EUR 100-310 K
 Implementation: EUR 65-
200 K
 Supervision: EUR 33-103 K
 Diagnostics: EUR 55-170 K
 Implementation: EUR 45-
140 K
 Supervision: EUR 18-53 K
 Diagnostics: EUR 100-310 K  Diagnostics: EUR 55-170 KPricing per
month

26. 26
Size of the project will depend on the type of the project
Full-blown project
Limited in scope
project
Limited in duration
project
 All phases: Diagnostics,
Implementation, Supervision
 All areas
 All phases: Diagnostics,
Implementation, Supervision
 1 area or part of the area
 1 phase, usually Diagnostics
 All areas
Limited in duration
& scope project
 1 phase, usually Diagnostics
 1 area
Description
 24-48 months  17-24 months  1-3 months  1-3 monthsDuration
 Diagnostics: 5-8 FTE
 Implementation: 3-5 FTE
 Supervision: 1-2 ½ FTE
 Diagnostics: 3-4 FTE
 Implementation: 2-3 FTE
 Supervision: 1-1 ½ FTE
 Diagnostics: 5-8 FTE  Diagnostics: 3-4 FTENumber of
consultants
 McKinsey level - EUR 3 M
 PwC level - EUR 1.8 M
 Local firm - EUR 1 M
 McKinsey level - EUR 1.8 M
 PwC level - EUR 1 M
 Local firm - EUR 0.6 M
 McKinsey level - EUR 0.6 M
 PwC level - EUR 0.4 M
 Local firm - EUR 0.2 M
 McKinsey level - EUR 0.3 M
 PwC level - EUR 0.2 M
 Local firm - EUR 0.1 M
Total price of
the project*
* Assuming Diagnostics 2 months, Implementation 6 months and Supervision 12 months

27. 27
Performance Improvement Projects for
Management Consultants
$190
$19
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Click here to check my course

28. 28
Performance Improvement
Projects in Retail

29. 29
Performance Improvement in
Retail – Introduction

30. 30
Retail is very competitive and therefore usually has low margins.
During performance improvement projects you can still find a lot
of interesting ways to increase the profits

31. 31
In this section I will show you frameworks and examples how to
improve the profits in Retail
Proposed project
organization
Introduction to the Retail
Business Model
Main Challenges in Retail
Modeling Retail in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in Sales
and Marketing in Retail
Main challenges in Supply
Chain in Retail

32. 32
Performance Improvement in Retail
– Proposed project organization

33. 33
For the Diagnostics phase of performance improvement I would
propose the following set-up
Market
Analyses
Category
Management
Store
processes
Supply Chain Head Office
Project
Manager
 Analyze competition
– growth rates,
profitability,
business models
 Analyze consumer
behavior and trends
 Analyze different
business models &
formats
 Analyze saturation
point in sales offline
& online by markets
/ regions / formats
Description  Analyze
performance of
different categories
– sales and margin
density
 Check the criteria for
selecting products
and allocating space
 Check criteria for
selecting suppliers
 Check the costs with
alternative suppliers
 Analyze efficiency of
category
management team
 Analyze & optimize
main store process
(use 80/20 rule)
 Check what can be
automated or
eliminated
 Check what are the
implication for the
supply chain coming
from the main
strategy, concept,
competition analysis
etc. (i.e. how
responsive or how
efficient the supply
chain has to be)
 Analyze the logistic
processes
 Check costs of
logistics with
alternative suppliers
 Analyze
organizational
structure, reporting
system and
motivation / bonus
system in the Head
Office
 Analyze processes at
Head Office
 Check what can be
automated or
eliminated

34. 34
For the Diagnostics phase of performance improvement I would
propose the following number of people
Market
Analyses
Category
Management
Store
processes
Supply Chain Head Office
Project
Manager
 2 Business Analysts# of People  1 Associate
 1 Business Analyst
 1 Business Analyst  1 Associate
 1 Business Analyst
 1 Business Analyst

