Business Case Development
Where We Started
A rapidly growing manufacturer was exploring an opportunity to better control its supply chain by taking over production of a key ingredient source from a third-party supplier.
What They Needed
The organization is a premium manufacturer in its field, well-respected and enjoying significant growth in sales throughout North America. One of the essential inputs to their manufacturing operation was exclusively sourced from a third-party operation, one of only a handful of suppliers in the marketplace. Recognizing their reliance on a narrow source of supply, and wishing for better end-to-end control of their product stream, the organization was considering a move to assume responsibility for its own component sourcing and preparation for manufacture. This would give them improved control over quality, and end-to-end responsibility for the full scope of their supply chain from sourcing right through to delivery of final products to retailers.
The organization was also working to improve the formality of decision making around significant investments. The intention was to support better analysis of options and more thorough review and deliberation as an executive team. While an initial presentation making the case for investment had been reviewed with the executive, there was a desire for a more robust exploration of the opportunity through development of a formal business case. Development of the business case was also intended to serve as a model that could be adapted and applied in future organizational decisions.
What We Did
Our approach to business case development involved an adaptive process of facilitation, options exploration and modelling and development of the final business case.
The work started with an exploration of the work done to date, including a review of previous research, discussions, draft reports and delivered presentations. An intensive exploration of the opportunity with a core business case team quickly revealed that wholesale replacement of input sourcing was likely not a desirable option; the organization would be trading off the risk of continued reliance on a single source of supply from the third-party supplier to themselves. It also identified several other viable options to explore that would meet the organization’s objectives of improving control over supply quality, diversifying sources of supply and ensuring a steady input stream into their manufacturing operation.
We worked with the organization to develop each option. We worked through a strategic definition of each opportunity, and estimation of the potential costs and benefits of each of the options under consideration. We also developed and modelled less tangible and more qualitative impacts that should still be factors in the overall decision making process.
The overall business case was compiled and developed, including development of detailed and summary narratives. This provided a record of developed assumptions going into the decision making process, while also supporting presentation and review by an executive audience.
One of the most intriguing parts of this engagement was the development of multiple viable, realistic options for the proposed investment. While many businesses cases present their preferred option, a non-viable status quo and one or two other less-likely strategies for consideration, this one did not. Each option was a realistic and potential solution to the organization’s problem. Consideration of the most appropriate solution literally required doing the work; we needed to model the solutions, develop realistic conceptual estimates of costs and benefits, and do the comparative analysis to figure out which one best satisfied the organization’s goals in a cost-effective manner.
While the organization ultimately opted to defer the investment and invest in improvements in the existing supplier relationship in the short-term, the overall engagement was considered to be a significant success. The business case demonstrated what was possible in reviewing and considering investment decisions. The developed business case continued to serve as a model for future projects, and has continued to be used as a reference. Most satisfying, we were able to transfer knowledge to support the development of future business cases to internal staff.