Crack the Case. D. Ohrvall

Pack: 001 page 14 of 20

MVM™

Zone 5

S P E C I A L T

4

Zone 4

Candidate Review Sheets

Pack: 001 page 15 of 20

Good

OK

“To best compare the different distribution sites, I first would like to understand the heart of each site’s operations—how they make and spend money. Once we clarify major differences there, I would like to breakdown the analysis into two parts: internal metrics, like inventory turns, stocking practices and management experience; and external ones, like competitor intensity and supplier pricing. We can dive deep on the ones that are more complex or appear to drive value. To get started, can you tell me more about how these sites generate revenue?”

(Wow! Are you sure you haven’t solved a case like this before? This is a solid approach that shows you know how to attack the problem from a variety of angles.)

“Several metrics come to mind immediately: inventory turns, internal efficiency and efficient distribution to retailers. I think wine and spirits would be similar to most distribution sites and therefore would need to perform well on these dimensions. There might be some other, more unique aspects to distributing wine that are not immediately obvious, like limiting breakage. What are the typical turn ratios in this industry?”

(You came up with some metrics rather quickly that we can discuss, but I don’t think you have created a structure for our discussion. Remember, at this stage of the interview your goal is to establish a plan for hitting important issues of the case.)

Pack: 001 page 16 of 20

Logic Flow Using the FRAME Method™ Logic Flow Using the FRAME Method™

R - Read the Audience

Interviewer: Play the Chatty Charlie or Cathy and help the candidate with the discussion. This case is designed to encourage the candidate to talk about the various aspects of running the business. The more you get him/her talking, the more you’ll find out about how the candidate thinks.

Answers,Answers,DiagramsDiagramsandandBehaviorsBehaviors

Good Reactions/ Body Language:

•Firm, dry handshake, leaning slightly forward

•High energy

•Consistent eye contact during the introduction

•Warm smile, worn most of the time

•Relaxed manner in small talk and getting situated

•“Ready to talk” body language, sitting on the front half of the chair, eager to discuss the case

Average Reactions/ Body Language:

•Half-hearted handshake

•Average energy

•Frequently breaks eye contact (indicates nervousness or insecurity)

•Forced smile

•A little tense and awkward in getting set up

•Moving around a lot in the chair, leaning or sitting back too far, indicating disinterest or laziness

Poor Reactions/ Body Language:

•Soft, weak or moist handshake

•Low energy

•Little to no eye contact

•No smile

•Awkward conversation; palpable tension

•Sitting completely in the back of the chair; slumping over the desk; putting arms on knees in the football coach position

Candidate Review Sheets

Pack: 001 page 17 of 20

A Logical Flow Using the FRAME Method™ A Logical Flow Using the FRAME Method™

A– Anchor a Hypothesis

Did you have any hunches here? Even though this case is about a set of metrics, it was a great test to see if you could think about the drivers of profit for a distribution site. As you work on other cases, your mental anchor (your hunch as to where the value is) and your plan should work together to help you with:

•Logical thinking that focuses on finding data to support your thoughts

•Common sense about metrics and how they can be collected and used

•Big picture thinking that turns the discussion back to next steps like “How do we practically find and fix the poor performers?”

SuggestedSuggestedAnswers,Answers,DiagramsDiagramsandandBehaviorsBehaviors

Potential Hypotheses

Did you have any hunches here? Which metrics mattered the most in your mind? For a case like this that is a blank discussion, it is easy to get stuck. If that happens to you, bring your mind back to big topics like the ones listed below. Capturing your thoughts early in the case will help you ask good questions. You do not need to state these hunches, but definitely anchor them in your mind.

People

“The quality of the people at the sites is going to be the biggest driver of value. I’ll check into their experience, years of work at Blueblood and overall physical strength. I also want to know about the leader of the site.”

Processes

“Doing well in distribution is all about executing processes well. I want to know what the time and steps are for all the major processes: picking, packing, loading the trucks and unloading. Office activities are worth looking at as well.”

Movement

“Since distribution is about moving items inside the site and eventually to the customer, I’m going to think about all the ways I can measure product movement. In addition to processes inside our site I’ll look at the actions at the customer: driving and unloading come mind immediately.”

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Inventory Turns

•What is the average inventory turn by site?

-Products (measured by case) typically turn between 7 and 9 times per month

•What is average for the industry?

-Industry average for number of turns is 8

•Which products in the warehouse turn more often?

-Table wines (retail <$10) move the fastest

•Which ones are typically slow to move?

