戰(zhàn)略分析工具_(dá)_分析方法-rcp3_[貝恩咨詢?nèi)坠ぞ遌

1、1Author: Laird ReedCost PositionRelativeMarch 1998Relative Cost Position2Agenda The relative cost position (RCP) conceptApplicationsRCP StepsClient exampleChallengesKey takeawaysRelative Cost Position3Context Relative Cost PositionExperience CurveCost Sharing AnalysisBest Demonstrated PracticeValue

2、Chain AnalysisProfit HuntProduct Line Profitability / Cost Allocation / Activity Based CostingOverhead AnalysisFixed/Variable AnalysisDirect/Indirect AnalysisCostsCustomersCompetitorsCapabilitiesRelative cost position (RCP) is a key analytical tool used for cost analysis.Relative Cost Position4Full

3、Potential OverheadLaborMaterialsClient-currentClient ACompetitor BCompetitor CClient-theoreticalfullpotentialClient-practicalfull potential$1.75$1.45$1.35$1.30$1.10$1.27$0.00$0.50$1.00$1.50$2.00Unit Cost (in Dollars)Bain uses RCP to determine a companys practical full potential cost position based o

4、n a comparison of its unit costs with those of its competitors and an understanding of the clients business.Lowest costPractical costRelative Cost Position5Questions RCP Can Help Answer RCP analysis helps answer both strategic and tactical questions.Strategic questionsTactical questionsIn what areas

5、 do our competitors have the biggest cost advantage?What is driving competitors profitability?How much flexibility would our competitors have in a price war?What is the clients market position?What are the strategic implications of the full potential cost position?Where should we focus our cost redu

6、ction efforts? (e.g., wage rates, amounts of raw material inputs)Which cost elements would decrease significantly with an increase in scale?Which cost elements might benefit from different business practices?Relative Cost Position6Agenda The relative cost position (RCP) conceptApplicationsRCP StepsC

7、lient exampleChallengesKey takeawaysRelative Cost Position7Applications Bain identified $29MM in annual savings for a chewing gum manufacturer. An RCP analysis led to a decrease in raw materials usage, better raw materials purchasing, process improvements, and more efficient inventory management.Bai

8、n helped a client in the diaper business take back market share it had lost; its share increased by 10%the client had a scale-driven cost advantage, but was maintaining a significant price umbrellaBain used an RCP to identify a price above the clients breakeven but below the competitors breakeventhi

9、s strategy had a substantial positive impact on the clients sales and profitsBain prevented a client from making a poor acquisition decision in the bakery products market. The RCP showed that one competitor of the target had a 30% cost advantage and that the target would not be able to close that ga

10、p.Bain has used RCP effectively for many clients. Examples of Bain work include:Relative Cost Position8Agenda The relative cost position (RCP) conceptApplicationsRCP StepsClient exampleChallengesKey takeawaysRelative Cost Position9Approaches There are two ways to approach an RCP: detailed bottom-up

11、analysis or top-down analysis.Detailed bottom-up analysisTop-down analysisBuild up each major cost element for key competitors based on primary dataTriangulate using cost data from multiple sourcesLess accurate, less time intensiveCompare competitors cost structures to clients cost structure at macr

12、o leveldefine key process/business practice differences for major cost elementsmake assumptions about the cost impact of differencesTest assumptions vs. overall financial dataMore accurate, more time intensiveOftentimes we use a combination of these two approachesRelative Cost Position10RCP Steps Ma

13、p the business value chainIdentify cost elements and driversScour information sources for cost data on clients and competitorsBuild, compare, and reality check cost barsCalculate practical full potential cost position and savingsDraw strategic implicationsProcess StepsKey Success FactorsMap value ch

14、ain from end to end (e.g., raw materials to finished product or delivery) Tie costs to operations not accounting categoriesBuild up cost bars category by categoryReality check results against similar companiesFocus on areas with the greatest potential for cost savingsAdjust for clients situation (e.

