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TMACentralTexasHenrySchneiderJanuary21,2015
®2016AllRightsReserved-PPQC 21/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• PPQCOverview• Scenario• EnhancedDueDiligence• Summary
®2016AllRightsReserved-PPQC 31/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• PPQCisanelite,highlyspecializedconsul>ngcompanythatrapidlydeliversanalysisandtailorssolu>onstomaximizeanorganiza>on’searningpoten>albystrikingthebalancebetweenpeople,process,andtools
o Appraisals
o ConsulAng
o Training
®2016AllRightsReserved-PPQC 41/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• DocumentReviewo Policies
o Procedures
o Plans
o Deliverables
• Interviewso ExecuAveManagement
o MiddleManagementandLeads
o PracAAoners
®2016AllRightsReserved-PPQC 51/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Iden>fystrengths,weaknesses,andgaps• Providerecommenda>onstoaddresskeyrisksandissues
®2016AllRightsReserved-PPQC 61/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• PremierAdvancedSecuritySystems(PASS)isahighlyspecializedcompanythatsellscustom-designedhigh-end/highqualityhomesecuritysystems
®2016AllRightsReserved-PPQC 71/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
®2016AllRightsReserved-PPQC 81/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• PASSdesignedanddevelopedthenewsecuritysystemandisnowproducingunits
®2016AllRightsReserved-PPQC 91/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• PASS’managementisecsta>cwiththerevenuegrowthandthecompanyisonthevergeofachieving“flashover”
®2016AllRightsReserved-PPQC 101/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• AtleastthreeprivateequityfirmshavebeenlookingatPASS’porQolioandfinancialstodeterminePASS’stabilityandprofitabilityforpossiblebuy-out
®2016AllRightsReserved-PPQC 111/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• However,thereisaseriousrecurringproblemthathasgoneunno>cedbyPASS’managementandduediligenceeffortso PASSismissingpromiseddeliverydatescausingWalmarttoregularlycancelorders
o OfallordersreceivedinFY2015,only65%werecompletedonAme
o SincePASS’profitmarginhasbeensostrongnoonehasbotheredtocarefullyassessthesituaAon
o Onlyeffortattryingtounderstandtheproblemwasalimitedstudydonebyaninternoverthesummer
• Whyisthisissueinvisible?o OpenordersarerecordedasbacklogunAldeliveredandinvoiced
o OrdersareonlyrecordedonthebalancesheetaYerinvoicing
o Bo[omlineisthattheorderprocessdoesnottrackun-invoicedorders
®2016AllRightsReserved-PPQC 121/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Whataretheimplica>onsofthisissueontheIPOandbuy-out?
• Whydidduediligencenotuncoverthisissue?• Whatcanbedonetosystema>callyiden>fythesetypesofissues?
®2016AllRightsReserved-PPQC 131/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Whatifduringduediligenceoneanalyststumbledacrossthesummerintern’sreportontheorderfulfillmentissue?
o WhatshouldtheanalystrecommendtothepotenAalbuyer?
o WhatshouldthepotenAalbuyerdo?
• Whatshouldbedonetosystema>callyuncoverthesetypesofissueswithouttrippingoverthem?
®2016AllRightsReserved-PPQC 141/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Systema>callyevaluatekeyinternalbusinessprac>ces(listdependsuponthebusiness)
o Incidenttrackingprocess
o Managementdecisionprocess
o Measurementandanalysisprocess
o Orderfulfillmentprocess
o ProducAonmanagementprocess(capacity,availability,conAnuity,etc.)
o Riskmanagementprocess
o Suppliermanagementprocess
• Documentreviewandinterviews
®2016AllRightsReserved-PPQC 151/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Canrapidlyevaluateinternalbusinessprac>ces(2–3days)• Iden>fyissuesnotcommunicatedupanddownthemanagementchain
• Provideaddi>onalkeyinforma>onthatcouldimpactthevaluetothepoten>albuyer
o Allfindingshaveanimpactonthebo[omline,butmaynotbeimmediatelyobviouswhenevaluaAngfinancialperformanceoraccounAngpracAces
• Generatealistoffindingsandrecommenda>onsonwhatthecompanyneedstodotobesuccessful
®2016AllRightsReserved-PPQC 161/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• IsPASSabletomoveforwardwiththeirplanstoraisemoneyorsellthecompany?
o Whatcanbedonetoaddresstheseissuesintheshortterm?
• CanPASS’internalmanagementandproduc>onissuesbefixed?
®2016AllRightsReserved-PPQC 171/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• EnhancedDueDiligencediscoveredthatPASSo Hasfaultyinternalprocesses
o CannotassessitsownproducAonanddeliveryperformance(capacityandavailabilityissues)
o Doesnotcorrectlytrackandreportorders(deliveredandcancelled)
o Doesnotcollect,analyze,andreportanyproducAonmeasures(e.g.orderaging,trends,etc.)
o HasnomechanismtoassessmarketchangesaffecAngproducAonanddistribuAon(supplierissues)
o Sales,markeAng,producAon,andordercyclesconflictcausingreporAngissues
®2016AllRightsReserved-PPQC 181/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Reasonsforthebrokenprocesseso BusinessgoalsandobjecAvesnotarAculatedorcommunicated
o Nohistoryofusingdatatomakedecisions
• LackofappropriateproducAonandmanagementmeasures
o LackofinternalcommunicaAon(horizontalandverAcal)
o PoorcontrolofproducAonperformanceandproductdelivery
o Poorsuppliermanagement
• Noformalacceptanceofsuppliercomponentstoensureon-Amedelivery
o RisksnotidenAfiedandmanaged
• NoinsightintomarketchangesthataffectproducAonanddistribuAon
®2016AllRightsReserved-PPQC 191/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Setrealis>candachievableshortandlong-termbusinessobjec>ves
o DefinekeymeasuresthatsupporttheobjecAves
o UsemeasurestotrackprogresstowardsachievingtheobjecAves
• Performperiodicprocessassuranceauditstoensurethedocumentedprocessesareconsistentlyfollowed
• Trainpeoplehowtocollect,analyze,andreportkeymeasuresanduseresultstomakedecisions
• Monitorvendorandsupplierperformance• Iden>fy,document,andac>velymanagerisks
o DetermineappropriateconAngencyandmiAgaAonacAons
®2016AllRightsReserved-PPQC 201/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
• Systema>callyevalua>ngbusinessprac>cesbeyondthebalancesheetsandfinancialreportsprovidesaddi>onalkeyinforma>onnecessarytomakeaninformeddecision
o IdenAfiesneededtools,infrastructure,andstaffingchanges
o IdenAfiesnecessarytasksandacAviAestoincreasevalue
o IdenAfiescostandscheduleesAmatesforaddressingtheissues
o ProvidesaroughAmelineandmilestones
®2016AllRightsReserved-PPQC 211/21/16
PPQCPROCESS AND PRODUCT
Q UA L I T Y C O N S U LT I N G
Address: HenrySchneiderPresident/SeniorPrincipalConsultant
ProcessandProductQualityConsulAng,LLC2009Simond,SuiteBAusAn,TX78723
Phone: 832-628-2486E-mail: [email protected]: www.ppqc.net