December 7, 2014

Operations Consulting and Reengineering - Chapter Review Notes

Operations' consulting assists clients in developing operations strategies and improving production processes.

In strategy development, the focus is on analyzing the capabilities of operations in light of the firm's competitive strategy.

In process improvement, the focus is on employing analytical tools and methods to help operating managers enhance the performance of their departments. Regardless of where one focuses, an effective job of operations consulting results in an alignment between strategy and process dimensions in a way that enhances the business performance of the client firm.

The management consulting industry can be categorized in three ways: by size, by specialization, and by in-house and external consultants. Most consulting firms are small, generating less than $500,000 in annual billings. Consulting firms are also frequently characterized according to whether their primary skill is in strategic planning or in tactical analysis and implementation.

Some of the major strategic and tactical areas where companies typically seek operations consulting can be classified in five key areas. In the plant area, assistance is provided for adding and locating new plants, expanding, contracting or refocusing existing facilities. In the people area, the consultants focus on quality including quality improvement, setting or revising work standards, and learning curve analysis. Make or buy decisions and vendor selection decisions are key parts decisions. Process decisions for consultants include technology evaluation, process improvement, and reengineering. Finally, planning and control systems analyzed by consultants include supply chain management, MRP, shop floor control, and warehousing and distribution.

Consultants are needed when companies are faced with major investment decisions or when they believe they are not realizing maximum effectiveness from their productive capacity. Operations consulting tools can be categorized as tools for problem definition, data gathering, data analysis and solution development, cost impact and payoff analysis, and implementation.

Consulting Tools

Problem Definition Tools

Customer Surveys
Employee Surveys
Gap Analysis - This can identify the gap between expectations of customers and employees and current performance of the organization.
SWOT Analysis
Porter's Five Force Analysis
Value Chain Analysis
Issue Trees - They are used by McKinsey company to highlight the problems and possible solutions to develop a consulting assignment specification.

Data Gathering

Plant Tours/Audits
Work Sampling

Data Analysis and Solution Development

Statistical tools
Bottleneck analysis
Computer simulation

Cost Impact and Payoff Analysis

Engineering Economic Analysis
Decision Trees - are useful when a set of decisions are to be taken sequentially in response to environment behavior
Stakeholder analysis
Balanced scorecard
Process dashboards


Responsibility Charts
Project Management

Business process reengineering (BPR) is a way of rethinking and redesigning business processes for improvements of performance, including cost, quality, service, and speed especially based on new technology. BPR basic premise is that new technology is not understood thoroughly by many users and also the existing way of producing is continued by using the new technology in those areas in which application is visible quickly. Principles of reengineering include: organize around outcomes desire and not around current ways of doing 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, link parallel activities instead of integrating their results, put the decision point where the work is performed and build control into the process, and capture information once - at the source.

Chapter outline (Chase et al Book)

What is Operations Consulting?
Operations Consulting Defined

The Nature of the Management Consulting Industry
"Finders," "Minders," and "Grinders" Defined

Economics of Consulting Firms

When Operations Consulting Is Needed
When Are Operations Consultants Needed?

The Operations Consulting Process

Operations Consulting Tool Kit
Problem Definition Tools
Data Gathering
Data Analysis and Solution Development
Cost Impact and Payoff Analysis

Business Process Reengineering (BPR)
Reengineering Define

Principles of Reengineering

Guidelines for Implementation


Case: A California Auto Club Reengineers Customer Service

Appendix: RPA Questionnaire and Rating Sheet


Updated  7.12.2014, 10.12.2011

MBA Core Management Knowledge - One Year Revision Schedule