Rationalising operational assets can deliver significant bottom line benefits but can also be a daunting task, requiring complex economic decisions while dealing with tough people issues. Decisions require a detailed cross-functional review of the performance and future requirements of a business, using tools that are typically not part of everyday decision making. This is where PIP can help.
Our approach to footprint rationalisation involves three elements:
1. Identifying value
The value of closing (or retaining) assets is a balance of cost, revenue and capital implications. To effectively identify the value in the decision making process, we prepare by:
- Agreeing on the decision criteria in advance. A restructuring decision can be emotionally charged and can easily get bogged down in detail unless the key decision criteria are agreed in advance.
- Building the financial model. The financial model to support a decision must include the key variables and ensure that important assumptions are not hidden in the detail.
2. Securing commitment
PIP focuses on three elements in facilitating decision making and enrolling key stakeholders:
- Raise issues and adopt a fact based approach, ensuring that key assumptions are visible and accepted across the business.
- Recognise the human side of the decision by paying attention to the emotional issues that emerge and ensuring that the team is adequately supported.
- Ensure stakeholders accept accountability for the KPIs underpinning the decision to close (or retain) a site.
3. Realising value
Value can easily be lost in the implementation through delays and cost escalations. Successful implementations are characterised by strong communication plans, tight management of variance to timelines and targets, and a continuous effort to identify opportunities to further increase value. Key elements of PIP’s approach include:
- Drive a culture of accountability through weekly reviews of priority tasks.
- Track agreed Key Performance Indicators to ensure outcomes are in line with expectations and provide early warning of variances.
- Ensure that issues are addressed as they emerge.
- Support staff morale and productivity through effective corporate communications.
- Maintain open communications between departments in order to resolve cross-functional tensions.
- Identify additional opportunities to further streamline operations and enhance value in parallel with the rationalisation process.
PIP's team mobilised our senior management team to get real alignment behind the asset portfolio optimisation process, notwithstanding significant sensitivities. The process, led by the PIP team, produced significant 'actionable' insights, and related decisions, within just eight weeks. PIP has been very effective at structuring issues and working to deliver the most value at the least cost. PIP have been invaluable at helping us understand the true economic drivers of our business, 'how to optimise our assets', and creating an actionable and practical plan to execute on this. [PIP's] ability to engage with senior management also ensured that the recommendations addressed stakeholder concerns, and had the management on-board.MANFRED HOSCHER
