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Chapter 9
Operatio ns
Co nsultin g a nd
Reengin eerin g
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OBJECTIVES
 Operations Consulting Defined
 Operations Consulting and the 5 P’s
 Hierarchy Within a Consulting
Organization
 Stages of Operations Consulting
 Operations Consulting Tool Kit
 Reengineering

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Oper ations C onsultin g

 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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Operatio ns Consul ti ng & 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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Operatio ns Consul ti ng & the 5


Ps ( Conti nued)
 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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Hierarc hy w ithi n Consul ting 7

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

Finders
Who find new business Partners

Who manage the Minders


business
Managers

Who actually Grinders


do the work Consultants

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Economics of Cons ulting 8

Firm s

 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 Consul tants


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 O per ations Consul ting


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

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Operatio ns Consul ti ng T ool 11

Kit:
Category 1 In this scheme we have
five categories of
activities, starting with
Problem Definition Problem Definition, that
consultants perform and
the supporting tools
used to aid the
Issue trees consultant in
performing that
Customer surveys category
Gap analysis

Employee surveys

Five forces model


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Oper ations Consult ing T ool


Kit : Categor y 2

Data Gathering

Plant tours/audits

Work sampling

Flow charts
Organizational charts

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Ope rati ons Consulti ng Tool K it:


Category 3

Data Analysis and


Solution Development

Problem analysis (SPC tools)

Bottleneck analysis

Computer simulation

Statistical tools

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Operati ons Consulti ng Tool K it:


Category 4

Cost Impact and


Payoff Analysis

Decision trees

Balanced scorecard

Stakeholder analysis

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Operat ions Consul tin g Tool Kit:


Category 5

Implementation

Responsibility charts

Project management techniques

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Reengin eering
 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


Reengi neeri ng Def ini tion
 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 18

Reengineering D ef init ion


(Cont inued)
 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 Reengineer in g
 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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Pri nci ples of Reengin ee ri ng


(Conti nued)
 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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Qu estion B owl

Reasons for the boom in consulting


include which of the following?
b. Globalization
c. Very inexpensive
d. Existing managers don’t know
what they are doing
e. All of the above
f. None of the above

Answer: a. Globalization

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Ques tion B owl

According to David J. Collis’s research on


the consulting industry, which of the
following companies made the most
money?
b. PricewaterhouseCoopers Consulting
c. KPMG Consulting
d. IBM
e. McKinsey & Company
f. Accenture
Answer: c. IBM (from Exhibit 9.1)
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Qu estion B owl

In the hierarchy of a typical consulting


firm who are at the top of the
organizational pyramid?
b. Minders
c. Finders
d. Grinders
e. Binders
f. None of the above

Answer: b. Finders

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Qu estion B owl

Which of the following are some of the


major strategic and tactical areas
where companies typically seek
operations consulting?
b. Plant
c. Parts
d. Processes
e. People
f. All of the above

Answer: e. All of the above (The five P’s also


include Planning and control systems.)
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Qu estion B owl

Using the “Stages in the Operations


Consulting Process”, what stage
follows the “Implement Changes”
stage?
b. Sales and proposal development
c. Analyze problem
d. Assure client satisfaction
e. Present final report
f. Develop systematic performance
measures

Answer: c. Assure client satisfaction

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Qu estion B owl

Which of the following are a part of the


“Operations Consulting Tool Kit” that
apply to the category of “Problem
Definition”?
b. Bottleneck scorecard
c. Employee surveys
d. Flowcharts
e. Statistical tools
f. None of the above

Answer: b. Employee surveys

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Ques tion B owl

Which of the following are a part of the


“Operations Consulting Tool Kit” that
apply to the category of “Data
Gathering”?
b. Decision trees
c. Employee surveys
d. Flowcharts
e. Statistical tools
f. None of the above

Answer: c. Flowcharts

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Ques tion B owl

Which of the following are a part of the


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

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End of Chapter 9

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