1. McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 13 Operations Consulting and Reengineering

3. 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 13-3

4. 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. 13-4

5. 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 13-5

6. 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 13-6

7. Hierarchy within Consulting Firms Partners Finders Who find new business Managers Minders Who manage the business Consultants Grinders Who actually do the work A way of looking at the typical consulting firm’s organization 13-7

8. 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) 13-8

9. 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 13-9

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

11. 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 13-11

12. Operations Consulting Tool Kit: Category 2 Data Gathering Plant tours/audits Work sampling Flow charts Organizational charts 13-12

13. Operations Consulting Tool Kit: Category 3 Data Analysis and Solution Development Problem analysis (SPC tools) Bottleneck analysis Computer simulation Statistical tools 13-13

14. Operations Consulting Tool Kit: Category 4 Cost Impact and Payoff Analysis Decision trees Balanced scorecard Stakeholder analysis 13-14

15. Operations Consulting Tool Kit: Category 5 Implementation Responsibility charts Project management techniques 13-15

16. 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. 13-16

17. 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 13-17

18. 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 13-18

19. 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 13-19

20. 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 13-20

21. Question Bowl Reasons for the boom in consulting include which of the following? a.Globalization b.Very inexpensive c.Existing managers don’t know what they are doing d.All of the above e.None of the above Answer: a. Globalization 13-21

22. Question Bowl In the hierarchy of a typical consulting firm who are at the top of the organizational pyramid? a.Minders b.Finders c.Grinders d.Binders e.None of the above Answer: b. Finders 13-22

23. Question Bowl Which of the following are some of the major strategic and tactical areas where companies typically seek operations consulting? a.Plant b.Parts c.Processes d.People e.All of the above Answer: e. All of the above (The five P’s also include Planning and control systems.) 13-23

24. Question Bowl Using the “Stages in the Operations Consulting Process”, what stage follows the “Implement Changes” stage? a.Sales and proposal development b.Analyze problem c.Assure client satisfaction d.Present final report e.Develop systematic performance measures Answer: c. Assure client satisfaction 13-24

25. 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 scorecard b.Employee surveys c.Flowcharts d.Statistical tools e.None of the above Answer: b. Employee surveys 13-25

26. 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 trees b.Employee surveys c.Flowcharts d.Statistical tools e.None of the above Answer: c. Flowcharts 13-26

27. Question Bowl Which of the following are a part of the “Operations Consulting Tool Kit” that apply to the category of “Implementation”? a.Organization charts b.Gap analysis c.Five forces model d.Computer simulation e.None of the above Answer: e. None of the above (These tools actually should include Responsibility Charts and Project Management Techniques.) 13-27

28. End of Chapter 13 13-28