15、g., different strategy (high quality vs. low quality), different equipment, different plant locations)Determine how to take advantage of the improved cost positionBe persistent and creative, but ethicalDoing an RCP involves several steps:Relative Cost Position11Agenda The relative cost position (RCP

16、) conceptApplicationsRCP StepsClient exampleChallengesKey takeawaysRelative Cost Position12Yummy Gum* - Background * Disguised client caseYummy gum has a solid hitchhiker position in the premium gum category. However, Yummys 1997 returns are well below expectationsYummy has tried to compete by intro

17、ducing new and costly SKUs and increasing advertising. Its main competitor has focused on cost reductionHow can Yummy improve profits in a premium market that requires innovation and strong brand equity?Situation:Complication:Question:Bain used RCP to help its client Yummy Gum improve its profitabil

18、ity.Relative Cost Position13RCP Steps Map the business value chainIdentify cost elements and driversScour information sources for cost data on clients and competitorsBuild, compare, and reality check cost barsCalculate practical full potential cost position and savingsDraw strategic implicationsProc

19、ess StepsKey Success FactorsMap value chain from end to end (e.g., raw materials to finished product or delivery)Relative Cost Position14Yummy Gum - Value ChainThere are six major steps in Yummys value chain:Raw materials purchasingBase makingMixingRollingCuringPackagingUnderstanding the value chain

20、 facilitates an understanding of the cost elementsRelative Cost Position15RCP Steps Map the business value chainIdentify cost elements and driversScour information sources for cost data on clients and competitorsBuild, compare, and reality check cost barsCalculate practical full potential cost posit

21、ion and savingsDraw strategic implicationsProcess StepsKey Success FactorsTie costs to operations not accounting categoriesRelative Cost Position16Yummy Gum - Costs (1 of 7) G&ASales andmarketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80

22、%100%Percent of Total CostsRaw materials are 25% of total costs. Cost drivers and data sources are noted.Quality of ingredientsMix of ingredientsVolume of ingredientsAmount of wasteCost of ingredientsReverse engineeringSuppliersPurchasing managersIndustry reportsCost driversData sourcesRelative Cost

23、 Position17Yummy Gum - Costs (2 of 7) G&ASales andmarketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80%100%Percent of Total CostsPackaging is 7% of total costs. Cost drivers and data sources are noted.Types of packaging usedPackaging mate

24、rialPackage sizeCost per packageReverse engineeringSuppliers10K/annual reportOperations managerCost driversData sourcesRelative Cost Position18Yummy Gum - Costs (3 of 7) G&ASales andmarketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80%100

25、%Percent of Total CostsDirect labor is 17% of total costs. Cost drivers and data sources are noted.Number of workersNumber of hours workedHourly wages/benefitsMix of overtime vs. regular pay10K/annual reportJob postingsPlant tourUnion contractsOperations managerCompetitor phone bookFormer employees

26、of competitorHuman resource managerDepartment of LaborCost driversData sourcesManufacturing processLine speed/throughputPlant tourMachinery suppliersRelative Cost Position19Yummy Gum - Costs (4 of 7) G&ASales andmarketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 199

27、6 Costs$300MM0%20%40%60%80%100%Percent of Total CostsIndirect overhead is 8% of total costs. Cost drivers and data sources are noted.Non direct laborWages and benefitsUtilitiesNumber of machinesCost of machinesAge of machinesMaintenance costsJob postingsPlant tourOperations managersCompetitor phone

28、bookFormer employees of competitorHuman resource managerBlueprintsUtility companyEnvironmental Protection AgencySuppliersSupplier product support departmentWorkshop managerCost driversData sourcesRelative Cost Position20Yummy Gum - Costs (5 of 7) G&ASales andmarketingAdvertisingIndirect overhead

29、Direct laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80%100%Percent of Total CostsAdvertising is 15% of total costs. Cost drivers and data sources are noted.Advertising cost10K/annual reportAdvertising Age (periodical)Leading National Advertisers Ad Dollar SummaryCost driversData s

30、ourcesRelative Cost Position21Yummy Gum - Costs (6 of 7) G&ASales andmarketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80%100%Percent of Total CostsSales and marketing is 20% of total costs. Cost drivers and data sources are noted.Trade p

31、romotionsConsumer promotionsNumber of sales peopleWages and benefits10K/annual reportHuman resource managerMarketing directorInvestor/public relationsSales peopleSales managerJob postingsCost driversData sourcesRelative Cost Position22Yummy Gum - Costs (7 of 7) G&ASales andmarketingAdvertisingIn

32、direct overheadDirect laborPackagingRaw materialsYummy Gum 1996 Costs$300MM0%20%40%60%80%100%Percent of Total CostsGeneral and administrative expenses are 8% of total costs. Cost drivers and data sources are noted.HeadcountWages and benefits10K/annual reportDun & BradstreetCorporate phone booksH

