Analytical Consulting Lab Candidate Projects SPRING 2014

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1 Analytical Consulting Lab Candidate Projects SPRING 2014 Welcome the Analytical Consulting Lab! In the following pages, you will find candidate projects from sponsoring companies under the Analytical Consulting Lab (DECS 915) for SPRING The projects listed include working with actual company data, developing meaningful analytical models for managerial decision-making, and presenting results and recommendations to company executives. Most projects will require some level of Non-Disclosure Agreement (NDA) with the sponsoring company. More information about the class can be found at its website: Please feel free to contact me at or with any questions and interest Thanks for your interest. Russell Walker, Ph.D. Associate Director of the Zell Center for Risk Research Kellogg School of Management Northwestern University

2 Chicago White Sox Background: In late 2011 the Chicago White Sox built a 12,000 square foot state-of-the-art retail space known as the Chicago Sports Depot. While open from 11am-5pm daily, the bulk of the business is realized during the baseball season. There are some inherent challenges in getting our fans into the store (as it seems to be located outside of the ballpark though fans can access it once they ve entered the stadium), so once there, we need to ensure that we are maximizing the revenue potential. Desired Takeaways: Using sales data from the 2013 season, we d like an analysis of what s selling and what s not. Were the promotions that we ran in 2013 successful and should they be continued? Are there potential product bundles that would help move product and generate greater revenues? What items are generating the most profit? Are sales impacted by the product s location in the store? Additionally, for games this April, we should be able to match some customer purchases with ticket account information. We d like some profiling/insight into these customers buying behaviors, as well as some future product/bundling/promotion recommendations. *We will need all participants on this project to sign an NDA. Chicago White Sox Sponsor is Beth Grabowski, Kellogg alumna.

3 US ARMY Economic Study About the Study Project Title: Enumeration of Economic Benefit of Talent Development by the US ARMY The US military trains thousands of new individuals each year in various forms and levels. The training, although beneficial, to the military, imparts an advanced skill in individuals that carries into civilian careers. The US aviation industry, for instance, has long benefited from militarytrained pilots and mechanics, by hiring readily available and qualified veterans without directly paying for the training. The training offered by the US military is, of course, not limited to aviation, but includes development of skills in IT, logistics, operations, healthcare, computing, and overall management and leadership. This project will undertake an analysis of the number and skills of individuals produced by the US military and its economic benefit to private sector firms and the overall US economy. Students will be expected to work creatively to measure the value of individual skill sets and the replacement cost of those in the economy. The student team will interface with Col. Rodney Haggins, stationed at Kellogg, and propose novel approaches for the economic measurement of talent development by the US military. See Col. Rodney Haggins at: Some Project Goals Include: Army Senior Leader Education: To what extent can the Army improve senior leader quality of senior leaders involved with Army business functions (Finance (Programming and Budgeting), Force Structure Management, Human Resources, Logistics) by providing business and management focused Executive Education to Lieutenant Colonels, Colonels and Senior Civilians? Joint Capabilities Development and Integration: Can the Business-to-Business (B2B) or Business-to-Customer (B2C) Lifetime Value Model be applied to military procurement? When considering military life cycle costs paid for procurement of capabilities and personnel fulltime equivalents costs paid to contractors, what would the value of military contracts be in business terms? Is the result feasible, acceptable and suitable? If not, must we reform military acquisition processes like Joint Capabilities Integration and Development System (JCIDS) and the Planning, Programming Budgeting and Execution System (PPBES).

4 Press Ganey About Press Ganey Press Ganey is the recognized leader in performance improvement. We partner with health care organizations across the continuum of care to improve the patient experience and create and sustain high performance. We offer solutions that capture the voice of the patient, improve employee and physician engagement and drive targeted improvement through analytics and advisory services. For more information, please visit: Analytical Projects Project Description Functional Department Next Best Offer for Clients Analyze and recommend the next most likely Sales & Marketing product/service that a client would purchase from Press Ganey based on their current basket of products/services Client Segmentation Identify the ideal market segmentation variables Marketing and optimize sales coverage based on the current sales resource count and segmentation insights Discount Analysis Analyze current discounting areas of opportunity Finance & Sales related to sales teams, geography, or products/services Client Opportunity Analysis Calculate probable client wallet size by clustering clients, determining the normal distribution of spend by product, and then determining remaining potential dollars by client Sales Experience with Analytical Consulting Lab MBA Candidates As a previous sponsor, I understand how important it will be for you to 1) receive clear instructions on what success looks like and the associated deliverables 2) gain access to ask clarifying questions after project kickoff and 3) enjoy the analytical work you will engage in and be able to gain experience on a real project that will be implemented. The previous ACL team s work was fully implemented and provided great insight and shaped how our organization sold products to our clients.

