Katz Students Perform Consulting Work

Ever since A. Stucki Co. was founded in 1911 —  a time period considered the golden age for U.S. railroads, capped by the opening of New York's opulent Grand Central Station — the Pittsburgh-area company has made products to keep railway cars running smoothly on the tracks. But A. Stucki recently cranked into expansion mode, acquiring a number of businesses since 2007.

The rapid growth expanded A. Stucki's product line and global presence, and brought some challenges, not the least of which is managing costs. To address that, a team of Katz Graduate School of Business students worked with A. Stucki in a Katz Consulting Field Project. They examined cost reduction opportunities in the company's use of industrial gases. After months of analysis, the students recommended changes to the invoice payment system and gas delivery system that, if implemented, could provide a savings of 27 percent. The number grew even bigger if the methodology was extended to all business segments, which could result in a $20 million annual savings, according to the students' estimates.

The students — Rachel Divosevic (MBA), Alex Halferty (MBA), Hannah Li (MAcc), and Kumar Simhadri (MBA) — won first place in Katz's 12th annual McKinsey Cup Competition in April 2013. They were one of 13 student teams who presented final recommendations from Katz Consulting Field Projects that they had completed in the spring term. In Consulting Field projects, which are a 3-credit course offered in the fall and spring, student teams work for a client company on a specific project that is in need of quantitative analysis, market research, or in-depth organization assessment.  The McKinsey Cup is the capstone event of the course.

The McKinsey Cup judges were Alan Veeck, vice president of Denali Sourcing Services; Scott Barnyak, a principal partner with SDLC Consulting LLC; and Amy Dubin, vice president of client services for Novum Pharmaceutical Research Services.  Teams were judged in three areas: engagement management, value added to their client, and presentation delivery. The presentations were 20 minutes in length, followed by a critique from the judges.

The students on the second place McKinsey Cup team — Sanjay Singh, Sai Venkataramani, Antonio Morayta, and Gerrit van Hartogh — completed a project for Westinghouse Electric Co. The team evaluated the global market potential of Westinghouse's small modular reactors and presented a corresponding business strategy.  Whereas a traditional nuclear reactor is a $10 billion investment, a small modular design costs $1 billion, and has the flexibility of non-electric applications and construction off-site. For this reason, the small modular reactors are anticipated to revolutionize the global nuclear power industry and are a key ingredient in Westinghouse's nuclear strategy as demand for such reactors is expected to exceed 100 reactors by 2030.

After careful analysis, the Westinghouse students recommended focusing on six markets: the United States, Brazil, Canada, China, India, and South Africa. Furthermore, the students recommended a traditional turn-key business strategy, although lease-to-own, group financing and operate, and build-own-and-operate were viable options as well.

The other two McKinsey Cup finalists completed projects for PNC Financial Services Group and All-Clad Metalcrafters. The PNC team analyzed the question of "what is the new normal?" — a question that all banks are asking themselves following the 2008 financial crisis and subsequent enhanced federal regulations. Lost non-interest income and higher compliance expenses are two repercussions banks are feeling on their bottom lines. Although PNC's market position has strengthened in the past several years, its price-to-book ratio has been declining, and in that regard, the students identified several industry leaders which have strategies that PNC can adopt. Before the McKinsey Cup, the team presented their recommendations to PNC's chief financial officer.

The students on the All-Clad team helped the Canonsburg, Pa.-based manufacturer of high-end specialty cookware with a company culture assessment.  The focus was to determine what changes in organization, incentives, and motivation could be made to align hourly workers with management performance goals. The students accumulated more than 5,000 responses in a comprehensive survey of the workforce.

Ultimately, the A. Stucki team was selected as the winner. Two managers with the company were present for the competition and congratulated the students for their contributions. Armed with recommendations from the Katz team, A. Stucki can expect big savings and better profit margins.