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The Industrial Products Team supports manufacturing companies in their efforts to restructure and to realize profitable growth. In their project work, Oliver Wyman combines in-depth industry expertise with specialized skills that have been developed during hundreds of projects. The acquired knowledge has largely been documented and structured by industry-specific studies and benchmarking databases that are available to our clients.
Our teams of experts realize fast-acting and sustainable impact and change for industrial enterprises all over the world.
On average, direct product costs amount for two-thirds of manufacturing companies’ total costs. Reducing these costs is therefore the most important component of any effort to significantly improve a company's total cost base. The Oliver Wyman product cost reduction approach is based on deep industry expertise and contains a mixture of methods that are tailored to the specific requirements of the client. It encompasses strategic approaches like product portfolio management or modularization as well as operational levers like the optimization of direct and indirect material purchasing or the lowering of costs through modifications of the product or changes in the supply chain. Experience has shown that the highest savings can be realized when the steps taken are framed and executed in a multifunctional project that incorporates purchasing, quality control, R&D, engineering, production, and sales.
The Industrial Products team at Oliver Wyman has a long and proven track record in optimization of product costs and in sourcing:
Oliver Wyman has worked on a wide range of product cost reduction projects in manufacturing companies. Our unique contribution comprises the specific industry knowledge and the transfer of best practices from other cost-intensive industries:
In their race for efficiency, manufacturing companies are facing a disruptive and demanding environment but are also struggling with internal hurdles (e.g., a lack of skilled resources, motivation, and management commitment). Despite unceasing improvement programs, companies still don't succeed in spreading and sustaining performance improvement. The challenge is to design an implementation strategy that both delivers an outstanding level of performance and also changes standards and behaviors to sustain performance.
Oliver Wyman has designed a proven methodology based on five pillars; it has been applied in a wide range of businesses and environments:
In such programs Oliver Wyman has the proven capabilities to support a wide range of measures to maximize client value. We are:
There are times when, in addition to the realization of existing cost-reduction projects, a “quantum leap” in cost reduction or efficiency improvement is necessary. And finding a balance between ambitious, far-reaching cost-cutting objectives and improvement of the underlying processes is critical to improving a company’s operations, motivating its high performers, and sustaining an efficiency initiative over the long term.
Our in-depth industry expertise allows us to individually adapt optimization levers to a client’s specific market requirements and competitive environment. Starting with the company-specific situation, we apply relevant benchmarks and best-practice know-how to the formulation of effective measures. Ongoing monitoring of cost savings ensures lasting and durable savings.
The Industrial Products team at Oliver Wyman has a long and proven track record in optimization of overhead costs:
Oliver Wyman has worked on projects targeting overhead cost reduction for many companies of different sizes. Our unique contribution comprises a combination of market and industry knowledge as well as methodological expertise:
Backed by its years of experience, Oliver Wyman acts as a trusted adviser to companies and investors as they take on the challenges of strategic, operational and financial restructuring. In the process, we place a particularly high priority on developing sustainable restructuring concepts that address both the market and competitive environment as well as specific factors for success. Oliver Wyman acts as a coordinator for restructuring processes, as an objective expert and a neutral third party who provides quantitatively supported advice to address the interests of management, shareholders, lenders and other stakeholders.
When an outside-in assessment of a company in distress is required, Oliver Wyman can leverage its deep industry expertise and extensive restructuring experience to identify risks and opportunities for a company, which are then used to assess business plan revenues, profits and cash flows. Special attention is paid to the viability of the business design and the ability of the company to win against its competitors.
Using benchmarks and best practices from industry peers and building upon our toolbox of methods to achieve operational excellence, we also give concrete recommendations on how to improve profitability and liquidity—often even beyond what was planned in the original business plan.
Hence, our IBRs are not only formal reviews but create real value for the company going forward.