35. 35
Main challenges in Retail

36. 36
Let’s have a look at the main challenges in Retail
Margin Management
Stock / Inventory
Management
Multichannel
Strategy
Managing price
across channels
Expansion to new
markets
Saturation of existing
markets
New product
development
Managing customer
experience across
channels
Format evolution
(possible death)
People rotation and
knowledge
management
Disruption esp. from
external forces /
business models
Automation

37. 37
Business model of Retailer –
main drivers

38. 38
The retail business model is driven by some basic KPIs
# Transactions
Average Value
Transaction
Total store revenue Total store costs
x
Store EBITDA
Average Value
Transaction of basic
purchase
Average Value
Transaction of
additional purchase
# of Visitors % Conversion
Rent
People
# of People
Average wages
+
x
x
Others
+
# of sq. m
Fee per sq. m x
% Gross Margin
Gross Margin generated
by the store
x -

39. 39
Let’s move to frameworks

40. 40
Just as a reminder we said we will cover the following issues
Proposed project
organization
Introduction to the Retail
Business Model
Main Challenges in Retail
Modeling Retail in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in Sales
and Marketing in Retail
Main challenges in Supply
Chain in Retail

41. 41
So far, we have discussed modeling of retail in Excel. Let’s move to
frameworks
Proposed project
organization
Introduction to the Retail
Business Model
Main Challenges in Retail
Modeling Retail in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in Sales
and Marketing in Retail
Main challenges in Supply
Chain in Retail

42. 42
Why you need frameworks

43. 43
Frameworks help you decide where to dig for potential
performance improvements

44. 44
In the case of performance improvement in retail we will be talking
about the following frameworks
Issue tree
Increasing sales
framework
Increasing margins
framework
Cost reduction
frameworks

45. 45
Issue tree – introduction

46. 46
Issue tree - general
Area of analysis
Area 1
Problem 1
Problem 2
Possible Reason 1
Possible Reason 2
Possible Reason 3
Possible Reason 4
Possible reasonsSuspected problems
Analysis to be
performed
Analysis 1
Analysis 2
Analysis 3
Analysis 4

47. 47
Issue tree in Retail –
examples

48. 48
When you are talking about retail you should have a look a
the following areas
Retail chain development
Product Range / Category Range
Management
Pricing
Logistic / Supply Chain
Expansion model
In-store process
HR especially trainings

49. 49
Below you can see example of issue tree in Retail Chain
Development
Area of analysis
Retail chain
development
Low growth in sales
Decreasing EBITDA of new stores
Possible reasonsSuspected problems
Analysis to be
performed
Analysis of rents vs comparable
competition
Salaries growth vs rotation – comparison
with competition
Analyze the change in sales after opening
new stores / on-line introduction
Analysis of number of openings vs
availability of new places
Low LFL due to cannibalization (on-
line, new stores in old locations)
Few new openings in locations
Increasing rents due not proper usage
of purchasing power
Growing salaries to keep low rotation
High cost of building new stores
No support from the shopping malls
Not optimized formats, expensive
fixtures
Analysis of contracts with shopping malls
Analysis of cost per 1 sq. m, number of
fixtures, cost per fixtures

50. 50
Issue tree – example – chicken meat producer
Area of analysis
Product Range
Management
Low margin on Category A
Low margin on Category B
Possible reasonsSuspected problems
Analysis to be
performed
Analysis of whom we buy from Category B
and the whole value chain
Analysis of planning and allocation process
Analyze of number of suppliers and their
share in sales vs market
Analysis of Private Labels potential –
benchmarks and potential supplier
Too many supplier of Category A that
undermines your purchasing power
Lack of Private Labels
Usage of middlemen instead of direct
suppliers
Improper planning and allocation by
stores
High inventory cost
Improper planning and allocation by
stores
Non-responsive supply chain
Analysis of planning and allocation process
Analysis of lead times, deliverability on-
time, level of breakage