5 FEW Spirits About FEW Spirits Founded as a dry community, Evanston was home to many influential advocates for Prohibition who effectively kept the city free of alcohol for more than one hundred years. Though the city legalized drinking in the late Nineties, it took the perseverance of our Master Distiller, Paul Hletko, to reverse the antiquated liquor laws. With roots going back to some of Europe's fabled brewing families, Paul and FEW Spirits have marked the end of Evanston's Prohibition and given the city its very own craft distillery. FEW Spirits has won many awards for its novel take on small-batch gin, whiskey, and specialty spirits. The team will work with the partners on the project. Project Description FEW Production Planning: Few is in the process of adding new fermentation capacity and new stills. As a result, we need a new 3 year production schedule and planning model. We would like an Excel model that gives us weekly production numbers based off of future demand data that we already have. FEW Inventory Management System Upgrade: We are current using a Excel inventory management model that needs to be updated and refined. The current model manage barrel size and aging requirements in order to project the volume of each SKU that will be harvested at a given date. The model also associates a value of the inventory as it ages. This model needs to be redone and update given the new demands on the business. FEW Retail Planning: This is a broader project that is in its infancy. We are in the process of outlining retail and event models to impact this revenue in This includes everything from specialty product production and packaging to event planning and demand forecasting.

6 United Airlines Candidate Projects There are multiple candidate projects with United Airlines and the Mileage Plus frequent flyer program. The projects will generally involve a study of customer redemption, reward use, search use and Internet tracking, new revenue creation, and partner involvement. The Mileage Plus program is an internationally recognized rewards program of premier status. Student teams will work on real projects, with real data, and present to senior executives. These projects are sponsored by executives in Mileage Plus, who have overseen previous ACL projects with Kellogg. Students may select from the below. Multiple projects with United are possible. 1. Rewards in Hawaii: We are currently offering space-available free upgrades to business class on all domestic flights to our Premier customers who have status with United. Trips to Hawaii are part of this program. We would like to know what would the impact of excluding Hawaii from this free upgrades program be? What customers would be the most affected? What are their characteristics? How valuables are these affected customers to us? 2. Drinks in Economy Plus: Right now we are only serving alcoholic drinks in the upper cabin. Should we add one free alcoholic beverage to E+? Yes/no? Why/why not? 3. Seats Fees: Currently our customers choose their seats for free. Some airlines charge customers for seat assignments. If we were to go a similar route, what would the world look like? What would be the implications of such a change for us? 4. Change fees: Who are the customers who are likely to want to change their itineraries and, therefore, pay us changes fees? Who pays us change fees in general? What kind of customers are they? We are interested in customer and itinerary characteristics.

7 Penn National Gaming and Hoss Marketing Group Introduction Penn National Gaming, Inc. owns and manages casino gaming and pari-mutuel properties in the United States and Canada. The company is involved in hotel, dining, retail, admissions, program sales, concessions, racing operations, and other ancillary activities. As of February 14, 2013, it operated 29 facilities in 19 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario. The company s operated facilities consist of approximately 36,800 gaming machines, approximately 850 table games and 2,900 hotel rooms. It is currently the third largest domestic casino operator in revenue and properties behind MGM Entertainment and Caesars Entertainment. Jeff Hoss, President of Hoss Markeeting Group, is a Kellogg EMP graduate and will serve as an advisor and coordinator or the project for Penn National. Project Description and Background In June of 2012, a capital CRM project was implemented throughout the casino locations that focused on driving new and incremental revenue to the gaming facilities via customers who were deemed to be VIP s or high rollers. This determination is factored by many elements including frequency, average bet, amount of time played by the customer and actual win/loss. The CRM project, dubbed Player Contact Management (PCM) was intended to focus on the existing database of VIP s as well as profiling the company s databases for new and potential customers who would qualify. PCM was launched at two properties that allowed a casino host, an inside sales person, to have a global view of offers, events and history of the customer and then initiate some form of contact via phone call, , letter or direct face to face contact. The interaction is then logged by the casino host in the PCM application on what type of contact took place and the outcome (booked trip, declined, will call back, no contact) Casino hosts are allocated a block of VIP s, ranging from 600 to 800 customers. It is this assignment that they are to contact individuals to offer additional services beyond the typical interaction of customers. Events ranging from entertainment, tournaments, money giveaways, promotions are some of the tools the marketing team utilizes to garner additional visitations by the VIP. Hosts are given sales benchmarks based upon overall player revenue via an industry standard called Average Daily Theo (ADT) This measurement allows the casino to quantify the value of a customer regardless of what type of game the customer plays over a period of time.

