Chapter 13 A Operations Consulting and Reengineering Mc

Chapter 13 A Operations Consulting and Reengineering Mc. Graw-Hill/Irwin Copyright © 2011 The Mc. Graw-Hill Companies, All Rights Reserved

Learning Objectives 1. Know the scope of operations consulting. 2. Understand how consulting firms make money. 3. Have a framework for the operations consulting process. 4. Describe the basic tools that operations consultants use. 5. Be introduced to business process reengineering and the principles of reengineering. 13 A-2

What is Operations Consulting? • Operations consulting: assisting clients in developing operations strategies and in improving production • An effective job of operations consulting results in an alignment between strategy and process dimensions that enhances the business performance of the client LO 1 13 A-3

The Management Consulting Industry • Can be categorized in three ways: 1. By size • Most consulting firms are small 2. By specialization • Frequently characterized as either in strategic planning or tactical analysis and implementation 3. In-house or external LO 1 13 A-4

Hierarchy • Finders: members who find new business • Minders: managers of project teams • Grinders: the consultants who do the work • Typically work in project teams – Selected according to client needs LO 1 13 A-5

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 3. Procedures: requiring activities similar to other existing projects LO 2 13 A-6

Where Operations Consulting is Needed • 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 LO 3 13 A-7

Where Operations Consulting is Needed Continued • People – Quality improvement – Setting/revising work standards – Learning curve analysis • Planning and Control Systems – – LO 3 Supply chain management MRP Shop floor control Warehousing and distribution 13 A-8

When are Operations Consultants Needed • When faced with a major investment decision • When management believes it is not getting the maximum effectiveness from the organization’s productive capability LO 3 13 A-9

Stages in Operations Consulting Process 1. 2. 3. 4. 5. 6. 7. 8. LO 3 Sales and proposal development Analyze problem Design, develop and test alternative solutions Develop systematic performance measures Present final report Implement changes Assure client satisfaction Assemble learnings from the study 13 A-10

Practical Guidelines for Conducting Consulting Projects • • LO 3 Under promise and over deliver Get the team mix right This 80 -20 rule is true Do not analyze everything Use the elevator test Pluck the low-hanging fruit Make a chart every day Hit singles 13 A-11

Practical Guidelines for Conducting Consulting Projects Continued • • LO 3 Do not accept “I have no idea” Engage the client in the process Get buy-in throughout the organization Be rigorous about implementation 13 A-12

Operations Consulting Tool Kit • • • LO 4 Problem definition Data gathering Data analysis and solution development Cost impact and payoff analysis Implementation 13 A-13

Problem Definition Tools • • • LO 4 Issue trees Customer surveys Gap analysis Employee surveys Five forces mode 13 A-14

Data Gathering Tools • • LO 4 Plant tours/audits Work sampling Flowcharts Organizational charts 13 A-15

Data Analysis and Solution Development Tools • Problem analysis – SPC tools • Bottleneck analysis • Computer simulation • Statistical tools LO 4 13 A-16

Cost Impact and Payoff Analysis Tools • Decision trees • Balanced scorecard • Stakeholder analysis LO 4 13 A-17

Implementation Tools • Responsibility charts • Project management techniques LO 4 13 A-18

Business Process Reengineering (BPR) • Reengineering: 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 LO 5 13 A-19

Principles of Reengineering • • • LO 5 Rule 1: Organize around outcomes, not tasks Rule 2: Have those who use the output of the process perform the process Rule 3: Merge information-processing work into the real work that produces the information 13 A-20

Principles of Reengineering Continued • Rule 4: Treat geographically dispersed resources as though they were centralized • Rule 5: Link parallel activities instead of integrating their results • Rule 6: Put the decision point where the work is performed, and build control into the process • Rule 7: Capture information once and at the source LO 5 13 A-21

Guidelines for Implementation 1. Codification of reengineering 2. Clear goals and consistent feedback 3. High executive involvement in clinical changes LO 5 13 A-22