-Specialty wines, rare vintages and rare hard liquors move the slowest

Delivery Costs

•How is product delivered to the customers?

-Delivery is by a truck driven from the warehouse to the customer site

•What is the average delivery cost per case of product?

-Cost per case is about $12

•What are the key components of delivery?

-Delivery can be broken down into packing, driving and unloading

•Which steps in the process have the most variability in terms of cost?

-Packing varies by skill or experience of packers

-Driving efficiency varies by driver and region

-Unloading time depends on a driver’s skill and experience

Competitor Intensity

•How does a distribution site compete?

-Distributors try to lock up customers through promotions, new products and better delivery schedules

•Where are Blueblood sites typically strong?

-Blueblood is known for its wide and deep selection of hard to find products

•Are there national competitors or regional ones?

-Few national competitors exist, and in all cases the regional player acts independently

•How do competitive pressures affect our revenue? Profit?

-Competitors play tough and consistently try to steal our market share

Interviewer Notes and Answers

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A Logical Flow Using the FRAME Method™ A Logical Flow Using the FRAME Method™

E– End the Case

How did you wrap up the case? Your recommendation needed to be as concise and data driven as possible. In this case you did see some metrics that are probably more important than others. However, there is more data that you could collect and there is a need to rank the sites to help with the evaluation process. Eventually you want fix the poor performers.

For any conclusion, keep the following questions in mind:

•How would you wrap this up?

•So what’s your conclusion? What did you learn that is the most insightful?

•For this case in particular: “I just got a call from the CEO, he’s going to drop by in a few minutes and wants to hear your thoughts on how to fix the poor performing distribution sites.”

SuggestedSuggestedAnswers,Answers,DiagramsDiagramsandandBehaviorsBehaviors

Good Ending: “From the sample data, four metrics seem to be the most important: inventory turns, limiting the number of sku’s, route density and relative market share (RMS). Our bottom performers tend to perform much worse on these. I cannot say with statistical certainty that these metrics are the drivers of performance, but they make sense. We naturally want to move volume quickly, simplify our products to the most popular and profitable, sell to customers that are close together and capture as much market share as possible. For next steps, I would like to test the full set of metric data to measure the statistical significance. Also, I would rank the sites in detail to determine which ones we should focus on first.”

(I like the use of numbers to back up your answer. You are obviously ready to follow-up as well.)

OK Ending: “From the data I reviewed, it seems like the drivers of value at the sites are RMS, delivery efficiency and inventory turns. We naturally want to ensure that we are controlling the price, keeping customers’ locations close, and rotate product often. I would recommend we rank all the locations on these metrics and then look more closely at the sites in the bottom third.”

(Straightforward response and pretty good recommendations at the end. It would be better if you could factor in some numbers to support your answer.)

Poor Ending: “Warehouses are all about inventory turns and making sure that the major products are in stock at all times. We’ll have to see which locations have slow turns and then determine how to pump up the turns in that region.”

(Inventory turns is a good place to focus, but I get the impression that the case’s data didn’t direct you in any way. There was a lot of qualitative discussion in this case, but try to hit on the data when drawing your conclusions.

Candidate Self Assessment

Pack: 001 page 20 of 20

Analytics

7. I analyzed the data well on a piece by piece basis.

8. I integrated data well and reached insights (saw the big picture).

Recommendation

9. My final recommendation was to the point and data driven.

10. I was persuasive in making my final points.

Total Score:

(10-60)

Do this self assessment before asking the interviewer for feedback. How did your numeric score compare to the one the interviewer gave you? What is your top priority going forward?

C

Pages 15 - 22

Candidate

•Working with an interviewer: Remove pages 3 through 6 to take notes and do your work. Give the rest of the pack to your interviewer. Interviewer prep is about 10 minutes for this case.

•After the interview: Rate yourself using the Self Assessment sheet in the back of the case pack. Review the feedback score and comments from your interviewer and discuss ways to improve. Review the suggested answers in the case.

•Self-study: Remove pages 3 through 6 to take notes and do your work. Remove any data handouts and place them face down. Follow the three Self Study Steps listed on these sheets. This self study method will help you form your plan, practice asking good questions and improve your ability to pull insights from the data slides. Keep in mind that you will benefit most from working with an interviewer who can evaluate your performance objectively.

Throughout these notes references will be made to the MVM™ (Maximum Value Model) and the FRAME Method™, the building blocks of the One Model/One Method™ approach to case interviews. Full descriptions of these unique tools, as well as additional cases, can be found in the book, Crack the Case: How to Conquer Your Case Interviews, available at www.consultingcase.com.