8 The project assigned is to review the contact strategy by all properties to see if PCM is functioning as intended and how much of a financial impact is being made by this marketing extension of VIP Services. Project will review the all slot and gaming play by assigned hosted player (approx. 90,000 VIPs), by host (120), by property (19) over a one year period (6 months prior vs. 6 months since tool was introduced) with establishing what benchmark was set prior to the contact strategy implementation to where we the company is today. Penn is looking for recommendations based on upon empirical data on how the contact strategy should be utilized moving forward. Project will also review market conditions and compare how the property is performing from a VIP standpoint to Penn s competitors.

9 Element Bars About We are a custom energy bar company located in Chicago. This means that at customers can create their own custom energy bar by selecting from all natural and organic ingredients and then naming their own bar. Our whole food ingredients are carefully handpicked and kept as nature intended. Then we hand make our bars using the ingredients our customers choose, bake them in our ovens and deliver them freshly baked from our ovens to their doors. The Founder and CEO Jonathan Miller is a Kellogg alumnus from the Class of He has worked with several students from Kellogg including hiring summer interns and serving as clients for other class projects. The Analytical Consulting Lab provides another great opportunity to provide students with rewarding experiences while allowing Element Bars to leverage student skills. Below are 3 projects of interest. The Analytical Consulting Lab provides another great opportunity to provide students with rewarding experiences while allowing Element Bars to leverage student skills. Below are 2 projects of interest. Project 1 Element Bars acquired 2 custom cereal companies at the beginning of We would like to track the effectiveness of this acquisition based on the conversion of the cereal customers and their anticipated life time value. We also did a direct mail to these customers and would like to analyze the effectiveness of this campaign to determine if we would should do it We have used Daily Deals (Groupon, Living Social,etc) as part of our marketing promotion and awareness strategy in the past. Our question is the life time value of these customers and if it makes sense for us to continue to do these promotions. The data we can provide is sales data, customer data, and historical sales from the cereal companies. Project 2 As Element Bars increases the amount of raw ingredients it purchases, we have new opportunities to purchase in bulk from different companies. The challenge is predicting which company to order what ingredients from based on order minimums, price per pound, lead time, and ingredients offered. For example, peanuts may be cheaper from one supplier, but their almonds are more expensive (and we don t order enough almonds from the cheaper supplier to meet their order minimum). The data we can provide is historic ingredient purchase data, current pricing of ingredients, order supplier terms.

10 NorthShore Hospital The NorthShore Center for Simulation and Innovation About The NorthShore Center for Simulation and Innovation (NCSI) at NorthShore University HealthSystem in Evanston, IL. recently expanded its simulation center to 13,000 square ft including 7 simulation rooms (2 fully operational trauma rooms, 3 patient rooms, and 2 operating rooms) and a surgical lab for advanced surgical training. Our center is now in the top 5% nationally in terms of size for hospital-based simulation centers (ie not based directly on the campus of a medical school university campus) and our learner throughput is likely in the top 1% as we have learners come through our center on any given month. We are multidisciplinary in nature with attendees from nursing, pre-hospital, medical students, residents in various fields, and attending physicians. As an institutionally based simulation center, our audience focuses more on "adult" learners (ie current practitioners - physicians and nurses) more than university-based medical school simulation centers who focus more on medical students and nursing students. Candidate Projects are Below: 1. Creating the business case and operational workflow necessary to increase utilization of B-Line Simulation Management Software. a. This project would have the students working with our techs to determine the various components of the simulation management software that could be optimized. (For example, today, only a fraction of our users are actively engaged and using the system fully.) b. Project goals Decrease time/effort spent performing manual data entry by leveraging the simulation management software Identifying ROI associated with technology upgrades to facilitate integration of B-line in workflows (ipads, kiosiks) Improving overall utilization of the system in both surgical and medical simulation - providing gap analysis of current functionality that is used vs. that which is under, or not utilized and then identifying workplan to achieve integration. 2. Reviewing historical utilization rates by department/learner type, and identifying the correct allocation formula to achieve equitable distribution of expenses. a. Identify data sources if data sources are not automated, identify mechanism to reduce manual workload associated with tabulating utilization

