Financial Control, Business Efficiency Improvement, and Optimization of the Operational Model and Company Structure
Situation:
Following a change in ownership at a major Russian oil refinery, the new management team required immediate operational support. Due to the tight transition timeline, PSK-Solutions was engaged for a four-month period to assist in financial control, organizational structure optimization, and operational cost reduction.
PSK-Solutions’ role:
Financial Control and Process Optimization
- Daily monitoring and approval of payments, including verification of supporting documents.
- Analysis of existing payment approval and cash flow (CF) forecasting systems.
- Review of work/service acceptance processes, inventory management, and settlements with the previous owner and related parties.
- Assessment of the current contract database and optimization of the contract approval process.
Business Efficiency Enhancement
- Analysis of production and administrative costs, benchmarking against peer enterprises.
- Identification of cost optimization opportunities and development of cost-saving initiatives.
- Evaluation of operational and production efficiency levers, economic impact assessment, and implementation planning.
Target Operating Model and Organizational Restructuring
- Analysis of the existing and development of a target organizational structure by functional units.
- Review and redesign of job descriptions for newly established positions.
- Workforce optimization proposals, including compensation and incentive schemes.
Results:
The PSK-Solutions team provided daily support to the company’s management over a four-month period. Key results achieved during this engagement include:
- A rolling cash flow forecast was developed and implemented, with a one-month planning horizon and payment-level detail. The forecast is updated on a daily basis.
- A comprehensive analysis of overdue and current accounts payable was conducted. Based on the findings, a prioritization framework and a structured methodology for managing payables were developed and implemented. This approach enabled the company to effectively address and reduce overdue liabilities.
- Over 20 cost-saving and process optimization initiatives were developed, each with a calculated economic impact. The immediate financial benefit achievable within one year exceeded RUB 200 million annually, while the long-term impact is estimated at up to RUB 1.5 billion per year.
- Target organizational structures for key functional units were designed and agreed upon. Management layers were reduced to three to four levels, managerial span of control was doubled, and inefficient positions were optimized or eliminated. The resulting annual savings from headcount optimization reached up to RUB 130 million.
- Standard job descriptions were created for key management positions (deputy general directors and one level below), with the intention of further rollout to other roles.
- A review of critical business processes (including payments, contract approvals, and materials acceptance) was carried out. Based on the analysis, several initiatives were proposed and approved to enhance process efficiency and overall business manageability.