Upload
june-charles
View
219
Download
0
Embed Size (px)
DESCRIPTION
Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 2 = f (,,, X ) P&L Analysis (Flow Down To Projects) Y = f ( x, x, x … x) Financial Performance Business Processes Market Conditions Mgt. Eff P&L Perform Analysis Comparative Trends Variance to Budget External comparisons Product line data Business Processes With some high-level financial data Cluster(s) Drill down - Why? Y = f ( x, x… x) Project
Citation preview
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Financial Assessment Workshop
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 2
Module Contents
• Financial Assessment Overview• Financial Assessment Example• Annual Report Exercise• CA Exercise
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 3
= f ( , , ,X)
P&L Analysis (Flow Down To Projects)
Y = f ( x, x, x … x)
FinancialPerformance
BusinessProcesses
MarketConditions Mgt. Eff
P&L
Perform Analysis• Comparative • Trends• Variance to Budget• External comparisons• Product line data
BusinessProcesses
With some high-level financial data
Cluster(s)Drill down - Why?
Y = f ( x, x… x)
Project
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 4
Finance Pathway
• Interview Finance Champion- Identify known or obvious project opportunities- If not identified, ask about common project areas (Accounts Receivable,
Inventory, SG&A expense)- Identify other key Finance people to interview
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 5
Finance Pathway
• Product Line Analysis- Get Product Line Financials from
Finance Champion- Look for high margin products –
Potential projects = increase sales volume
- Look for low margin products – Potential projects = improve profitability (cost reduction)
- Look for high-volume products – Potential projects = productivity improvement
Group Product YTD Margin $(000) YTD Net Sales $(000) COSG $(000) GM %
2717 Diclofenac ER 1,044 1,091 47 96%
2127 Clonidine 5,662 6,001 339 94%
Kadian $60,105 $64,896 4,791 93%
3067 Clorazepate 438 471 33 93%
2620 ISMN IR 769 860 91 89%
2221 Hydrochlorothz. 4,600 5,217 617 88%
2051 Diazepam 825 942 116 88%
2358 Proprn./ Hctz. 53 64 10 84%
2027 Alprazolam 10,161 12,173 2,012 83%
3016 Phentermine 699 843 144 83%
2023 Butalb. w/ Asp. & Caf. 366 448 82 82%
2269 Metoclopramide 553 693 140 80%
2657 Metformin 2,998 3,761 762 80%
2672 Spironolactone 8,521 10,809 2,289 79%
2067 Oxazepam 3,374 4,283 908 79%
Jan - Nov 2003
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 6
Finance Pathway
• Financial Ratios Get Financial Ratios for client (from
Finance Champion and from external source – e.g. Yahoo Finance)
Look for high improvement opportunities by comparing client to industry averages
Discuss/review with Finance Champion to identifypotential clusters
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Financial Assessment Example
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 8
Process Utilized
• 4 wk assessment completed at various sites of client
• Interviews completed with all staff members at each location
• Data requested from each location and HQ prior to interviews- Regional balance and P and L sheets
- AR and AP data requested from each location
- Headcount and budget data requested
- Employee survey
- Key performance and financial metrics for each area of the company
- Competitive information and benchmarking analysis
- Gap analysis of client vs. company information
- Value Stream Maps (if available) and any identified gaps
• CTQ Flow Downs completed with each site mgmt team and projectclusters identified
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 9
Project Clusters Identified
• Days Sales Outstanding and Unapplied Cash• AR over 90 days• Shipped not Billed• Company specific project clusters• Billing Quality• Order Fulfillment
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 10
Cluster Data
Days Sales Outstanding (DSO) & Unapplied Cash
What we heard:
1. “Varies anywhere between 43 – 82 days in the different regions
2. “Customers do not pay for a reason …”– Verbal
3. “60 days for AR … target is 40 days”– Verbal
4. “60% of orders kicked back for errors … contact #’s missing”– Verbal
5. “$200 K in revenue impact … can’t get orders to customers”
6. Client Comp. (top 3 causes) Billing Equipment Issues, Need Equipment Invoices, Bad Debt Recovery – AR
7. AR (top 3 causes) overpayment due to CM andduplicate payments
DSO AndUnapplied
Cash
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 11
Dashboard DSO – Global
DSO (AR Balance/ Ave. Days Sales)Region Jan. Feb. MarchNE 46.1 42.1 43.4SE 73.6 77 81.5South 50.7 51.7 47.5SW 54.5 52.4 52.7Total 52.5 52.5 52.4Target 46 46 46
SAMPLE FIN
ANCIAL DATA
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 12
DSO – NE Region
North FY'00 FY'01 FY'02 FY'03
1 26 442 65 503 46 454 49 49 42 545 51 49 25 536 44 39 39 437 47 48 42 468 43 39
9 50 48 36 41
South FY'00 FY'01 FY'02 FY'03
10 66 5211 70 44 47 4312 4813 65 45 46 6214 59 39 5515 37 4216 44 40
17 56 47 41 42
NE - DSO
0
10
20
30
40
50
60
00 01 02 03
DSO
FY DSO00 5601 4702 4103 42
SAMPLE FIN
ANCIAL DATA
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 13
Over 90 By AR Type – January (Region X)
29.8%
33.1% 33.0%
$4,538,09025.6%
18.0%16.3% 16.7%
18.4%
$1,710,22037.7%38.2%
$5,574,69112.3%
10.4%10.4%
8.1% 8.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
September October November December January
SAMPLE FIN
ANCIAL DATA
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 14
Projects Identified
• 70% Reduction in AR over 90 days in Region x• 70% Reduction in DSO and unapplied cash in Region y• 70% Reduction in SG& A in Region z• 70% Reduction in T and L for Region a
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 15
Annual Report Exercise
• Please review the provided annual reports• Please answer these questions:
- What is the organization’s strategy ?- What are their issues ?- What have you learned from this exercise ?
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 16
CA Financial Exercise
• Please review the data provided by CA Finance• What are your conclusions from this data ?• What are your strategies ?
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 17
Objectives Review
Participant should now be able to understand:
• Financial Assessment Overview• Financial Assessment Example• Annual Report Exercise• CA Exercise
Copyright © 2001-2005Six Sigma Academy International, LLCAll Rights Reserved
Presentation Name Pg 18
The following are trademarks and service marks of Six Sigma Academy International, LLC: Breakthrough Lean®, Breakthrough Strategy®, Breakthrough Value Services®, Breakthrough Change StrategySM, Breakthrough DesignSM, Breakthrough DiagnosisSM, Breakthrough ExecutionSM, Breakthrough Sigma LeanSM, Breakthrough Six SigmaSM, Breakthrough Software DesignSM, FASTARTSM, Six Sigma Gold BeltTM, SOLVING YOUR BUSINESS PROBLEMS FOR THE LAST TIMESM. Six Sigma is a federally registered trademark of Motorola, Inc. MINITAB is a federally registered trademark of Minitab, Inc. SigmaFlow is a federally registered trademark of Compass Partners, Inc. VarTran is a federally registered trademark of Taylor Enterprises.
Six Sigma Academy International, LLC
8876 East Pinnacle Peak Road, Suite 100Scottsdale, Arizona 85255
Tel. (480) 515-9501 • Fax (480) 515-9507
www.6-sigma.com