11 b. Review yearly budget/financials, and identify potential allocation back to departments likely will need a few proposals given the political reality of non-revenue generating related expenses. c. Review current utilization of the center Up-time Down-time Number of optimal FTE resources needed to staff center vs. how many resource employees are necessary d. Given historical utilization, forecast the number of external courses needed for the center to break even in FY2014. The team is encouraged to prepare and share with the Northshore team in an academic/technical paper and presentation on this work. Here is a video of our simulation center and a link to our center so that you can see what we do. The student team is expected and encouraged to visit the center in Evanston to learn more about this leading simulation center. This project is sponsored by Dr. Ernie Wang, MD, director of the center.

12 The Internet of Things Study on Economic Value Project Descritpion The Internet of Things has come to our daily lives. Today, even the home, its appliances, and security can be controlled and managed through Internet equipped devices. Many such devices passively capture information about human patterns and lifestyles and deploy artificial intelligence and or algorithms for the optimization and improvement of daily operations. An example is the rise of Nest and its self-learning thermostat, recently acquired by Google. The Internet of Things promises that nearly every device and appliance in our lives will have an IP address, allowing for data capture, automation, and convenience. This project will examine the trends on the movement of the Internet of Things on a few fronts: 1) Forecast the degree of the advancement of the Internet of Things in the home and our daily lives 2) Develop an assessment of those functions and actions that can best be improved in operations for reduced risk and increase economic gain. For instance, Nest and its thermostat reduce homeowner energy costs, justifying its installation. Where else is improved needed? 3) Evaluate the cyber risks in connecting homes and appliances online. Already, viruses and computer code issues have come-up. 4) Analysis of market impact on human lives and projection of economic gains, convenience, and further implications. 5) Are there apps or classes of apps that currently do not exist that will be needed to satisfy the needs generated from the Internet of Things? The team will work in a strategy team and Dr. Tim Carone of Microsoft.

13 Background on the firm Pricing and Economic Market Analysis Tegesoft is a start-up company in Metz (France) that specializes in the research, development, & manufacturing of industrial technical software & electronic devices. It aims at developing its own products to achieve greater profitability and offer higher added value. It strives to reach customers globally to serve a broader customer base. Tegesoft focuses on research and development to offer the industry innovative new products thanks to its expertise in both hardware and software. In a period of economic and financial crisis in Europe, its R&D activity recently led to the design of a breakthrough innovative new product with cutting-edge technology. It is a handheld multifunction device for the record, analysis, and visualization of data on data networks (CAN and LIN buses) in transportation and industry (vehicles, robots automation, production lines ) for R&D use. The device is standalone but can be connected to computers or mobile devices for real-time visualization and interaction with the machine. The data are recorded in a file format that is supported by most industries standards. Tegesoft already have some projects in store for new product lines, other extensions, and other innovations to stay ahead of the competition when it will react to the introduction of Tegesoft s innovative new product. The applications and utilizations are countless so the industries and companies that can benefit from our product are many. Overall any industry or any company that uses the CAN and LIN buses in its products or manufacturing processes will benefit from our product for the diagnostic of failures, the calibration/configuration of machines, and the maintenance of production lines. More specifically, manufacturers of vehicles (cars, trucks, tractors, planes, boats, trains, agricultural equipment, construction machines, etc.) and manufacturers of parts for these vehicles will benefit from our product in the design and testing stages (with the research and development engineers being the key users in most cases). Our product provides manufacturers and other clients with an opportunity to save money and time and have greater convenience of utilization. It guarantees a start-up time of around 5 ms while the start-up time for competitors products ranges from 30 seconds to several minutes. This is a factor that is very important. The start-up time of our product ensures the record of data right from the beginning. It is at the beginning that most errors occur so our considerably smaller start-up time ensures an incredibly more efficient errors detection thus reducing a smaller number of vehicles that return to development after testing. That translates into savings in days of development or testing of a product, which means savings of time and money.

