1. Pulp Fiction - Can we survive
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
Wentamuck Part 2 Wrap Up Examples of visuals which answer the assigned questions
What’s helpful about this process?
In my experience…
Visuals help us intuit what’s going on.
Visuals help quickly scope where to focus.
Visuals give tangible weight to subjective issues
Key is often to ask insightful questions.
Methodology of transforming questions into findings helps “kick the tires”, delegate, & engage stakeholders
EMBA Turnaround Module, C White

2. 1. PF needs 6½ cents more Working Capital for every $1 in Sales
$.94
Note how separating WC and PPE helps one to quickly see and scope the relative impact

3. 2. What drove the increase in working capital between 2002 and 2006?
One tool is a “source of change” analysis: a chart comparing the absolute difference between one year and another.
That’s often my first step when trying to understand financial trends…I insert columns in the worksheet that calculate current period minus some other point in time. Charting helps internalize what’s a big deal and what’s not…

4. 2a. Paying vendors faster and collecting money slower consumed capital
Sources of Increase in Working Capital, 2002 to 2006, $ 000
Note: When current liabilities go down (which are mostly trade payables in this case), capital is being USED to pay faster.
The change in channel focus likely drove up AR

5. 2b. Paying vendors faster and collecting money slower consumed capital
Same chart, but using ratio of capital to sales, which is better method to normalize for changes in sales.
Sources of Increase in Working Capital, 2002 to 2006, $ capital / $1 sales

6. Incremental working capital needed for each $1 revenue, 2006 vs. 2002:
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
2c. The decline in CL and increase in AR relative to sales drove up working capital
Incremental working capital needed for each $1 revenue, vs. 2002:
Here’s another option using the same data: it highlights the total change in WC, and then shows the components driving that total change.
EMBA Turnaround Module, C White

7. 3. The increase in prices covers the increase in costs per ton
Though margins as a % have declined, the delta between prices and costs has not significantly changed.

8. Just for fun, notice how 2 teams came to 2 different conclusions from the same data:
In real life, we interact with others to build a shared understanding of what’s going on, and visuals facilitate that process. I would rather get push-back on an interpretation than to not say anything worth discussing. Above, because the interpretation is clearly stated, BOTH of these slides would enable a productive discussion of a nuanced issue.

9. How would you apply this to Pulp Fiction?
4. Are PF’s most valuable or constrained resources aligned with its sources of value?
This is a common question in strategy projects. A tool often use to address this – “Sources & Uses Analysis” …
100% Columns
Compare across:
Product lines
Channels, or
Markets
Etc.
Resources: E.g., Expenses, People, Capital, or Time, etc
Benefits: E.g., Revenue or Profits
How would you apply this to Pulp Fiction?

10. 4a. Private Label products leverage machine hours better than Poof products
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
Poof products consume 58% of capacity but provide only 54% of contribution $
EMBA Turnaround Module, C White

11. 4b. Private Label products better leverage capacity than Poof products
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
EMBA Turnaround Module, C White

12. 5a. A focus on contribution per hour shifts priorities from Poof to Private Label
Contribution / Ton
Contribution / Hour

13. 5b. A focus on contribution per hour shifts priorities from Poof to Private Label
Contribution / Ton
Contribution / Hour

14. 6. What does PF have that might be better leveraged?
Poof brand.

15. 7a. In general, common questions might be…Do customers value the benefit we offer? Are we getting the price we deserve?
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
A Price/Benefit Matrix can show how customers value the benefit offered across competitors
Gap
Offers in this
category
E.g., this real-life example points out a hole in the competitive landscape.
This analysis often highlights who’s getting more than they deserve.
Price
(or perceived performance)
Actual Performance (e.g., speed)
EMBA Turnaround Module, C White

16. How is Competitor C earning a better-than-deserved price? Can we?
7b. Prices do correlate with softness, but Competitor C is earning a premium
How is Competitor C earning a better-than-deserved price? Can we?
PF Brands = Purple

17. Projecting impact of capacity additions…
(This is a generic cost curve; in this case, demand would be vertical)
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
EMBA Turnaround Module, C White

18. Attractiveness Ability to Succeed High Select strategically Homeruns
9. There are many ways to characterize initiatives; many combine some indicator of VALUE and RISK…
Pulp Fiction - Can we survive? Involves price, demand, & cost forecasting as well as cash flow projections
This tool can be used as a conceptual matrix or a scatter chart of values to build & prioritize a portfolio of initiatives.
High
Select strategically
Homeruns
Attractiveness
($ Value)
Bunts & Singles
Low Priority
Another approach is to consider near term vs. long term pay-offs
Ability to Succeed
EMBA Turnaround Module, C White

19. Example from prior EMBA Team 9
Example from prior EMBA Team 9. Status Report of 10 initiatives to improve PF’s profitability
Speed Up Receivables
Reduce Inventory
Revise incentive pay for sales
De-white the TP
Base production on Run time
Use metrics beyond Revenue/ton
Etc.
Note that drafting this early creates an opportunity to develop buy-in by discussing what matters with different stakeholders. This is part of enabling change…giving palpable weight to issues