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Recent activity on May 16, 2018
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Ekundayo asked on May 16, 2018
Ekundayo

Greetings Everyone!

Can someone suggest books that can explain how to evaluate industry cost structures and how they evolve.

List of Analytics Use cases for different industries

Thank You

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Vlad
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replied on May 16, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Not sure if I understood your question correctly, however the best source of cost structures will be:

1) Cases - you simply solve 50-70 cases and get a broad knowledge of different industries, common pitfalls and questions. The key here - find good partners who already had case interviews with MBB companies

2) Company reports, equity reports, IB roadshow docs - usually have a good overview of company and industries. The most useful sources to understand what's going on with the companies

3) HBS cases - quite useful, but not sure if lot's of them available publically. Probably worth buying

4) Books - one good book about airlines with numbers and industry analysis can give you all needed industry knowledge. Just use the Kindle search

5) News, Industry blogs

You may approach cost-related problems in the following way:

1) Operational math problems. (e.g. Should we increase the speed of the elevator or just buy a second one? How should we reduce the queues? How should we increase the output of a factory?).

Structuring:

  • Usually, you have to look at the process. Even the most complicated systems have the inflows and outflows

The key concepts that you have to learn:

  • Capacity and utilization (both machine and people)
  • Cycle time, Throughput time, Little's Law
  • How the does lowest cycle time influence the production? (Lead time = cycle time of the slowest process)
  • How can we mitigate the bottlenecks with low cycle time? (Buffer, Parallel process, speeding up)

2) Cost cutting cases

Structuring:

  • What is the cost composition and what are 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

The key concepts that you have to learn:

  • Internal / external benchmarking
  • Idle time
  • Core processes (usually are optimized) and the supporting processes (usually are cut)
  • Math structures (Frequency of operations * time per operation)
  • Other useful structures (e.g. people - process - technology)

3) Bottleneck cases (e.g. Huge write-offs in the meat store or bottleneck on the bridge)

Structuring:

You draw a value chain and go through it to find a bottleneck.

E.g. for the meat write-offs it will be:

  • Supplier issues (packaging, meat quality, warehousing)
  • Transportation (Length, fridges)
  • Store (Refrigerators in the warehouse, in-store fridges, demand for the meet)

Feel free to reach me for further help with these cases.

Best

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Ekundayo on May 18, 2018

Thank you your insight Vlad!

Ekundayo on May 18, 2018

I will definately get back to you if i need further information.

Vlad gave the best answer

Vlad

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McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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