Copyright © Six Sigma Academy International, LLC All Rights Reserved Financial Assessment Workshop

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 1 Module Contents Financial Assessment Overview Financial Assessment Example Annual Report Exercise CA Exercise

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

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 3 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 © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 4 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

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 5 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 identify potential clusters

Copyright © Six Sigma Academy International, LLC All Rights Reserved Financial Assessment Example

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 7 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 project clusters identified

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 8 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 © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 9 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 and duplicate payments DSO And Unapplied Cash

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 10 Dashboard DSO – Global SAMPLE FINANCIAL DATA

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 11 DSO – NE Region SAMPLE FINANCIAL DATA

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 12 Over 90 By AR Type – January (Region X) SAMPLE FINANCIAL DATA

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 13 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 © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 14 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 © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 15 CA Financial Exercise Please review the data provided by CA Finance What are your conclusions from this data ? What are your strategies ?

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 16 Objectives Review Participant should now be able to understand: Financial Assessment Overview Financial Assessment Example Annual Report Exercise CA Exercise

Copyright © Six Sigma Academy International, LLC All Rights Reserved Presentation NamePg 17 The following are trademarks and service marks of Six Sigma Academy International, LLC: Breakthrough Lean ®, Breakthrough Strategy ®, Breakthrough Value Services ®, Breakthrough Change Strategy SM, Breakthrough Design SM, Breakthrough Diagnosis SM, Breakthrough Execution SM, Breakthrough Sigma Lean SM, Breakthrough Six Sigma SM, Breakthrough Software Design SM, FASTART SM, Six Sigma Gold Belt TM, SOLVING YOUR BUSINESS PROBLEMS FOR THE LAST TIME SM. 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 100 Scottsdale, Arizona Tel. (480) Fax (480)