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McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved

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Chapter 13

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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End of Chapter 13