In devising its sustainably successful restructuring approaches to a client situation, Oliver Wyman draws on its deep base of knowledge about market trends and specific success factors, its far-reaching expertise about operational excellence methodologies as well as its solid grasp of the needs and options of various financial sponsors (i.e., equity/borrowed capital). We take an integrated approach in this work. Our restructuring concepts are based on four pillars:
Oliver Wyman has a broad base of knowledge about industries and methodologies that it uses to help carry out restructuring projects in a quantitatively-based and methodical manner. This includes:
Careful monitoring of the project's implementation is the key to its success. Another vital step is to keep all stakeholders up to date about the status of implementation and to transparently report potential problems. This enables barriers to implementation to be identified at an early stage and then removed. Oliver Wyman assists with the implementation of restructuring programs in a number of ways, including:
Profitable growth and the continuous adjustment of the business model are a key challenge for the management of manufacturing companies. Value Driven Business Designs developed by Oliver Wyman are based on the analysis of value shifts within an industry. This analysis enables the identification of future profit zones that are systematically developed by means of alternative business models. Successful strategies for manufacturing companies can assume very different types: from a strict focus on component manufacturing, to downstream strategies concentrating on comprehensive solutions for the customer up to innovation strategies.
The Oliver Wyman Industrial Products team has extensive experience in the implementation of new business models in manufacturing industries. This comprises of:
Oliver Wyman has developed and successfully implemented sustainably profitable growth strategies for many companies. Our contribution is our unique combination of distinctive industry know-how and comprehensive methodological expertise:
The sales & after-sales activities of many companies operating in the industrial environment still hold significant improvement potential. Management still focuses too strongly on development, production, and assembly (upstream segments) and neglects other segments. Because purely technology-based product differentiation is becoming increasingly difficult and also harder to communicate, management must emphasize sales & after-sales topics more and more. The most important areas of action are utilization of after-sales-opportunities by downstream businesses like spare parts, service, financing, and maintenance as well as increasing sales effectiveness.
In many instances, after-sales is not industrialized as a separate business. Consequently, it is not supported, operated, and managed by the appropriate (global) processes, organization, leadership, systems, and tools. By implementing the appropriate downstream business designs, it is possible to achieve EBIT margins of 10 to 20 percent – a fact that most companies are aware of. However, these companies find it difficult to realize their earnings and growth potential. Only 25 percent of companies earn more than 20 percent of their revenue with downstream business activities (spare parts, service, financing, maintenance, etc.).
Oliver Wyman has developed a systematic approach for identifying and evaluating downstream opportunities. The following are the core elements of this approach:
A second large area of action for industrial companies is to improve the performance of their sales operations (sales effectiveness). This is rather a dire necessity than an opportunity. Customers have become more demanding and increasingly require a sales process that is more geared to providing advice. In addition, more and more sales staff can no longer deal with the growing number of products, and is unable to market differentiating innovations adequately - a major risk in stagnating markets. Channel conflicts between suppliers and distributors can hamper the sales process as well. Furthermore, companies usually lack efficient processes and sales management tools - a deficit which can easily grow exponentially in a globalized world. Most salespersons, for example, spend far too much time on activities that do not create much value, and too little time with the customer.
From our perspective clearly defined levers exist and these levers can significantly improve sales performance:
In the last five years, Oliver Wyman has supported many sales effectiveness projects for a broad range of clients. The following are some representative results:
Market shifts, new competitive structures, and adjustments of the business model change the requirements towards an organization. Frequently, it is necessary to change historically grown structures and processes, in order to align the organization optimally to the success factors of the business.
Oliver Wyman has accompanied various change processes in companies of varying sizes. Our unique contribution consists of the applied combination of content and methodological competency:
In its competence areas Mergers & Acquisitions and Post Merger Integration, Oliver Wyman offers extensive value improvement opportunities by means of a unique combination of in-depth industry knowledge and long-term experience in the international transaction business. Our services for corporate clients from industry, i.e., strategic investors, are complemented by a tailor-made consulting offering for financial investors in the area of Private Equity as well as Distressed Debt and Mezzanine.