51. 51
Increasing sales framework –
Retail & B2C Services

52. 52
Let’s have a look at the general framework we can use to increase sales in
Retail and B2C Services
Increase sales
New stores LFL / same store growth New Brands New Channels
Build faster more stores
Create new formats within
existing brand
Enter new markets (regions,
countries)
Bring more traffic to existing
stores
Improve % conversion
Increases Average Transaction
Value (ATV)
Create new retail brands for
the same segment but within
the same product range
Create new retail brands for
different segments but within
the same product range
Create totally new retail
concept (different product
and segment)
Own online
Marketplaces and other
online stores
Franchising
Wholesaling
Increase selling space within
existing stores

53. 53
Increasing margins framework –
Retail & B2C Services

54. 54
Let’s have a look at the general framework we can use to margin in Retail &
B2C Services
Increase gross margin
Improve space
productivity
Renegotiate contracts Price & Discount Policy Private Labels (PL)
Increase the space devoted to
more profitable products
Change the store layout to
have the best sellers in the
best places
Cross-selling of higher margin
products
Renegotiate contracts with
current suppliers
Change the supplier
Get additional money / back
margin from suppliers
Changing price structure
Changing discount policy
Sell more in 1st price (full
prices)
Increase the share of the PL In
a specific category
Introduce PL in new categories
Promote PL outside your retail
channels

55. 55
Cost reduction framework

56. 56
Let’s have a look at the general framework we can use to cut costs
Cut costs
Reduce usage Automate
Optimize process and
costs
Renegotiate contracts
Eliminate fully certain
expenses
Change specification – use less
of certain thing
Change specification – use
cheaper substitute
Standardized the process
using the best practice
Automate with software
Automate with machine
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses and
if needed outsource or buy
outside
Renegotiate contracts with
current suppliers
Change the supplier
Change the form of using (i.e.
owing something instead of
leasing)

57. 57
Cost reduction framework –
Stores

58. 58
When it comes to offline stores there are 2 major cost groups that you
should concentrate on
Labor (the people) Rent (the space)

59. 59
Let’s adjust our general framework accordingly to the stores
Cut costs in the store
Reduce usage Automate
Optimize processes and
costs
Reduce the space needed
Eliminate fully certain
expenses
Change specification – use less
of certain thing
Change specification – use
cheaper substitute
Standardized the process
using the best practice
Automate with software
Automate with machine
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses and
if needed outsource or buy
outside
Estimate the full cost of
keeping stock in the whole
supply chain
Have more frequent deliveries
and move the stock to
regional / central warehouse
Change layout / fixtures /
space arrangement and zoning
Move the process in a
different place

60. 60
Cost reduction framework –
Head Office

61. 61
Headquarters in many cases are significant cost position and you
can find a lot of opportunities for potential performance
improvements

62. 62
Let’s adjust our general framework accordingly to the Head-office costs
Cut costs in Head-office
Reduce usage Automate
Optimize process
and costs
Renegotiate
contracts
Eliminate fully certain
expenses
Change specification – use
less of certain thing
Change specification – use
cheaper substitute
Standardized the process
using the best practice
Automate with software
Automate with machine
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses
and if needed outsource
or buy outside
Renegotiate contracts
with current suppliers
Change the supplier
Change the form of using
(i.e. owing something
instead of leasing)
Org Chart and
motivation systems
Simplify structure i.e. less
directors
Change / align
motivation systems
Change reporting system

63. 63
Let’s move to case studies

64. 64
Just as a reminder we said we will discuss the following things
Proposed project
organization
Introduction to the Retail
Business Model
Main Challenges in Retail
Modeling Retail in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in Sales
and Marketing in Retail
Main challenges in Supply
Chain in Retail

65. 65
So far, we have discussed modeling and frameworks. Let’s move to case
studies
Proposed project
organization
Introduction to the Retail
Business Model
Main Challenges in Retail
Modeling Retail in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in Sales
and Marketing in Retail
Main challenges in Supply
Chain in Retail

