Case study

Fixed cost health check for a chemicals company

Situation

A chemicals company needed to understand how well the company performed on the fixed costs base relatively to the competition, the chemicals industry and other industries. The company engaged a consultant to conduct a fixed cost health check, assess current cost reduction initiatives, and build a high level business case for achieving leaner cost structure. Delivery Partners provided benchmarking and financial modeling support.

Our work

  • Built an updated benchmarking database based on the data available in the firm as well as new sources
  • Conducted a benchmarking assessment of the client against a set of benchmarks for the chemicals industry for most indicators (e.g. Manufacturing, Logistics, R&D, IT, etc.) and across industries for some (e.g. Finance, Law, Procurement)
  • Developed a ROACE model and benchmarked the client’s performance against competition using ROACE tree indicators
  • Helped develop a high level business case summarizing improvement opportunities across all areas of the fixed cost and identified the “size of the prize”

Results

  • Identified what areas of the client business are already performing well, what areas need improvement, and what areas are significantly lagging behind and need the focus of the leadership team
  • Identified 4 key areas and 3 key enablers for the leadership team to focus on
  • Developed a business case for reducing the fixed costs base