The document summarizes a portfolio complexity diagnostic conducted by Wilson Perumal & Company to help clients optimize their product portfolios. The diagnostic examines a client's products, operations, customers and finances over 3 weeks to identify root causes of complexity. It aims to determine if complexity reduction is feasible and the potential size of benefits across areas like costs, capacity, margins and revenues. The diagnostic is meant to align the organization for a broader portfolio optimization effort that can typically realize over 25% improvement in EBITDA by eliminating unprofitable products and segments.

1. Product Portfolio Health Check
WP&C’s Perspective on Portfolio Complexity Diagnostic
April 2015

2. How well do you know your product portfolio?
• Study after study has shown 80% of products are not truly profitable—the whale curve
• Wonder how you might be able to achieve Portfolio Optimization results?
We helped a technology client grow 2.4x by cutting products under
development from 3,500 to 500, resulting in faster innovation, 63% increase
The most profitable 20% - 30% of products generate more than
300% of profits…the remaining 70% - 80% erode 200% of the profits.
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• The majority of companies fail in their Portfolio Optimization efforts due to a limited
focus on cutting the tail
We used our approach to optimize the portfolio of an industrial
goods client and reduced it by 50%, restoring profitability.
development from 3,500 to 500, resulting in faster innovation, 63% increase
in customer satisfaction, and 13% point increase in operating earnings.
Before you embark on the Portfolio Optimization journey, it is important to
diagnose your issues and to understand the size of the potential benefits

3. Are you experiencing any of these symptoms?
Customer Symptoms
Frustrated customers due to service/quality
levels below par
Long lead times/queues
Product over-choice diluting
Marketing & Sales effort
Distributors resist focusing on
the product line
Production Symptoms
High inventory levels
Product shortages
Product surpluses/ markdowns
Frequent changeovers/
eroded capacity
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System Symptoms
Sprawling physical footprint with poor asset
utilization
Efforts to consolidate network stymied
Operations struggles to keep
up with product line
Tangled web of IT symptoms
Financial Symptoms
Many unprofitable products
Growth in revenue but not in profits
Increase in SG&A costs inexplicable
Large working capital
Lost sales loss due to
capacity constraints
These could be signs of an “unhealthy product portfolio” causing “Complexity”

4. Portfolio Complexity Diagnostic will identify your root
causes and unlock opportunities…
Do we have a portfolio complexity issue?
What are the sources of complexity?
Is complexity reduction feasible?
Key Questions to Address:
Sources & Impacts
Opportunity areas
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Where will we find the benefits?
What is the size of the prize?
What will it take to realize these benefits?
Size of the Prize
Path forward
Portfolio Complexity Diagnostic analyzes both internal (products, operations,
organization) and external (customers) drivers to assess your portfolio complexity
and identify if the opportunity is worth pursuing

5. …And do so in just 3 weeks
Basic Fact
Base, Data
Gathering ,
and Initial
Work Stream #2:
Customer & Market Assessment
Week 1 Week 2 Week3
Work Stream #1:
Product & Financial Assessment
Synthesis
and
Definition
of Path
WP&C High-level Portfolio Complexity Diagnostic Project Scope
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and Initial
Hypotheses
Customer & Market Assessment
Work Stream #3:
Operations Assessment
of Path
Forward
Inventory
Benefits
Margin
Benefits
Pricing
Benefits
Capacity
Benefits
Market
Benefits
Size of the prize and sources of value
Key constraints/interdependencies
Organizational alignment on path forward

6. The diagnostic will align the organization for a broader
Portfolio Optimization effort with transformative effects
Eliminate profit eroding products/
segments
Release of assets/fixed costs
Create capacity for innovation
Focus and align sales force
Build a more competitive offering
Cost Benefits Frequent Revenue Benefits
Diagnostic typically leads to a deep-dive phase on Portfolio Optimization over 2-3 mths
Detailed analysis on the six facets* will be assessed to identify the optimal portfolio
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It is important to align on the expected benefit early in the process.
Our clients typically realize >25% EBITDA improvement
Release of assets/fixed costs
Reduce working capital and
inventory levels
Focus/reduce marketing spend
Increase manufacturing capacity
Build a more competitive offering
Improve pricing and lifecycle
management
Reduce customer confusion
* See next page

7. Portfolio Optimization analysis requires an assessment
across multiple facets
Organization & Process
• Implementability—from key
stakeholders’ perspectives
• Sales force effectiveness
• Business rules for ongoing
portfolio management
Profitability
• Complexity-adjusted costing
• Gross vs. Operating profit
• Whale curve profile
• Incremental cost & revenue
Product Range
• Substitutability from Customer
perspective
• Substitutability across value
chain
• Gaps in the product lines
WP&C’s 6-Facet Approach
ProfitabilityProfitability
Integration
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portfolio management
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Gaps in the product lines
Benefits
• Sources and timing of benefits
• Breakpoint—threshold to cut to
realize benefits
• Options for levels of portfolio
cut and timing
Strategy
• Business strategy
• Voice of end customers
Constraints
• Regulatory constraints
• Operational constraints
• Specification & certification
StrategyStrategy
Integration
framework
We anchor the work around a deep understanding of the customer.
A holistic view across all these lenses is better than a deep dive in one.

8. North America Europe
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Contact Us:
One Galleria Tower
13455 Noel Road, Suite 1100
Dallas, TX 75240
+1 972-716-3930
Longcroft House
2/8 Victoria Avenue
London, EC2M 4NS
+44 (0)203 206 1496
www.wilsonperumal.com