Wednesday, June 11, 2008

Network Planning & Development Project

My company had already built 23 branches all over the country since 1980s. Due to our business expansion, it was easy to define where we wanted to build new branches. We also didn’t really care about the feasibility study. Usually we just did the market study and estimated how big the potential market in that area is.

This day, with fierce competition in operating lease business, it is possible to build a new branch of course, but we must act more carefully to estimate the initial investment, payback period of that branch, sales target, and many things else.

I think the company didn’t think or concern about this earlier because our CEOs background mostly from sales or operation. Usually they just see from the opportunity but didn’t go detail about the financing concern.

We highlight this concern in Business Process Reengineering [BPR] project. Network Planning & Development is one of the projects that still on going in my company.

The idea is if we have potential market in one area, we can’t just decide to build a branch there only based on market study. We must consider the financial study and make a feasibility study.

The global concept is like this:

So, the output or deliverables in this project are:

  1. Branch Classification
    We made a branch classification matrix based on Unit in Operation numbers and percentage of sales dealing. We follow-up this classification to define the branch man power standard, office and building facilities, benefit and employee level for every branch class.

  2. Man Power Standard
    Together with HR department, we made a Man Power Standard. Each branch has different class, therefore we define different standard for them. Example, a 90% sales dealing and a big branch can’t have junior administration head; it must have a senior and maybe an assistant too.
    With this, we also can make their career path, they can start from branch that has lower classification and then climb up to higher branch class.

  3. Office Facilities Standard
    Building and office facilities will be varied depend on the branch classification.

  4. Template of Feasibility Study
    Now, this is the difficult one. The effort to build this template has to make me learn again about Excel function in more advance way.

    Generally, I am proud of the project result, because right now, it is possible to make a financial projection to build a branch.
    The Feasibility templates will calculate:Profit and Loss Projection for 5 year; Cash Flow projection; Loan Payment Schedules; Sales target and Cost budgeting; Payback period [for op lease branch 5 year pp is not enough ^_^]; IRR; and NPV.