Outside Case In Point's segmentation of cost imporvement ideas by labor, production, and finance, what are some other interesting ways to segment cost-focused profitability ideas?
Hi there,
In general, for determining cost issues, you need to break down the problem into a tree/root-cause analysis and ask the highest level (but specific) questions first! In this way, you essentially move down the tree.
How do you identify where to look? Well, you need to look into whichever of the following 5 make the most sense based on where you are:
https://www.preplounge.com/en/consulting-forum/structure-breakdown-for-costs-7963
https://www.preplounge.com/en/consulting-forum/inventory-costs-how-to-segment-6861
Major Costs - Areas to Cut
FC
VC
The more simplistic and arguably more tailored approach is to take the top 3-5 largest cost buckets of the business and think about how you can reduce the unit cost and/or volume. For example, fuel cost is a major cost item for an airline. Firstly, volume (i.e., consumption) can be reduced through better fuel efficiency programmes (e.g., pilots trying to fly more fuel efficiently, more fuel efficient aircraft, etc.). On the other hand, although limited, you can reduce unit cost by negotiating/changing suppliers or hedging.
Another segmentation I would think about to be expansive in your idea generation is to think about both direct and indirect costs to the business of which there is a sub-segment of procured costs which is you can think about from a supply-driven commercial (e.g., negotiating with suppliers) as well as demand-driven technical (e.g., changing the specifications) and process (e.g., procurement process) levers.
Hello!
I would not recommend you to think about cases in this "generic" format. Instead, I suggest you to post here the real case where you are being asked to problem-solve Cost-Focused Profitability Improvement Ideas, and we can help you out with the ideation.
Hope it helps!
Cheers,
Clara
Thank you so much, Clara! — on Feb 28, 2021
A marketing and publishing company is considering developing a new magazine as it has received information that this business line may be interesting, but is unclear about profitability. Analysis shows that profit per subscription is exactly $0. The next step is to suggest profit maximizing ideas. — on Feb 28, 2021 (edited)
I'm segmenting profit improvement ideas into: 1-Revenue: segmented by short term and long-term ideas 2- Cost: segmented by labor, production, and finance — on Feb 28, 2021
The cost segmentation is the one recommended by Case in Point. I just worry that every candidate will begin to sound the same, and segment in the same ways because we're all using the same prep material. — on Feb 28, 2021
This is why I was curious about alternative ways to segment cost improvement ideas. Thank you — on Feb 28, 2021
I’m thinking about setting up a wine cellar in my basement. The way I see it, shelf space would be divided into two sections: (1) a “drinking” section where I store bottles for my own consumption and (2) an “investment” section where I store bottles that I intend to sell at a profit after they appre ... Open whole case
You have been hired to support the owner of a bike-shop as a business consultant. The bike-shop has suffered a significant revenue decline during the last year, and now the owner would like you to assess the situation and options for the way forward. They want to know last year’s profit, i.e. how i ... Open whole case
Your client, Customlope, is the leader in the US secure envelope manufacturing industry. Banks buy these envelopes for operations such as money deposits and high value transactions. Next year, a new digital technology will reduce the overall number of units sold in the industry by 25%. In the shor ... Open whole case
Your client is a chewing gum manufacturer. The CEO of the manufacturing company wants you to find out why his company is experiencing a declining profit margin. He then wants you to suggest ways to improve his company’s profit margin. Open whole case
Our client is madflix.com, a website similar to Netflix. The biggest difference is however that Madflix targets mainly men and provides a majority of “mad movies”, such as action, horror or science-fiction movies. Clients sign up online, order online, receive the movie and mail it back. Madflix is ... Open whole case
Prepped and Primed 