66. 66
Overview of analyses and case studies –
performance improvement projects

67. 67
To see the case studies along with analysis in Excel check my online course.
Below a link to the course
How to increase the
profitability of a retail
chain
Product range analysis Inventory analysis
Saturating existing markets
Expansion strategy into
other countries
Convenience stores –
Analysis of tariffs
Groceries – warehouse
optimization
DIY – internal logistics
optimization
Introduction to e–
commerce
Click here to check my course

68. 68
Performance Improvement Projects for
Management Consultants
$190
$19
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Click here to check my course

69. 69
Overview of Sales in Retail

70. 70
Retail is the sales channel for many products, including its own
private label. More and more they also join marketplaces and act
as a multichannel

71. 71
Retail supply chain is not only long and involves many parties but also
is fluctuating a lot

72. 72
Overview of Marketing in Retail

73. 73
In Retail a lot of the marketing activities are around building the right
concept and supporting it via bought media. Customer base is also crucial
Create retail concept
that is a good fit with
your target group
Put it in front of the
customer
Build online presence
and act as a
multichannel
Increase brand
awareness via bought
media
Build loyalty program
and customer base
Increase customer
purchase frequency
via bought media
Use the customer
base to up-sell and
cross-sell

74. 74
For a typical Retailer owned media, especially his stores and products are the
most important marketing channel. Nevertheless, he spends a lot of money
on bought media
Bought MediaOwned Media Earned Media
 TV, radio, newspaper ads
 Paid digital reach: Adwords, Facebook, Pinterest,
Instagram, YouTube, paid digital banners etc.
 SEM
 Leaflets, inserts etc.
 Outdoor advertisement
 Affiliate programs
 Catalogues
 Advertisement at your partner’s media i.e.
Retailer
 Sponsored content
 Product placement
 Influencers (Youtubers, bloggers, celebrities)
 Brand Ambassadors
 Participation in wider loyalty program
 Stores, especially fascia
 If you have private label then your product and
the package
 Your people, including uniforms
 Your web presence especially your website,
fanpages on Facebook and , YouTube channels
 Newsletters, sms and customer base
 Mobile apps and the underlying customer
(contact) base
 Own content and content marketing
 Referral Program
 Your own loyalty program
 Free users (in Freemium and Free trial)
 Partners’ owned media when you do not have to
pay to get in touch with end-consumers
 Partner’s sales force and customer support
 Guest blogging, guest presence in YouTube
channels etc.
 Word Of Mouth especially Virality
 Presence in aggregators of reviews (i.e. Yelp)
 Organic SEO
 Co-branding with FMCG especially in
advertisement
 User Generated Content (post by fans,
recommendations, photos, reviews etc.)

75. 75
Main challenges in Sales and
Marketing for Retail

76. 76
There are number of challenges in the Sales and Marketing in
Retail
Multichannel Price transparency
Price comparison
sites and aggregators
Increasing
importance of
marketplaces
Saturation point in
penetration
LFL growth
Expansion modelPrivate Labels
Big data
Self service in offline
on the level of online
Changing value
proposition
Changing formats
and concepts

77. 77
Overview of Supply Chain in
Retail

78. 78
Retail has become extremely competitive. Retail supply chain has
become extremely complicated due to having some of the
supplier far away, multichannel, increased importance of private
labels and bigger changes in external conditions

79. 79
Retail supply chain is not only long and involves many parties but also
is fluctuating a lot

80. 80
Main challenges in Supply Chain
in Retail

81. 81
There are number of challenges in the Supply Chain in Retail
Managing suppliers
in Far East
Managing your own
brand
Long Supply Chain
and Long Lead Time
Local differences on
markets where it
operates
Automation
Increasing cost of
labor at your country
and China
Supply chain
activities in the
stores
More extreme
weather conditions
Multichannel
New retail concept
including
manufacturing
Big Data for Planning
and Allocation

