How to structure plant-option case?

Hi,

Several areas to consider:

1. Even before structuring the case, you should start with clarifying questions (1. quantifiable objective - what is exactly too high? Why is he thinking about closing? 2. Business model - in this case maintenance ops model and key maintenance processes)
2. The structure has no diagnostics of the current situation, you are jumping into options directly. Always start with AS IS diagnostics before jumping into options analysis
3. Currently, you are analyzing the existing options and generating new ideas within the same structure. Again, start with diagnostics and don't come up with the solutions from the beginning

I would be happy to help you with a structure, but coming up with a structure without asking clarifying questions (objective, business model / ops model) first is a bad habit

The overall approach to cost-cutting is the following:

• Cost composition and the biggest costs
• Benchmarking of the biggest costs to find the improvement potential
• Process improvements to meet the benchmarks
• Costs and benefits of the proposed initiatives

Feel free to book a session with me. I had a dedicated session on cost-cutting / ops cases where we can go further into details

Best

I think the structure is great! I'd just have two comments:

• Before structuring this case, I would ask for the udnerlying data: What leads the client to the conclusion that maintenance costs are two high? Are there internal/external benchmarks? Is there a maintenanc cost development over time, etc? These data points will help you form a working hypothesis before you move into the structure.
• I would then structure the framework not as Bucket 1 and 2, but as a two step approch that first builds a framework in step one and then uses it in step 2. This will help you separate process from content more clearly.
  • Step 1: Define a short-list of suitable options  - columns of your framework
  • Step 2: Evaluate them on a set of criteria (rows of your framework)

Hello!

Overall I agree with how you started the answer thread -sometimes, it´s about not freezing and starting to problem solve with the interviewer, just as you are doing there-. 

However, it´s fundamental to ask clarifying quesitons and those needed to understand the underlying causes (e.g., if client will close the plant X, first thing would be to understand why, what are the causes for it, in order to orient the issue tree well as soon as possible). 

Hope it helps!

Best, 

Clara

Hey,

Agree with Henning. Also have a look at this recent thread on a very similar topic: https://www.preplounge.com/en/consulting-forum/structureframework-for-cost-cutting-cases-8689

Honestly? I don't like either (sorry)

You need to actually structure this as if it were a real-life project. Where would you really look first? What would you actually say to the client? Can you assign bucket 1 to consultant A and bucket 2 to consultant B with a clear objective in mind?

In regards to Bucket #1....why would we build a new plant? This literally has nothing to do with the problem at hand (don't avoid the problem/solution)

In regards to both, implied in every case is root-cause analysis, solutioning, next steps, risks. These cannot be buckets. Of course we need to clarify options and then think of solutions. However, this is not a framework. The framework is HOW you're going to do this.

So, a better framework would be along the lines of:

1. Breakdown of high maintenance costs through a) competitor benchmarking and b) time-series analysis of costs. Evaluate the highest maintenace costs and determine what can be reduced and by how much
2. Evaluation of plan financials AFTER maintenance cost reduction: What is the new unit economics of the plant? Does the plant now operate with a positive cashflow? If not, anything we can do? No? Then close. If yes, confirm that this is sustainable.