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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Chapter 9
Operations Consulting and Reengineering
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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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