82. 82
Performance Improvement in Retail
– techniques that you should master

83. 83
Below just the main techniques areas it’s worth mastering to make your
life easier. You will find attached some additional suggested readings
Lean Manufacturing Theory of Constraints Queueing Problems
Modeling in Excel
Main rules on the behavior
of customers in the stores
E-commerce &
marketplaces
Econometrics & Scoring
Models
Category Management in
Retail

84. 84
Performance Improvement Projects for
Management Consultants
$190
$19
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Click here to check my course

85. 85
Retail for Business Analysts and
Management Consultants
A practical guide
presentation
Check also my presentations with more details on retail

86. 86
Performance Improvement
Projects in FMCG

87. 87
Performance Improvement in FMCG
– Introduction

88. 88
FMCG are all branded goods that you consume frequently during
the year. In this category we have food, cosmetics etc. Its
complicated business model provides plenty of opportunities for
performance improvement

89. 89
In this section I will show you frameworks and examples how to
improve the profits in FMCG
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

90. 90
Performance Improvement in FMCG
– Proposed project organization

91. 91
For the Diagnostics phase of performance improvement I would
propose the following set-up
Market
Analyses
Sales &
Marketing
Production Supply Chain Head Office
Project
Manager
 Analyze competition
– growth rates,
profitability,
business models,
technology
 Analyze consumer
behavior and trends
 Analyze different
business models
 Analyze saturation
point
 Analyze different
segments including
non-users
 Analyze other
markets
Description  Analyze channel
performance
 Analyze sales
performance
 Analyze group of
product
performance
 Analyze marketing
efficiency
 Analyze Product
Development
 Analyze production
costs
 Analyze production
batch size vs
demand and costs
 Analyze bottlenecks
 Analyze capacity
management
 Check what are the
implication for the
supply chain coming
from the main
strategy, concept,
competition analysis
etc.. Analyze the
logistic processes
 Check costs of
logistics with
alternative suppliers
 Analyze all planning
processes: sales
forecast, production
and procurement
planning,
 Analyze
organizational
structure, reporting
system and
motivation / bonus
system in the Head
Office
 Analyze processes at
Head Office
 Check what can be
automated or
eliminated

92. 92
For the Diagnostics phase of performance improvement I would
propose the following number of people
Market
Analyses
Sales &
Marketing
Production Supply Chain Head Office
Project
Manager
 1 Business Analysts# of People  1 Business Analyst  1 Business Analyst  1 Associate  1 Business Analyst

93. 93
Introduction to FMCG
Business Model

94. 94
We can be talking about 2 different models here
Branded FMCG with strong brand
awareness
Private labels
Private
label

95. 95
Main challenges in FMCG

96. 96
For branded FMCG product I propose to have a look at the
following aspects
Brand Awareness
Reach (Weighted and
numeric distribution)
Your strategy across
many channels
Managing price
across channels
Leveraging the brand
Spreading beyond
original target group
Product lifecycle
Managing customer
experience across
channels
Efficiency of
marketing activities
Lifecycle of your
target groups
Seasonality

97. 97
Drivers of FMCG Model

98. 98
The FMCG business model is driven by some basic KPIs
# sold
Unit production
cost
Gross Margin Head office
Operational profit
Fixed Cost /
Quantity produced
Unit variable cost
+
Cost of sales &
marketing
Net Margin
-
-
Average price
Unit Gross Margin
-
x
Market share Market size

99. 99
Let’s move to frameworks

100. 100
Just as a reminder we said we will cover the following things in this
section
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

101. 101
So far, we have covered project organization, modeling. We will move
now to frameworks
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

102. 102
Why you need frameworks

103. 103
Frameworks help you decide where to dig for potential
performance improvements

104. 104
In the case of performance improvement in FMCG we will be talking
about the following frameworks
Issue tree
Increasing sales
framework
Cost reduction
frameworks