14 The device records data and saves them into a file format that is supported by most industries standards. That means the data recorded by our device can be used and integrated into other development tools on the market. The device itself is standard and does not require the purchase of a computer for utilization contrary to some competitors products. It has the capacity to record large amount of data over an extended period of time and that is possible thanks to the file format and the use of an SD card. Extending the length of the record time for extended testing of the vehicle just requires a change of the SD card. It is that simple. The client just needs to buy some transceivers to connect the device to the appropriate data bus. The configuration of the device is upgradeable without having to buy another device. Compared to competitors products, our product has an incredibly smaller size and just a few connecting cables. The software application takes very little time to set up. Overall the installation time is at most 30mn with only a few operations (including plugging it to the engine under the hood or in the glove compartment where it can fit thanks to its small size) while for some competitors products it can take up to half a day with a product size that equals the passenger s seat for a car. Our expertise in hardware engineering enabled us to design a miniaturized electronic card with smaller and fewer electronic components, for a lower cost of production. And our considerable know-how in software development enabled to develop a software application that harnesses the power and efficiency of our hardware design to the benefit of the end user. So simplicity, convenience, power, and low cost of utilization are offered to the user in exchange for savings of time and money. The client can then meet his goals better, bigger, faster with a standard product that is adaptable, multifunction, and multiprotocol. Project description We do not know the US market enough or rather we need data to quantify and qualify our intuitions. We need data and analytics for decision-making with regard to the marketing and strategy for the US market. We need to have a better idea of what the US market involves and how it compares to some markets in Europe. For example in the German market, we are used to some products that are most often robust and expensive. We are not sure that the trends and things that we perceive in Europe can be transposed to the US. To be able to build reputation and credibility from the beginning and to be able to be reactive is critical to us because things go fast. We are unknown and cannot afford a failure if we want to penetrate a market. It is a challenge to offset a bad beginning and reestablish a good reputation. So how do we position ourselves so as to not fail when attacking the US market? To be able to rely on an economic analysis with a pricing study and an ROI evaluation will allow us to make sound business decisions and choose the right strategy with an effective implementation plan. To be able to quantify savings and economic benefits to the customers will allow us to be effective and convincing in our communication and marketing strategy.

15 The results of the project will be the groundwork that Tegesoft will rely on to make business decisions about whether to launch the product in the US or not, which would mean create a company in the US and open a manufacturing unit there later (or not). So the impact is meaningful and sizeable. Questions and issues to deal with for the project The company wants to launch the product on the European and American markets but would like to know more about the addressable market in the US, the competition, and the segments it should target with data and analytics for these segments. What characterizes the economic environment in the US market and the industries where our product is relevant? What are the key economic features/constraints that could translate into some risks? What are the constraints and risks associated with customs and regulations in the US? Who are the competitors in the US with similar products or with products and services that will compete with ours (competitive study and competitive landscape)? What are the technological trends among competitors? What are the competitors products and their characteristics? Which firms would benefit the most from our product? What is the economic benefit and savings for use of the product? How does our product compare to others? Analysis of our value proposition for the US market Prospective study to determine future trends Suggestions to improve it with services and other features for the US market Depending on that economic and risk analysis, what is the optimal and most relevant pricing model? What is the pricing strategy to adopt so as to successfully launch the product and secure market penetration? \We have a breakthrough innovative new product with cutting-edge technology. The right pricing model will be key to ensure success and gain market share. We want to remain competitive without leaving money on the table. What is the customers willingness to pay in each segment? What are the pricing strategies of competitors? What are the big factors and key issues in pricing in the US addressable market? Depending on that economic analysis, what are the recommendations for the distribution strategy? What are the best channels to distribute the product (and those currently in development) in the US? What are the recommendations to build an effective distribution network in the US from a financial and economic standpoint? What are the risks and the cost of distribution through the different possible channels in the US? What are the best strategies for market penetration?

16 What are the risks and impediments to success? How can they be overcome? What is the potential US market share? Establish several case scenarios for sales forecasts in the US with associated costs and risks. Perform an ROI analysis with the investment that is needed for sales. Background on the people that the students might work or interact with Primary contact Xavier Talvande Chief Marketing Officer / Chief Strategy Officer Multicultural graduate education in computer science and business administration Work experience in entrepreneurship, finance, and nonprofit Co-founded a startup that still operates 13 years later Successfully turned around a mail-order bookshop that was verging of bankruptcy International business executive and fluency in French/English/Spanish Other contacts Paulo Freilao Chief Financial Officer / Chief Sales Officer Graduate education in electrical engineering and sales in the industrial field Work experience in entrepreneurship and sales Co-founded several start-ups and businesses Created and managed a distribution network in Southern/Eastern Europe for a computerized maintenance management system software company Frederic Leuba Chief Technology Officer / Chief Operations Officer Graduate education in electrical engineering and industrial software engineering Work experience in entrepreneurship and software engineering Co-founded several start-ups Created an innovative software application for a leading company in instrumentation and testing devices for motors in Germany