33、uman resource managerJob postingsCost driversData sourcesRelative Cost Position23RCP Steps Map the business value chainIdentify cost elements and driversScour information sources for cost data on clients and competitorsBuild, compare, and reality check cost barsCalculate practical full potential cos

34、t position and savingsDraw strategic implicationsProcess StepsKey Success FactorsBe persistent and creative, but ethicalRelative Cost Position24Data Sources Cost informationFormer employeesUtility companiesFinancial analysisClient sales and marketingIndustry expertsMarket research reportsPlant/site

35、toursIndustry conventionsReverse engineering reportsProduct brochuresGovernment filings and patent filingsSupplier interviewsLiterature searchesLocal newspapersEquipment vendorsCustomer interviewsCurrent employeesLabor unionsThe next step is to scour myriad sources for cost information.Multiple data

36、 sources should be used whenever possibleRelative Cost Position25U.S. Government Sources FederalStateLocalSecurity filingsU.S. Environmental Protection AgencyU.S. Department of LaborEqual Employment Opportunities Commission (EEOC)Patents and TrademarksNational Labor Relations Board (NLRB)Consumer Pr

37、oducts Safety CommissionU.S. Department of CommerceSolid Waste GroupAir Quality BureauOccupational Safety and Health Association (OSHA)State Insurance DivisionEmergency Response Commissionannual inventory filingschemical release formsEmployment Security DepartmentDepartment of Energy ResourcesDepart

38、ment of Environmental ProtectionWater BureauTown HallTax AssessorFire MarshallChamber of CommercePlanning CommissionTown landfill/dumpWaste Water CollectionBuilding InspectorsIndustrial Development BoardCompany debt offeringsCompany 10KOther company filings The following are some U.S. Government sou

39、rces:Relative Cost Position26Conducting a Plant Tour Raw materialswaste, spills, overuse, scrapProcess and methodsquality, yield, alternativesLaborstaffing, supervision, work rules, machine utilizationmaintenance, changeover, downtime, bottlenecks, speedsMaterial handlingflow, number of transactions

40、, number of peopleInventoryamount, damaged, amount of handling, storage efficiency, work in processSchedulinghow organized, flexibility, lead timesPurchasingnumber and variety of sources, standardsYou may want to note the following when conducting a plant tour:Relative Cost Position27RCP Steps Map t

41、he business value chainIdentify cost elements and driversScour information sources for cost data on clients and competitorsBuild, compare, and reality check cost barsCalculate practical full potential cost position and savingsDraw strategic implicationsProcess StepsKey Success FactorsBuild up cost b

42、ars category by categoryReality check results against similar companiesRelative Cost Position28Yummy Gum - Raw MaterialsRaw materials costs are built up by multiplying ingredient costs by the amount of ingredients used for each type of gum. SugarSugar freeBubbleIngredient cost/mgsweetenerbaseflavor

43、colorX mg used per 100 stickssweetenerbaseflavorcolor192mg107mg3mg6mg76mg204mg6mg3mg120mg125mg3mg6mgX 100 sticks produced 199710,202,79361,291,52215,845,631 Total raw material cost: $6.5MM$58.8MM$9.7MM $75.0MM+Relative Cost Position29Yummy Gum - PackagingTotal pac

44、kaging costs are built up by multiplying the cost per inner wrap by the number of sticks in a package and the cost per outer wrap by the number of packages for each type of package. Five stickBig packMultipackNumber of sticks per pack52010Number of packs (1996)x cost per outer wrapping310,286,6500.8

45、908$2.8MM574,604,8891.0268 Total cost (outer wrapping)71,825,6131.3849$1.0MM$5.9MMNumber of sticksx cost per foil wrapping1,551,433,2510.13$2.0MM5,746,048,8900.13Total cost (foil wrapping)1,436,512,2600.13$1.9MM$7.5MMTotal packaging cost$4.8MM$2.9MM$13.4MM$21.1MM+Relative Cost Position30Yummy Gum -

46、Direct Labor (1 of 2)*The wage rate should be adjusted for overtime hours. In this example, no overtime hours were required.Direct labor costs are calculated for each step of the value chain. For the mixing step, costs are driven by the number of hours the machines are running, the number of machine

47、s, the staff per machine, and the wage rate. SugarSugar freeBubbleNumber of mixing machinesX 100 sticks/machine/hourTotal 100 sticks/hour69935,9581996 100 sticks/total sticks/hour1996 operating hours15,845,6312,660X Number of machinesX Staffing per machineX Wage rate*$27.082.636Total direct labor co

