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Case Studies

Adz Group has delivered improvements to clients across various industries and around the world. Below are highlights of selected client engagements.

  • Case Study 1
    • Situation: A $1B specialty manufacturer's margins were declining despite increasing revenue and a sales mix shift toward newer, high-technology items. The engagement was to investigate product costs and margins and identify areas of opportunity.
    • Finding: Intensive analysis uncovered 3 main factors:
      • Hidden Costs to Serve - R&D costs were not being completely factored into costs under government cost-plus contracts
      • Friction of Variability - The range of product flows was very diverse resulting in increased processing costs
      • Problem Pricing - Inappropriate overhead cost allocations made commodity products appear significantly more expensive to produce than reality
    • Outcome: A detailed, precise and accurate costing system was developed to address both government contract needs and commodity product cost calculations. Product flows were simplified and standardized. The overall solution resulted in nearly $50m in increased revenue and a reduction of almost $100m in working capital primarily from reduced inventory.
  • Case Study 2
    • Situation: The US division of a European manufacturer was consistently losing money even while both their market share and the overall market were growing. Adz was engaged to analyze the situation and recommend solutions to make the division profitable.
    • Finding: Deep investigation revealed two key factors:
      • Unintended Consequences - Sales incentives and discounts encouraged larger orders but often of low margin products.
      • Problem Pricing - Product prices were set at a markup above transfer prices independent of product positioning.
    • Outcome: The compensation and discount schemes were revised to be aligned with margins rather than revenue. Simultaneously prices were changed to reflect customer and market value. The combination resulted in division profits for the first time ever.
  • Case Study 3
    • Situation: A key division of a $10B+ manufacturer was experiencing record sales growth but ever growing losses. Adz was engaged to determine actual product costs and margins as part of a larger, internally led pricing initiative.
    • Delivery: Adz conducted numerous management interviews and analyzed hundreds of thousands of operational records. This resulted in the development of a custom software management tool that calculated actual product costs using detailed operational and finance data. The client then used this information as the key input to future pricing decisions.
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