The term “operations” essentially describes the process of transforming certain inputs into required outputs in the form of goods or services. As such, operations are not restricted to manufacturing but apply also to other activities, such as construction, transport, health care, public administration and all kinds of services.

This process of transformation requires decision-making on the part of operations management with a view to getting an output of the desired quantity and quality delivered by the required date and at a set (as a rule minimum) cost. The consultant’s task is to advise management, whenever necessary, on the best means of achieving this objective. In most cases, operations management consultants are able, in the performance of their functions, to measure and assess the results of their work.

Operations materialize the value chain, which comprises product development, marketing, inbound logistics, production, outbound logistics, sales and after-sales services. Operations consultants therefore need to consider the effect of their propositions on the overall value chain. Increasingly a supply chain perspective is taken to coordinate and integrate the components of a value chain. Supply chain management focuses on organizational aspects of integrating separate firms as well as coordinating flows of materials and information within a production and distribution network. The term supply chain management is often used synonymously with logistics.1

17.1 Developing an operations strategy

How can operations consultants contribute to improving the performance of production and distribution systems having in mind an optimization of the whole value chain? Problems submitted to the consultant may have very different degrees of importance to the client organization.

At one end of the scale there are problems that belong to the group of basic choices. An operations or production consultant may have an important say in

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a team that is examining the client’s business strategy. At the opposite end of the scale there are myriad problems whose common denominator is the need to meet certain criteria with regard to productivity, quality, cost, or job satisfaction in the performance of specific production tasks. Such problems tend to be operational in nature. But the consultant will be well advised not to lose sight of the broader needs of the client organization, as it is not unusual for assignments in very specific production fields to disclose problems that are much more profound and lie outside the production area itself.

In defining an improvement programme or project, consultants, together with their clients, should:

–establish competitive performance criteria and levels;

–develop a clear understanding of available operations choices (best practice);

–select the consulting approach.

Performance criteria and levels

Speed, quality, productivity and customer focus, as well as their continuous improvement, characterize operations:2

●The speed imperative is translated into criteria such as time to market for new products or services, response time to orders from internal or external customers, and manufacturing lead time for production.

●Quality and productivity are increasingly defined in terms of the customers’ need and desire and translated into product specifications by using tools such as quality function deployment. In product development, productivity and quality mean achieving high leverage from critical resources, as well as an increased number of successful projects developed in a truly cross-functional development process. With tools such as total quality management (see Chapter 21), efforts are made to improve quality and productivity in operations by increasingly concentrating on processes and not only on products.

●Customer focus aims to meet the increasing expectations of ever-more segmented customers who are offered, for most products and services, a wide choice. Here, the efficient translation of these demands into products and services with distinction and integrity has to be tackled.

Consultants are used to implement all these performance criteria or competitive imperatives, as shown in box 17.1. In the drive to restructure production, consultants should, however, be careful not to generate too many projects which cannot be absorbed and sustained by existing production facilities and staff.

In defining performance criteria and setting performance standards, a client company assisted by a consultant is well advised to search for those best practices of superior companies, competitors and non-competitors, which are

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Source: Adapted from: S. G. Wheelwright and K. B. Clark: Revolutionizing product development (New York, The Free Press, 1992).

relevant to achieving superior performance. Benchmarking (see description in Chapter 20) has been used by many consultants to help clients establish performance levels in production and operations by comparing the client’s current practices with those of sector leaders, competitors or other companies able to offer, and willing to share, useful practical experiences. In the approach developed by the Xerox Corporation, the interfirm comparison methodology, traditionally used with financial data, has been applied to product design, manufacturing and customer services by seeking to identify, evaluate and use the best approaches developed by successful competitors.

Making operations choices

In implementing performance improvement programmes according to the above criteria, the most complex aspect is perhaps the wide variety of choices a consultant faces, a summary of which is given in box 17.2. Often these choices

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Box 17.2 Major types of manufacturing choice

Source: S. G. Wheelwright and R. A. Hayes: “Competing through manufacturing”, in Harvard Business Review, Jan.–Feb. 1985, p. 101.

are sold as a complex package such as “lean production”.3 Lean production advocates a reduced vertical integration, where the original equipment manufacturer (OEM) produces only about 20–30 per cent of the product value. Parts and components are bought from a reduced number of suppliers with whom close collaboration is developed. Suppliers take up product development tasks and synchronize their production “just-in-time” with the OEM. Consultants are often called in either by the OEM or by suppliers to develop lean production practices which make such an enterprise network operate efficiently.

Another package of choices concerns the implementation of information technology (hardware and software) in operations aiming at computer-integrated manufacturing. In several cases, this is introduced or planned simply to keep up with competitors, and without the necessary preparatory work. Computer applications have found their way into production through computer-aided design (CAD) and computer-aided manufacturing (CAM). There have been several developments in CAM, as well as the introduction of flexible manufacturing systems. Advanced planning systems and efficient consumer response applications support supply chain management. Operations consultants would do well to remind their client organization that if the plant layout is poor, the product design old, production planning and control not the best, and standards loose, transferring these ills to a computerized manufacturing system is not going to help much. Therefore, business process improvement (BPI) programmes are usually an integral part of client-based solutions.

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Furthermore, it is the rule rather than the exception that new technology is introduced alongside traditional technology. This may be a permanent arrangement or a transition phase, and the consultant must be able to diagnose the problems and improve the efficiency of the traditional technology, either to increase productivity and cut costs or as a prelude to the introduction of new technology.

Selecting the consulting approach

There is not only a wide variety of operations choices, but also a variety of consulting approaches that are applicable to operations.

Process or product focus. In order to improve the performance of operations, consultants have to decide together with their clients whether to focus on certain products, on certain processes, or on cutting overhead costs independently of products and processes. For a company wishing to improve speed of delivery, for example, it would be useful to look into order processing, which would generally be similar for a whole range of products. If the task is to increase the contribution margin of products that have a high share of sales, then the consultant would be well advised to analyse the production sequence for these products. An overhead reduction approach will be appropriate if there is a high percentage of overhead costs and if there are too many products and processes to achieve short-term performance improvements.

Technical expertise or change management skills. While operations consultants have traditionally acted very much as industrial engineering or technology experts, they have had to learn how to lead and assist in complex organizational and technological change processes. It is still a major challenge for an engineer to acquire process consulting skills and be sensitive to people’s concerns in proposing changes in established production practices. The failure of consulting projects can often be attributed to an imbalance between technical expertise and the skills required to lead change processes (see Chapters 3 and 4).

Revitalization or incremental improvements. Increasingly, clients call in consultants in operations management in order to modernize operations and to achieve “quantum leaps” in speed and efficiency. For such cases, consultants have devised revitalization approaches to identify and radically improve processes that are essential for creating value and meeting customers’ demands; other processes are not restructured, but are discontinued and dismantled. State- of-the-art production and information technologies are essential for achieving process integration and reorganization, which is the opposite to traditional process fragmentation into thousands of small tasks.

In contrast, continuous and incremental improvement, following the principles of kaizen (in Japanese, “gradual unending improvement”), builds on existing systems with the objective of using every opportunity and involving everyone – top and middle management, supervisors, specialist staff and workers

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