105. 105
Issue tree – introduction

106. 106
Issue tree - general
Area of analysis
Area 1
Problem 1
Problem 2
Possible Reason 1
Possible Reason 2
Possible Reason 3
Possible Reason 4
Possible reasonsSuspected problems
Analysis to be
performed
Analysis 1
Analysis 2
Analysis 3
Analysis 4

107. 107
Issue tree example for a
FMCG firm

108. 108
When you are talking about FMCG you should have a look a
the following areas
Marketing
Product Development
Managing Sales Force
Production
Supply Chain including Planning & Sourcing
Customer Data Analysis
Competition Analysis
Expansion Model

109. 109
Below you can see example of issue tree in FMCG – Sales Force
Management
Area of analysis
Sales Force
Management
High sales at the end of the month
Different market shares in regions
Possible reasonsSuspected problems
Analysis to be
performed
Analyze the motivation system
Analyze channels per region
Analyze the motivation system
Analyze sales forecasting, planning of
production and return rate
Bonus system with a high threshold
that incentives pushing the product
The firm is not producing what the
customer wants
We have set-up too low targets for
some regions
Some regions have different channels
High cost of sales force in relation
to sales
We have inefficient sales team
We have too many overlapping sales
representatives
Drive with sales force team members,
analyze processes, tools, efficiency
Analyze sales per sales representative and
compare with competition

110. 110
Below you can see example of issue tree in FMCG – Production
Area of analysis
Production
We have high production costs
related to labor
Inventory level are extremely high
Possible reasonsSuspected problems
Analysis to be
performed
Analyze production planning and
procurement, sales forecasting
Analyze how work is controlled on the
production floor
Analyze solution used by other firms,
especially automatization
Check the Overall Labor Efficiency (OLE)
and look for bottlenecks
A lot of people are required for some
of the processes
We use the people inefficiently
We are very bad at planning and there
is no sales forecasting
The machines / part of production are
not linked properly
We have high waste cost
We are using wrong technology or
machines
We are using wrong materials
Analyze waste by technology and
machines. Check planned vs actual
Analyze cost of production by different typ
of materials

111. 111
Increasing sales framework –
Consumer Goods

112. 112
Let’s have a look at the general framework we can use to increase sales in
consumer goods
Increase sales
Increase distribution Increase Product Range Price & Discount Policy
Increase demand for
your product
Bigger share on the shelves in
the current distribution
Better penetration of existing
channels
Enter new channels
Enter new markets (regions,
countries)
New products within existing
categories
New categories within
existing brands
New brands
Changing price structure
Changing discount policy
Changing prices formula
Increase consumption per
capita
Shorten the lifespan of the
product
Find new customers

113. 113
Cost reduction framework

114. 114
Let’s have a look at the general framework we can use to cut costs
Cut costs
Reduce usage Automate
Optimize process and
costs
Renegotiate contracts
Eliminate fully certain
expenses
Change specification – use less
of certain thing
Change specification – use
cheaper substitute
Standardized the process
using the best practice
Automate with software
Automate with machine
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses and
if needed outsource or buy
outside
Renegotiate contracts with
current suppliers
Change the supplier
Change the form of using (i.e.
owing something instead of
leasing)

115. 115
Cost reduction framework –
Sales & Marketing in FMCG

116. 116
Let’s have a look at the general framework we can use to cut costs
Cut costs & improve
efficiency
Sales Force Costs
Optimize allocation of
money on marketing
Optimize other processes
and costs
Renegotiate contracts
Standardized the process
using the best practice
Improve efficiency of their
actions
Optimize process and costs
Calculate efficiency and
capacity of each channel
/method
Allocate money according to
strategy, efficiency and
capacity
Improve the efficiency of main
channels
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses and
if needed outsource or buy
outside
Renegotiate contracts with
current suppliers
Change the supplier
Change the form of using (i.e.
owing something instead of
leasing)
Automate with machine or
machine

