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CASE EXAMPLES

BUSINESS TURN-AROUND

Sometimes the “squeaky wheel” isn’t what is effecting results.  Read how rPM³ helped this Division of a Fortune 500 Company apply ERM strategically to discover the truth about their performance.

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ROOT CAUSE DISCOVERY

Our feelings often cloud our judgment.  With the right tools and measures we get the data needed to see clearly.  Learn how we helped this company get insight into the root of their problems.

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MEASURABLE RESULTS

Often conventional financial reports don’t paint a complete picture regarding costs and project effectiveness.  Read how this State agency leveraged ERM to get the facts needed to demonstrate value.

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CASE STUDY

Business Turn-around

Background

MANUFACTURING the Latin American Division of a Fortune 500 Conglomerate had returned 5 consecutive years of Operating Losses with the last year being a $15 Million loss.  The Division covered 15 countries and 4 languages. Convinced they understood the issues, Management devised a strategy that (they believed) would rectify the problems.

Solution Strategy

STRATEGIC RISK ASSESSMENT

Identify, analyze and evaluate the risks to the new Strategy and Strategic Targets.

QUANTITATIVE RISK ANALYSIS

Deploy Monte Carlo Simulation to results-based estimates of each risk in dollar terms.

RESPONSE & MONITOR
Modify the Plan to address the Key Risks identified and monitor Key Risks and progress.
TECHNOLOGY DEPLOYED

Engagement Summary

First, to assure the will of the CEO would not overpower the Strategic Risk Assessment (SRA), the Lead Consultant privately asked the CEO to write down on a 5×7 card the Top 5 risks he felt could effect performance (the same risks incorporated into the new Strategic Plan) and asked him to abstain from the SRA workshops. Business Unit leaders from every country participated in the workshop. Of the 50 identified risks only 7 produced 80% of the impact, measured as a result of the quantitative analysis. Once the analysis results were in, the CEO was asked to reveal the 5 risks he had written down. None of his risks were even in the Top 20. He openly admitted that “without proper risk analysis the squeaky wheel will always get the grease, but it may not be the reason the car is broken down.” He immediately ordered the Strategic Plan to be revised to address the Key Risks identified.

The Results

With a new Plan and close monitoring of the Key Risks and risk response measures every month, the Latin American Division finished out the year with a $15 Million profit – a $30 MILLION TURN-AROUND in only 12 months. The Division maintained their good performance by leveraging an Enterprise Risk Management program and by adopting ARQ™ to monitor cost of risk and measure risk management effectiveness with every financial close.

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It has been said…
“A person who aims at nothing is sure to hit it.” –Origin Unknown Yet, companies continue to struggle with where to focus resources and strategic effort – significantly affecting their performance.

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CASE STUDY

Root Cause Discovery

Background

CLOTHING & SHOES DESIGNER, MANUFACTURER & RETAILER – the Company has been experiencing a 3 year history of volatile revenue and earnings performance.  Revenues are currently around $500 Million. The CEO, owner and namesake is convinced that the historical fluctuations are solely due to design issues and lack of enough higher end product.

Solution Strategy

COST OF RISK BASELINE
Decipher 16 quarters of historical financial results to establish a cost of risk (COR) baseline of the company.
HISTORICAL EVENT IDENTIFICATION
Identify the events (negative and positive) that caused the Core Performance variances calculated in the Baseline.
DATA ANALYTICS
Analyze the results to ascertain connections between risks, risk management and performance.
TECHNOLOGY DEPLOYED

Engagement Summary

Utilizing ARQ Technology™, the last 16 quarters of financial results and budget data were uploaded into the software. Decipher workshops with key management personnel were conducted to create the decipher template for Cost of Risk. Management found value in the decipher process itself – in how it changed their thinking about expenditures and resource allocation. Results from the decipher are immediate in the system, so the major findings and anomalies were identified right away. Management were asked independently in interviews to divulge the events that were behind the core business variances and explain anomalies. With all data entered into the system, the root causes of the performance volatility were obvious to recognize.

The Results

Data analytics revealed that product design and inventory did not match with demand through any of the company’s channels to market. This was at the root of the volatility. Although the CEO had strong feelings about making his company a “high end” brand, his customers had a different idea. Brand reputation was strong and customer demand for a certain group of products was constant, however, their “high-end” designs were not being received at higher prices. Realizing that the process for the design-to-distribution process was driven by “gut feel”, not data, the company devised a multi-pronged response strategy that included front-end market research and more targeted marketing campaigns to increase demand. This $13 Million strategy closed the gaps in volatility, generating $57 MILLION IN NEW, GROWING & STABLE REVENUE.

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Did you know that…

…an analysis by a Fortune 50 Company revealed that: “A 10% Reduction in Earnings Volatility (Standard Deviation from Target) yielded a 20% improvement in P-E Ratio?” Yet, with continuous technology change, global economic instability, growing regulatory intrusion and other systemic factors, businesses struggle more than ever to perform consistently.

Contact us now, we’ve got this!

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CASE STUDY

Measurable Results

Backgound

GOVERNMENT AGENCY – as a $280 Million State Agency reached a critical mass of conservation land holdings, the Governing Board and constituents grew concerned over the cost effectiveness of the Agency’s risk management activities.  Public complaint painted a certain picture in the media, but it lacked facts.

Solution Strategy