M&A Strategy: Portfolio analysis, implementation of cross-border growth and diversification strategies or value-improving “Buy and Build” approaches
These services are complemented by Value Merging – our strategic approach to successful Post Merger Integration: In the case of mergers and takeovers that took place in recent years one is struck by the fact that 60 percent of companies were unable to integrate their new partners successfully in their own organization. The lessons learnt from these failures: While the value of an acquisition depends on many aspects, there is one central factor that decides on its success – a systematic and professionally planned and conducted Post Merger Integration (PMI). In order to support medium-sized and major integration processes, Oliver Wyman developed an approach that above all realizes the Operational Excellence and the set-up of a homogeneously integrated overall company. The Value Merging approach makes the complexity of the take-over process manageable, thus creating the prerequisites for a sustained generation of additional corporate value.
Due to our expertise, an increasing number of demanding customers has decided to work with us over the past years:
Oliver Wyman's Global Risk & Trading practice enables the world's top industrial corporations and commodity trading organizations to gain competitive advantages by assisting them with managing risk across their businesses more effectively. By working with global leaders in a broad range of industries, our practice has developed unique capabilities that help industrial corporations and commodity trading organizations create value and maximize their performance by making risk-adjusted strategy, investment and capital allocation decisions.
Our practice works with clients to measure and manage risk at all levels within their organization - from the board and executive suite to line management. Drawing upon resources from across our division with decades of specialized expertise in risk management as well as the deep knowledge that partners in other parts of Oliver Wyman possess of specific industries, regulatory issues, economic trends and leadership development, we anticipate unprecedented challenges in our clients' competitive environments and deliver comprehensive customized solutions quickly that improve their operations and risk-return profile.
Our practice supports top corporations in embedding risk and volatility management into decision-making processes across their organizations. Whether strategic, counterparty, commodity or large project risks, we offer advice on the frameworks and best practices that improve a company's financial performance by improving its risk-adjusted decision making.
Leading commodity traders count on our practice to create the risk-adjusted infrastructure necessary for their organizations to optimize value. We support our clients on all matters related to the risks they encounter in their business ranging from building trading processes, tackling strategic challenges, to establishing an appropriate governance structure and the required risk methodologies.
To overcome these challenges, mechanical engineering companies can address several areas of action to increase / sustain their sales volume and to reduce costs continuously:
Oliver Wyman has more than 20 years of experience in restructuring and realignment of mechanical engineering companies. More than 70% of the leading mechanical and plant engineering companies are our customers. On the restructuring side, we have specific experience in comprehensive restructuring, the reduction of production and overhead costs, in process optimization, in sourcing and reorganization. On the growth side, our expertise lies mainly in execution of comprehensive growth programs, expansion of the downstream service businesses, sales, value pricing, development of new markets, and Mergers & Acquisitions.
For international plant engineering companies, the global market has been reality for decades. Growth is mainly driven by BRIC countries and the gulf region. Additionally business is characterized by the continuous increase of individual project volumes and a rising scope of responsibility for the manufacturers with respect to general contracting and turnkey solutions. At the same time internal value add is decreasing more and more, as either the customers demand “local content”, or sourcing in low-cost countries becomes indispensable in establishing competitive cost positions.
The modified market conditions pose new challenges for the management of plant engineering companies:
To overcome these challenges, plant engineering companies can address several areas of action:
Oliver Wyman has more than 20 years of experience in realignment of plant engineering companies to profitable growth and in adaption to new market conditions. Most of the leading plant engineering companies are our customers. We have specific experiences in holistic restructuring, reduction of product and overhead costs, optimization of processes, sourcing and reorganization. On the growth side, our expertise lies mainly in execution of comprehensive growth programs, expansion of downstream service businesses, sales, value pricing, development of new markets, and Mergers & Acquisitions.
Today, automation technology is crucially important in many application areas. In the past, innovation led to significant improvements in productivity, security, and energy efficiency in many industries. This can also certainly be expected in the future. However, a certain degree of maturity can be recognized in the industry, and companies have to adapt to this:
Automation providers must respond to these developments, and adjust their business models in terms of strategy and operations. Core elements to be considered are:
Oliver Wyman has in-depth knowledge of the automation industry and comprehensive experience in its strategic and operational issues. We utilize a worldwide network of experts in Europe and Asia, in the Middle East, and in North America. In addition, our teams benefit from the know-how of other Oliver Wyman industry experts serving the automation industries’ customer segments, such as the automotive, manufacturing, and process industries.
