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Chapter 9

Operations Consulting and Reengineering

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Operations Consulting Defined

Operations Consulting and the 5 P’s

Hierarchy Within a Consulting Organization

Stages of Operations Consulting

Operations Consulting Tool Kit

Reengineering

OBJECTIVES

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Operations Consulting

Operations consulting involves assisting clients in developing operations strategies (i.e., product leadership, operational excellence, customer intimacy, etc.) and in improving production (and service delivery) processes.

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Operations Consulting & the 5 Ps

Plants– Adding and locating new plants– Expanding, contracting, or refocusing

facilities Parts

– Make or buy decisions– Vendor selection decisions

Processes– Technology evaluation– Process improvement and reengineering

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Operations Consulting & the 5 Ps (Continued)

People– Quality improvement– Setting/revising work standards– Learning curve analysis

Planning and Control Systems– Supply chain management– MRP– Shop floor control– Warehousing and distribution

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Hierarchy within Consulting Firms

PartnersFinders

Who find new businessWho find new business

ManagersMindersWho manage the

business

Who manage the business

Consultants

GrindersWho actually do the work

Who actually do the work

A way of looking at the typical consulting firm’s organization

A way of looking at the typical consulting firm’s organization

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Economics of Consulting Firms

David H. Maister’s article on consulting draws an analogy between the consulting firm and a job shop operation. Three types of jobs:

1. Brain Surgery: Requiring innovation and creativity

2. Gray Hair: Requiring a great deal of experience (little innovation)

3. Procedures: Requiring activities similar to other existing projects (little innovation or experience)

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When are Operations Consultants Needed

When faced with major investment decision(s)

When management believes it is not getting the maximum effectiveness from the organization’s productive capability

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Stages in Operations Consulting Process

1. Sales and proposal development2. Analyze problem 3. Design, develop and test alternative

solutions4. Develop systematic performance

measures5. Present final report6. Implement changes7. Assure client satisfaction8. Assemble learnings from the study

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Operations Consulting Tool Kit: Category 1

Problem Definition

Issue trees

Customer surveys

Gap analysis

Employee surveys

Five forces model

In this scheme we have five categories of activities, starting with Problem Definition, that consultants perform and the supporting tools used to aid the consultant in performing that category

In this scheme we have five categories of activities, starting with Problem Definition, that consultants perform and the supporting tools used to aid the consultant in performing that category

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Operations Consulting Tool Kit: Category 2

Data Gathering

Plant tours/audits

Work sampling

Flow charts

Organizational charts

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Operations Consulting Tool Kit: Category 3

Data Analysis and Solution Development

Problem analysis (SPC tools)

Bottleneck analysis

Computer simulation

Statistical tools

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Operations Consulting Tool Kit: Category 4

Cost Impact and Payoff Analysis

Decision trees

Balanced scorecard

Stakeholder analysis

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Operations Consulting Tool Kit: Category 5

Implementation

Responsibility charts

Project management techniques

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Reengineering

Reengineering is defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service, and speed. As a engineering discipline, reengineering can be applied to any process in manufacturing and service businesses, education, and the government.

Business process reengineering (BPR) is focused on reengineering business processes.

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Key Words in the Reengineering Definition

Fundamental– Why do we do what we do– Ignore what is and concentrate on

what should be Radical

– Business reinvention vs. business improvement

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Key Words in the Reengineering Definition (Continued)

Dramatic– Reengineering should be brought in “when

a need exits for heavy blasting” Companies in deep trouble Companies that see trouble coming Companies that are in peak condition

Business Process – a collection of activities that takes one or

more kinds of inputs and creates an output that is of value to a customer

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Principles of Reengineering

Organize around outcomes, not tasks

Have those who use the output of the process perform the process

Merge information-processing work into the real work that produces the information

Treat geographically dispersed resources as though they were centralized

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Principles of Reengineering (Continued)

Link parallel activities instead of integrating their results

Put the decision point where the work is performed, and build control into the process

Capture information once and at the source

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Question Bowl

Reasons for the boom in consulting include which of the following?

a. Globalizationb. Very inexpensivec. Existing managers don’t know

what they are doingd. All of the abovee. None of the above

Answer: a. Globalization

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Question Bowl

According to David J. Collis’s research on the consulting industry, which of the following companies made the most money?

a. PricewaterhouseCoopers Consultingb. KPMG Consultingc. IBMd. McKinsey & Companye. Accenture

Answer: c. IBM (from Exhibit 9.1)

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Question Bowl

In the hierarchy of a typical consulting firm who are at the top of the organizational pyramid?

a. Mindersb. Findersc. Grindersd. Binderse. None of the above

Answer: b. Finders

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Question Bowl

Which of the following are some of the major strategic and tactical areas where companies typically seek operations consulting?

a. Plantb. Partsc. Processesd. Peoplee. All of the above

Answer: e. All of the above (The five P’s also include Planning and control systems.)

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Question Bowl

Using the “Stages in the Operations Consulting Process”, what stage follows the “Implement Changes” stage?

a. Sales and proposal developmentb. Analyze problemc. Assure client satisfactiond. Present final reporte. Develop systematic performance

measures

Answer: c. Assure client satisfaction

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Question Bowl

Which of the following are a part of the “Operations Consulting Tool Kit” that apply to the category of “Problem Definition”?

a. Bottleneck scorecardb. Employee surveysc. Flowchartsd. Statistical toolse. None of the above

Answer: b. Employee surveys

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Question Bowl

Which of the following are a part of the “Operations Consulting Tool Kit” that apply to the category of “Data Gathering”?

a. Decision treesb. Employee surveysc. Flowchartsd. Statistical toolse. None of the above

Answer: c. Flowcharts

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Question Bowl

Which of the following are a part of the “Operations Consulting Tool Kit” that apply to the category of “Implementation”?

a. Organization chartsb. Gap analysisc. Five forces modeld. Computer simulatione. None of the above

Answer: e. None of the above (These tools actually should include Responsibility Charts and Project Management Techniques.)

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End of Chapter 9