Operational Excellence keeps in balance the complete involvement of employees, customers and suppliers with shareholder value and social responsibility(1).
? What can I do in order to avoid losing money and/or to improve my cash flow?
? Are the customers satisfied with my product/service?
? What can I do to be more efficient/ productive? How do I reduce my costs?
? Is Operational Excellence a solution to these problems?
? What is the role of a management consultant in an Operational Excellence initiative?
CEOs or COOs often ask themselves the questions above.
According to a study(2) released by Eurogroup Consulting(3) in 2013 which involved over 250 respondents, representatives of companies from different industries operating in six European countries (France, Germany, Portugal, Romania, Belgium and the Netherlands), Operational Excellence is an approach influenced by both recent economic conditions and the increasingly sophisticated consumer needs which ultimately translate into better quality products / services against a reasonable price, and fast delivery.
According to the same study, 81% of the respondents stated that Operational Excellence was an issue which concerned them, and 50% of them were going to launch a new initiative in this regard in the following years.
What is an Operational Excellence initiative?
The most important elements which the study participants indicated as part of Operational Excellence are as follows:
? Optimization through measurement and acting upon those measurements, in other words launching optimization initiatives (for example applying methods such as cost-benefit analysis, Lean, Business Process Reengineering - BPR, establishing key performance indicators, measuring and monitoring these indicators, applying corrective measures etc.);
? Stronger customer orientation for satisfying client demands, in other words, the company must find out what the customer really expects from the company;
? Reducing the complexity of the business: review the business model.
During such an initiative, the consultant becomes a partner of the client: he is expected to provide both an independent vision and an original perspective on the current situation, as well as offer concrete solutions to the client’s problems. He works together with the client project team in order to achieve the objectives mutually agreed at the beginning of the project.
According to a BPR(4) study released by Ensight in 2010 which gathered responds from over 40 Romanian companies representing mostly retail and distribution industries, telecommunications, financial services and other professional services, organizations try to compensate for the lack of internal capabilities (e.g. Project Management, Change Management) by asking assistance of external consultants in different roles. Although they act as communication facilitators, project managers and additional resources, their primary role remains the one of methodological or functional expert.
From the respondents’ point of view, the most important advantages of involving external consultants are their experience in similar projects, their objectivity and the quality of their services.
What do clients generally pay a management consultant for?
In line with the above, Ensight gathered from their clients some ideas on their expectations from consultants. They corroborate the roles of the consultant according to the ‘Guide to Good Practice for Consultants’(5).
? To bring added value via the application of methods that have proven to be effective in similar projects, in the same industry or in related industries;
? To analyze problems, draw conclusions, find and evaluate possible solutions (preferably innovative solutions) and develop recommendations;
? To identify profit and loss sources of the business;
? To provide an independent opinion.
You can see below what some Ensight clients formally state regarding the role of consultant in an Operational Excellence initiative:
? ‘Facilitating and streamlining the change process, by providing a global and impartial perspective on the activity of the company’ – Project Manager, Financial Services;
? ‘The customer wants a consultant who is available whenever he is required and who gives him a sense of protection, of not having to tackle the project alone’ – Project Manager, Energy;
? ‘Chemistry is necessary between the two parties. If the person sent by the consulting company has no coaching/ mentoring skills and doesn’t put effort into being liked or even wanted, the experiment fails. This is very important!’ – Ex-Procurement Director, Energy;
? ‘Knowledge transfer and providing access to best practices in process, organization or corporate management’ – Project Manager, Financial Services;
? ‘To collaborate with the customer in order to find the best solutions (in the sense of brainstorming) and not to compel the customer to accept limited solutions which worked for other customers. (The same disease manifests itself differently in two different patients)’ – Project Manager, Energy.
As a conclusion, at the end of the project, when we draw the line and analyze what went good and what went wrong, the majority of clients state that the consultant’s work brought added value to the company, by providing support to accomplishing project tasks, mobilizing teams, facilitating and streamlining the change and communication processes.
If we were to put this in figures, the solutions recommended typically lead to the following benefits:
? Increase in profit margin by 1-2%;
? Decrease of inventories by up to 15-20%;
? Decrease of operational expenses by up to 25%;
? Reduction of average process time by 50% (for poorly automated organizations).
Naturally, companies can also engage in Operational Excellence projects by themselves, using their available internal resources. However, when they decide to seek the assistance of a consultant – either for an ‘extra mind’ (expertise / method / innovative vision) or for an extra ‘pair of hands’ (additional resources for the project), the client only benefits from this situation. For us, customer success leads to a good reputation on the market, additional recommendations and, as a consequence, more business.
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1) http://www.ensight.ro/press/news/operational-excellence-an-increasing-focus-for-romanian-companies/
2) Eurogroup Consulting - A New Perspective on Operational Excellence, 2013 Edition
3) Eurogroup Consulting is the most powerful management consulting groups in Europe which currently has a team of 1,200 consultants and operates in 21
countries. In 2010, Ensight Management Consulting became an affiliate of this management consulting group.
4) Business Process Redesign National Study, Second edition, 2010 – Ensight Management Consulting
5)’Guide to Good Practice for Consultants’ on http://www.amcor.ro/menu/Materiale-profesionale.html