117. 117
Cost reduction framework –
Head Office

118. 118
Headquarters in many cases are significant cost position and you
can find a lot of opportunities for potential performance
improvements

119. 119
Let’s adjust our general framework accordingly to the head-office costs
Cut costs
Reduce usage Automate
Optimize process
and costs
Renegotiate
contracts
Eliminate fully certain
expenses
Change specification – use
less of certain thing
Change specification – use
cheaper substitute
Standardized the process
using the best practice
Automate with software
Automate with machine
Simplify and optimize
processes
Replace Opex with capex
(analyze Opex vs capex
tradeoff)
Make it or buy it analyses
and if needed outsource
or buy outside
Renegotiate contracts
with current suppliers
Change the supplier
Change the form of using
(i.e. owing something
instead of leasing)
Org Chart and
motivation systems
Simplify structure i.e. less
directors
Change / align
motivation systems
Change reporting system

120. 120
Let’s move to case studies

121. 121
Just as a reminder we said we will cover the following things in this
section
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

122. 122
So far, we have covered project organization, modeling, frameworks.
We will move now to case studies
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

123. 123
Overview of analyses and case studies –
performance improvement projects in
FMCG

124. 124
To see the case studies pleas check my online courses. You will find
there also detailed analyses in Excel
Sales force efficiency
analysis
Finding the white spaces How to expand the brand
Chicken Producer – Fuel
usage
Juice Producer – Simulation
Optimal production batch
analysis – FMCG
2–stage production
planning
Click here to check my course

125. 125
Performance Improvement Projects for
Management Consultants
$190
$19
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Click here to check my course

126. 126
Let’s move to main challenges

127. 127
Just as a reminder we said we will cover the following things in this section
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

128. 128
So far, we have covered project organization, modeling, frameworks, case
studies. It’s time to discuss main challenges
Proposed project
organization
Introduction to the FMCG
Business Model
Main Challenges in FMCG
Modeling FMCG in Excel Useful frameworks
Examples of analyses and
case studies from
performance improvement
projects
Main challenges in sales
and marketing in FMCG
Main challenges in Supply
Chain in FMCG

129. 129
Overview of Sales in FMCG

130. 130
FMCG are all branded goods that you consume
frequently during the year. In this category we have food,
cosmetics and other similar products

131. 131
FMCG sells mainly through retailers. Some go into independent
distribution via own website and own stores

132. 132
Overview of Marketing in FMCG

133. 133
FMCG is pushing the customer through phases that make him at the end
loyal customer
Create brand
awareness
Teach people how to
use your products
Get the product in
front of the potential
customers
Convert the brand
aware people into
customers
Retain the customer
Up-sell and cross sell

134. 134
Therefore, marketing concentrates on 7 tasks
Make people aware of the
brand and product
Get the product in front of
him
Find and conquer niches
Expand the product
Expand the brand
Manage price, price
perception and discounts
Create mechanisms that will
sell / market on their own

135. 135
FMCG is probably the most advanced when it comes to marketing efforts
and uses practically every way to get its message across. Mainly uses paid
methods
Bought Media Owned Media Earned Media
 TV, radio, newspaper ads
 Paid digital reach: Adwords, Facebook, Pinterest,
Instagram, YouTube, paid digital banners etc.
 SEM
 Leaflets, inserts etc.
 Outdoor advertisement
 Affiliate programs
 Catalogues
 Advertisement at your partner’s media i.e.
Retailer
 Sponsored content
 Product placement
 Influencers (Youtubers, bloggers, celebrities)
 Motivation schemes for the sales force of your
Partner
 Brand Ambassadors
 Store-in-Stores (offline and online)
 Participation in wider loyalty program
 Your product and the package
 Your site - your factory, office, stores
 Your people
 Your web presence especially your website,
fanpages on Facebook and , YouTube channels
 Newsletters, sms and customer base
 Mobile apps and the underlying customer
(contact) base
 Own content and content marketing
 Referral Program
 Your own loyalty program
 Free users (in Freemium and Free trial)
 The products of your partners (powered by)
 Partners’ owned media when you do not have to
pay to get in touch with end-consumers
 Partner’s sales force and customer support
 Guest blogging, guest presence in YouTube
channels etc.
 Word Of Mouth especially Virality
 Presence in aggregators of reviews (i.e. Yelp)
 Evangelists and
 Organic SEO
 Social Following platforms i.e. Quora
 Co-branding (Intel inside)
 User Generated Content (post by fans,
recommendations, photos, reviews etc.)