48、st (mixing)$1.1MM$8.1MM29421,88410,202,7935,41524.7$27.08$1.4MM1,88491,33912,05161,291,5225,08694.5$27.08$5.6MM12,0515,958+MixingRollingBase makingCuringPackagingRaw material purchasing 100 sticks/machine/hourRelative Cost Position31Yummy Gum - Direct Labor (2 of 2) The direct labor costs for each s

49、tep are then aggregated across the direct labor value chain to give a total direct labor cost of $51MM. Raw material purchasingBase makingMixingRolling/curingPackaging$2.1MM$4.3MM$8.1MM$11.1MM$25.4MMTotal direct labor$51.0MM1996 Direct laborRelative Cost Position32Yummy Gum - Indirect Overhead Overh

50、ead costDriversCostSupervisory laborDepreciationOverhead laborUtilitiesRepair and maintenanceNumber of supervisors by departmentX Wage rates of supervisorAsset register/P,P, & EX Depreciation scheduleNon-direct plant laborersX Wage roles and benefitsWater and electricity cost/unitX Amount used o

51、f eachAverage annual cost/machineX Number of machines$8.2MM$6.2MM$4.4MM$3.0MM$2.1MM$23.9MMIndirect overhead consists of a number of cost categories totaling $23.9MM.Relative Cost Position33G&ASales and marketingAdvertisingIndirect overheadDirect laborPackagingRaw materialsG&ASales and market

52、ingAdvertisingIndirect overheadDirect laborPackagingRaw materialsYummy Gum 1996 costsBolt Gum 1996 costs$3.44$2.80$0.00$1.00$2.00$3.00$4.00Cost/100 SticksYummy Gum - Cost Comparison The Bain case teams analysis of each cost category for Yummy and its major competitor, Bolt, revealed that Yummys $0.6

53、4 cost disadvantage came mostly from raw materials and direct labor. Yummysper unit cost disadvantage$0.64$0.01$0.03$0.05$0.04$0.34$0$0.1723%Relative Cost Position34RCP Steps Map the business value chainIdentify cost elements and driversScour information sources for cost data on clients and competit

54、orsBuild, compare, and reality check cost barsCalculate practical full potential cost position and savingsDraw strategic implicationsProcess StepsKey Success FactorsFocus on areas with the greatest potential for cost savingsAdjust for clients situation (e.g., different strategy (high quality vs. low

55、 quality), different equipment, different plant locations)Relative Cost Position35Yummy Gum - Potential Savings The Bain case team focused on the areas with the largest potential cost savings.Primary drivers:Cost saving levers:Scale purchasingNegotiation with suppliersQuality of ingredientsMix of in

56、gredientsTotal amount used per 100 sticksUnion vs. non-unionLocationBenefits ratesStaffing/machinecomplexitytechnologyNumber of machinesMachine speedRaw materialsDirect laborPriceAmount usedWage ratesStaffingRelative Cost Position36Yummy Gum - Raw Materials Savings Note: *Bain recommended and the cl

57、ient agreed that the client should reduce its supplier baseRaw materials savings account for $10.6MM in cost reduction per year. OpportunityQuantification methodologySavings potentialSweetenerrenegotiate mint oil purchasingrenegotiate sweetener contract$1.0MM$3.0MMpurchasing manager estimatescompeti

58、tors contractsBase and flavoringless expensive ingredientsless ingredients per stick (less flavor per stick)off-the shelf ingredients adjust cost/mg in modeladjust amount used of each ingredient in model Othervolume discounts* $10.6MMsupplier data on volume discountsTotal raw material savings:$1.0MM

59、$5.6MMRelative Cost Position37Yummy Gum - Direct Labor SavingsDirect labor savings, primarily from reducing headcount, are worth $14.0MM per year. OpportunityQuantification methodologySavings potentialCrew reductionseliminate unnecessary stepsconsolidate idle time$6.4MMreduce the staffing/machine in

60、 modelLine speed increasereduce changeovers (re-tooling the machines for a new product)improve technology increase the number of 100 sticks/machine/hour in model Automate some jobscase packingstocking remove or reduce the staffing/machine in model$14.0MM$5.6MMTotal direct labor savings$2.0MMRelative Cost Position38Yummy Gum - Total Cost Savings OtherRaw materi