Strategic Support
Examples of Strategic Support Experience …
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Developing negotiation strategies and providing support in negotiations
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Designing and executing implementation plans to ensure benefits are captured and retained
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Development and evaluation of alternative sourcing strategies
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Assessing opportunities available in the supply market for the purchase of specific goods or services
Commodity Hedging Strategies
Our approach to developing hedging strategies starts first with clearly defining and quantifying the risk our client faces, whether through the purchasing of fuel to supply power plants and equipment or through the sale of power at wholesale or retail levels. Once risk is defined and quantified, we work with our clients to identify acceptable levels of risk given the client's strategic goals and financial targets. After the identification of acceptable levels of risk, we develop a means by which clients can manage risk, whether through contracting at certain volumes and pricing or the purchase of real or financial call or put options. Price and volume options within a hedging strategy come at a cost, whether it’s to cover a counterparty's risk, transaction costs or collateral requirements. L. E. Peabody & Associates, Inc. analyzes and prices financial options and real options with the use of closed-form option modeling and through the use of monte carlo simulation.
Management Planning Strategies
The Firm is acutely aware of the reasons for success in the supply chain process. The successful enterprise has a keen understanding of the myriad of interactions among today's transportation and logistics organizations. These interactions between human, information and operational systems determine the success of the supply chain organization. L. E. Peabody & Associates, Inc. brings considerable depth of experience in these critical system areas and the field experience necessary to insure successful implementation.
The Firm's involvement does not end with a recommendation, however. In today's ever-growing and dynamic environment, we bring consistency and on-going support to our clients through the Firm's stability. As various new forces impact a client's strategy and position, L. E. Peabody & Associates, Inc. provides staff experience and knowledge to address a client's particular issue that will assist in setting a new course of action.
Market Assessments
L. E. Peabody & Associates, Inc. understands the need for decision makers involved with the services and commodities market to comprehend supply, demand, pricing and costing issues. Our expertise includes the ability to assess competitive markets through the analysis of supply, demand, correlated markets and regulatory constraints to arrive at market views specific to client needs. Our data are based on the aggregation of public information, internal knowledge and experience, and our proprietary views on market drivers, both current and future.
Many of our market assessments examine not only what we expect to happen but what might happen if existing drivers change or if new drivers are introduced to markets, such as potential environmental compliance or market design regulations. This type of risk assessment is easily constructed with the proper structuring of a fundamental model plus the proper modeling of correlated variables.
Our market assessments also consider drivers that may be specific to a client's disposition but not to the market in general, such as equipment/facility characteristics and access to transmission, rail, water, pipelines, etc.
Strategic Sourcing
L. E. Peabody & Associates, Inc. has assisted its clients in implementing strategic sourcing and supply chain improvement programs across a wide spectrum of industries and for a range of materials and services. The Firm has assisted clients in sourcing
rail and truck transportation, small package delivery services, automobiles and light trucks and gasoline and diesel fuels. As part of these and other engagements, L. E. Peabody & Associates, Inc. has led programs that assess and redesign distribution channels and implement all aspects of the strategic sourcing process. Our approach to strategic sourcing involves a rigorous multi-step process that includes:
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Assessing opportunities available in the supply market for the purchase of specific goods or services; -
Development and evaluation of alternative sourcing strategies; -
Definition and implementation of project-specific sourcing procedures and tasks; -
Developing negotiation strategies and providing support in negotiations with suppliers; and -
Designing and executing implementation plans to ensure negotiated benefits are captured and retained.
Risk Assessments
The understanding of asset value is vital to making rational asset and capital decisions. This includes acquisitions, divestitures, retrofits or retirement of assets. L.E. Peabody & Associates, Inc. uses several methods to value the current worth of assets, including the income approach, cost approach and comparable sales.
Since critical asset decisions need to also consider the range of an asset’s risk and opportunity, we typically employ an income approach to asset valuation based on real option analysis. This approach considers the extrinsic value inherent in having the option, but not the obligation to undertake certain business initiatives under uncertain market conditions. A common application of this approach is for the valuation of electric generating assets, where an asset owner has the option to start or stop a power plant depending on market conditions. Our models consider operating flexibility as well as market uncertainty around correlated variables to calculate the extrinsic value of assets. Our approach relies on "Monte Carlo" simulation which replicates decision making under varied market conditions to arrive at an expected value of an asset and to define a probability distribution around expected results.
L.E. Peabody & Associates, Inc. has experience with valuing electric power generating assets, energy commodity contracts, transportation infrastructure, railroad equipment fleets as well as entire companies. With more and more reliance on embedding optionality in economic decisions, we offer the ability to price optionality whether it is related to a physical asset or a contract with reopeners, early termination rights or volume flexibility. Our valuations rely not only on sophisticated tools but also on the business acumen needed to understand markets and the drivers that impact client value.
Asset Valuations
Since critical asset decisions need to also consider the range of an asset’s risk and opportunity, we typically employ an income approach to asset valuation based on real option analysis. This approach considers the extrinsic value inherent in having the option, but not the obligation to undertake certain business initiatives under uncertain market conditions. A common application of this approach is for the valuation of electric generating assets, where an asset owner has the option to start or stop a power plant depending on market conditions. Our models consider operating flexibility as well as market uncertainty around correlated variables to calculate the extrinsic value of assets. Our approach relies on "Monte Carlo" simulation which replicates decision making under varied market conditions to arrive at an expected value of an asset and to define a probability distribution around expected results.
L.E. Peabody & Associates, Inc. has experience with valuing electric power generating assets, energy commodity contracts, transportation infrastructure, railroad equipment fleets as well as entire companies. Whether our clients are looking to calculate Net Liquidation Value (NLV) or want guidance with other value based strategic decisions, we taylor our valuation to the client's needs. With more and more reliance on embedding optionality in economic decisions, we offer the ability to price optionality whether it is related to a physical asset or a contract with reopeners, early termination rights or volume flexibility. Our valuations rely not only on sophisticated tools but also on the business acumen needed to understand markets and the drivers that impact client value.
Infrastructure Appraisal