136. 136
Overview of Supply Chain in
FMCG

137. 137
FMCG are all branded goods that you consume
frequently during the year. In this category we have food,
cosmetics and other similar products

138. 138
FMCG supply chain is pretty complicated on the outbound side – the
distribution to end-customers

139. 139
Main challenges in Supply Chain
in FMCG

140. 140
There are number of challenges in the Supply Chain in FMCG
Many suppliers
Dedicated
transportation
modes
Many Channels of
sales
Minimum Order
Quantity
Direct DistributionMultichannel
Local version of the
product
Shelf Life
Added value services
and products
Distribution through
Marketplaces
Customization

141. 141
Overview of Production in
FMCG

142. 142
Let’s see what kind of production you can have in FMCG
Types of production
Tubes
1 main materials
many products
Highly automated
multi stage
Semi-automated
Juice / Milk / Jam
Vodka / Beer
Salt
Meat
Fish
Automate with machine
Cookies
Prepared food
Pharmaceuticals
Toys
Labor intensive
Fashion

143. 143
Main challenges in Production
in FMCG

144. 144
There are number of challenges in Production in FMCG
Automation Small Batches
Customization &
Personalization
Sourcing of needed
materials
Changes in demand
due to consumer
trends
Capacity
Management
Issues related with
Environmental
Impact
Change in technology
due to customer
trends (i.e. gluten)
Peak management
Production for 3rd
parties

145. 145
Performance Improvement in FMCG
– techniques you should master

146. 146
Below just the main techniques areas it’s worth mastering to make your
life easier. You will find attached some additional suggested readings
Lean Manufacturing Theory of Constraints Product Development
Modeling in Excel
Marketing especially Digital
Marketing
Critical Chain Method
Category Management in
FMCG
Strategy – especially used
by Retailers and
marketplaces
Product Digitalization

147. 147
Performance Improvement Projects for
Management Consultants
$190
$19
For more details and content check my online course where you can find case
studies showing analyses along with detailed calculations in Excel
Click here to check my course

148. 148
Case study in Performance
Improvement

149. 149
Case study in Performance
Improvement – Introduction

150. 150
To get the most out of this section please first solve the case on your own
and only after that proceed with next lectures.
Read problem set /
Case study
Pause the course and
solve the problem on
your own
Go to next lectures
where you will find the
step by step solution
1-2 hours to find the
problems
2-3 hours to estimate in
Excel improvements

151. 151
Case study in Performance
Improvement – General Information

152. 152
You were hired to support the new CEO of Canned Foods Incorporated
in performance improvement project
Their profitability is below
competitors
They have problems with liquidity
They sell 4 groups of products:
peas, corn, mushrooms and tomato
They have 1 factory in Poland with
782 people
Almost everything is sold on the
domestic market

153. 153
You have 2 goals to achieve
Find ways to increase
profit
Find ways to improve
liquidity

154. 154
Go to the online course for more details. You will find attached to the
course important resources with data describing the case
Description of the case
in pdf.
Data in Excel
Click here to check my course

155. 155
Performance Improvement Projects for
Management Consultants
$190
$19
Go to the online course for more details. You will find attached to the
course important resources with data describing the case
Click here to check my course

156. 156
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