Due to the recent sales crisis, the business trends in the commercial vehicle industry have become more pronounced. These include more competition in a strongly concentrated industry, increasing professionalization of dealer structures, and a continuing cost-orientation of customers adding to already strong margin pressures.
In 2009 traditionally cyclical markets in the United States and Western Europe reached sizes last seen in the 1990s. The current downturn in Western Europe shows the strongest historical decline ever, and the emerging commercial vehicle markets in Eastern Europe have also declined rapidly.
A quick recovery of the commercial vehicle markets is currently not expected. Over the next few years structural growth is expected to take place mostly in Asia; the European market is not expected to return to its 2007-2008 size anytime soon.
Therefore, companies in the commercial vehicle industry are being confronted with a profound and sustainable shift of global demand toward emerging markets.
As a result, the commercial vehicle industry is facing far-reaching structural challenges.
In order to respond to these challenges, companies can address the following key areas to increase revenue and sustain profitability:
For many years Oliver Wyman has worked successfully with the leading manufacturers of commercial vehicles, for their suppliers, and for service providers in the commercial vehicle industry. Oliver Wyman helps its clients address strategic issues like comprehensive optimization of business models or development and implementation of sustainable product, market, and sales strategies. We also have broad experience in cost-efficiency improvement and restructuring, as well as in sustainable reduction of product-related costs. In addition, Oliver Wyman regularly supports strategic and financial investors in valuation and M&A activities focused on the commercial vehicle
In recent years renewable energy has become more and more important, and this trend is expected to accelerate. Though wind and solar energy have become essential technologies for the future, manufacturers of facilities and components for the generation of wind and solar energy are faced with dynamic market conditions:
The high-tech industry is one of the most demanding markets of all. Companies have to deal with numerous challenges, including:
At the same time, dynamic markets continue offering opportunities for a significant improvement of the market position by means of innovations or changes to the business model. In many cases, the high-tech industry enables above-average growth and profitability.
The key to make use of these opportunities is focusing on selected target segments and the consistent orientation of the business model along the requirements of the target segment. Oliver Wyman supports these transformation processes with a four-step approach:
Oliver Wyman has a worldwide network of high-tech experts in North America, Europe, and Asia. In addition, our teams utilize the knowledge of other Practice Groups in the consumer industries of the high-tech industry, for instance, communications, computing, automotive, and manufacturing industries.
After several years of strong growth, the global agriculture & construction equipment industry was severely affected by the financial and economic crisis of 2009. Most affected were manufacturers of construction equipment in traditional large markets in Western Europe and North America. In contrast, manufacturers in emerging countries have shown continuously strong growth rates, but their growth is not strong enough to compensate for the losses in industrialized countries.
In the context of the global crisis, companies in the agriculture & construction equipment industry are faced with several challenges:
Nevertheless, the crisis offers an opportunity to ensure sustainable success by conducting major adjustments business models. The areas of action for a promising re-positioning cover a wide range of potential improvement levers:
The successful re-alignment of the business model requires deep insights into relevant markets as well as proven methodologies and tools to develop and implement the necessary changes. Having conducted multiple studies and extensive analyses across the agriculture & construction equipment industry, Oliver Wyman is a qualified partner for these tasks. Leveraging project experiences from many years in this industry, we identify the right answers to all relevant questions about the future development of a company’s business model. Together, we work with our clients to successfully implement the recommended changes:
In order to respond adequately to these challenges, producers of materials and components can address several key areas of action:
Oliver Wyman has conducted a large number of projects for producers of materials and components, and has supported them particularly in the fields of sales and efficiency improvement. Based on a clear market segmentation and an understanding of future customer requirements, Oliver Wyman helps to identify optimization potential and to develop concrete adjustments to existing business models. Efficiency improvement projects comprise purchasing, production, and inventory management, as well as sales and service.