With today’s ongoing dip in oil prices, many companies find themselves searching to strike that perfect balance between cutting costs and maintaining effective operations. A global oilfield services company reached out to Athenian Consulting Group in hopes that we could help them do just that. Our team got with theirs to evaluate and prioritize cost-cutting measures to assist them during the market’s downturn. Here is how it played out:
Under the Microscope
We began by designing and conducting a regression analysis to pinpoint areas where the company’s growth rate and productivity levels might not be in 100% agreement. We found that, over a two-year period, sales saw a 20% increase, while headcount was up 10%. At the same time, productivity (measured at the point of delivery) was down 5%.
Evaluating the Why
We were working with a company that obviously had the potential for growth, but something just wasn’t clicking. The next step was determining where that hiccup was taking place. Further analysis revealed that revenue growth was tied to negotiated revenue increases, but numbers were becoming muddled as lagging inflationary pressure on cost of goods sold (COGS) meant that they were passing along lower costs to clients.
Creating a Solution
The final step was to place our client in a healthier situation moving forward. With help from regression analyses and process requirements, we determined a 10% decrease in headcount would place them on firmer financial footing. Those calculations proved correct. We are happy to announce that, following that correction, the client found themselves not only able to maintain operational margins, but coming through more successfully than in previous downturns.
Managing a business is no simple task, and solutions aren’t always cut and dry. Still, when you do find that success, it feels good to know you’ve made a true difference to a client.