Products and Services :

A Path Forward for You—Our Consulting Services

Allan Consulting can help you to understand developing market trends and develop strategies to optimize your position, regardless of whether you are a producer of printing papers, a buyer, or an investor in printing papers or its customer industries. From the very shortest consulting engagements to the very longest, get in touch with us to explain what you are looking for, and we will start to chart a path forward together.

Examples of consulting projects Allan Consulting has worked on in the past year:

Mergers, acquisitions, asset sales: due diligence.
Putting two companies together in the best way possible: developing a joint marketing strategy for NewCo.
Marketing strategy: the role of price and the optimal customer portfolio in achieving the desired operating margin.
Regional marketing strategy: what should a specific newsprint mill’s regional sales footprint logically look like?
Purchasing strategy: how to buy paper at a price the buyer can afford through the cycle; anticipating the peaks and valleys of pricing.
Newsprint 101: introducing a new financial player to the fundamentals of the business.
Helping a potential investor to identify value in the newsprint and uncoated groundwood spaces by highlighting participants’ competitive strengths and weaknesses.

Customer Portfolio Value Audit™

Allan Consulting’s newest service has already generated concrete value for clients. The Customer Portfolio Value Audit™ can be used in a variety of critical business situations:

When you need to optimize the performance of your existing assets.
When you are considering a realignment of an assets product portfolio through an operational change or major capital investment.
When you are preparing to sell an asset, and need to understand what kind of value you are offering to the potential buyer.
When you are considering buying or investing in an asset, and want to understand the value it is presently creating as well as its potential.

Most of the data needed to perform the Customer Portfolio Value Audit™ will found within the client’s organization. However, many clients find that an independent point of view can clear away legacy practices and viewpoints that have impeded dispassionate analysis.

The first step in understanding an asset’s potential for value creation is to develop a set of metrics that take you beyond a simple margin analysis, to a deeper understanding of the various ways an asset can contribute to an organization. For example, an asset can:

Make a direct economic contribution, covering operating costs, cost of capital etc.
Provide stability by serving a customer base which requires a reliable volume over time.
Provide flexibility by serving customers requiring a variety of product parameters.
Provide opportunity by being capable of conversion to manufacture other products.
Provide opportunity by enabling the company to become a more efficient, learning organization, generating new best practices which can elevate the state of play for the entire company.

Customers should be seen as assets which are capable of doing many of the same things. To analyze the present and potential value creation of a customer portfolio, it is important to consider what a customer can do for a company – for example, by listing the company’s operational strategies and then considering how customers contribute to each of them. Here’s an illustration:

Imagine a company which wants to improve operating margins, reduce volume volatility, build switching costs into its customer relationships, and build in barriers to entry to its part of the market. If those are all key corporate goals, then each individual customer should be evaluated according to how it contributes to each goal.
In some cases, the metrics to use will be obvious; in others, sales people might have to be guided to create relative rankings. It is best to use a limited number of metrics to evaluate customers: 4-6 is probably ideal. Each metric should be defined clearly and the definition commonly understood in the organization
Each metric should be weighted according to management’s view of the relative importance of each metric. For example, management might choose a customer’s cash contribution and the estimated potential for margin improvement as the two most important metrics, and might assign a relative weighting of 40% to the first and 20% to the second, leaving other customer metrics to contribute 40% of the total.
When a customer’s performance against all the key metrics is added up, a weighted preference score results, indicating which customers add the most to the organization – where growth should be sought, which customers should be maintained at present volumes, and which should be reduced or eliminated as customers.

When Allan Consulting conducts a complete Customer Portfolio Value Audit™, it goes through a series of 10 steps:

All available, relevant operational metrics are assembled. Where useful metrics do not exist but can be created, this process is initiated. For example, if a company is not looking at its customers according to a metric similar to customer margin/machine hour, it will be encouraged to begin tracking this number. Decisions will be made about the use of standard costs versus customer-specific actual costs. The fullest possible data base of relevant operational numbers will be assembled to set the stage for subsequent analyses.
A customer margin analysis will be performed, comparing individual customer margins against current averages for the asset as well as against potential margins for each customer – for example, how would the margin change if freight mode were optimized, and what would be needed to accomplish that.
Key value analysis will be conducted. In this step, we review with management the company’s strategies, operational goals and style, top-level closely-watched numbers, and corporate culture, to identify 4-6 metrics that will be used to rank customers. As with all other steps of the Customer Portfolio Value Audit™, this is an iterative process in which management’s complete buy-in and involvement is required, since the process will only generate meaningful results if it is adopted by the company as “how we do business”.
With key values identified and operational metrics available, a ranking of customers will be performed. The ranking will be discussed with management and sales and the process will be recalibrated to reflect any customer-specific nuances that can produce a more useful result.
Once the ranking process is well understood and refined, a similar ranking of prospects will be conducted, identifying desirable additions to the customer portfolio, and likely volumes and other metrics associated with each prospect.
Based on the ranking of customers and prospects, and associated with metrics, today’s customer portfolio can be compared with a potential customer portfolio, and incremental value creation can be estimated.
A volume risk assessment is conducted as a companion of the potential customer portfolio, identifying a worst-case given reasonably likely market scenarios – among them, a base case scenario in which the company doesn’t change any of its present actions.
Using current and potential customer portolios, a share analysis will be conducted, looking at the asset’s share of relevant universes: total product market, geographic region, target customers, an economic segment of customers, or other specific subsets such as all customers requiring specific product parameters.
An operational synergy analysis will be performed. This step looks for ways in which the existing customer portfolio causes operational inefficiencies within the organization, and where such inefficiencies can be mitigated. For example, a particular customer may require an unusual amount of technical service at its pressrooms. In some cases, this may simply be the nature of the customer. However, in other instances, it is possible that a concentrated, high-intensity joint project between the customer and the producer’s staff can identify and break through blockages, producing a smoother working relationship in the future. In most cases, the information about problems – and related solutions – will be found through interviews and conversations within the company’s staff, following a thoughtfully crafted disciplined approach.
As a final step, an optimization strategy will be created, reflecting the learning from each of the preceding steps as well as Allan Consulting’s discussions with management and sales during the Customer Portfolio Value Audit™ process.

For further information about the Customer Portfolio Value Audit™, please click on Contact Information below to get in touch with David Allan.

Contact information