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Operations Consulting

Operations Consulting

Overview of what is operations consulting

Operations Consulting refers to the practice of advising organizations on how to optimize their internal processes to achieve their business goals. Operations consultants work with businesses to identify inefficiencies in their operations and develop strategies to improve productivity, reduce costs, become leaner and increase revenue.

Operations consulting has its roots in the management consulting industry, which emerged in the early 20th century with the rise of scientific management and the efficiency movement. Today, operations consulting is a specialized form of management consulting that focuses specifically on improving business operations.

In recent years, operations consulting has become increasingly important as businesses look to optimize their operations in the face of growing competition and increasing customer demands. With the rise of digital technologies and the increasing complexity of business operations, operations consulting has become an essential function for businesses looking to stay competitive in today’s fast-paced business environment.

Key Areas of Focus

Supply Chain Management

One of the key areas of focus for operations consultants is supply chain management. They work with companies to streamline their supply chain processes, from procurement to inventory management to logistics. By optimizing the supply chain, businesses can reduce costs, improve delivery times, and increase customer satisfaction.

For example, an operations consultant might work with a company to improve their procurement process by identifying suppliers who offer better prices or faster delivery times. They might help the company to implement a just-in-time inventory management system to reduce inventory costs and improve cash flow. They might also work with the company to improve their logistics processes by optimizing transportation routes and reducing delivery times.

Process Improvement

Another important area of focus for operations consultants is process improvement. They analyze a company’s existing processes and identify bottlenecks and inefficiencies. They then develop strategies to streamline these processes, reduce waste , downtime and increase productivity.
For example, an operations consultant could work with a manufacturing company to improve their assembly line process. They could analyze the current process and identify bottlenecks that are causing delays in production. They could then develop a strategy to improve the flow of materials and optimize the assembly line layout to reduce waste and increase productivity. By implementing these changes, the company could improve their production output and reduce costs, ultimately leading to increased revenue.

Technology Implementation

Operations consultants also help companies to implement new technologies and systems to improve their operations. They work with businesses to identify the right technology solutions to meet their needs and develop implementation plans to ensure a smooth transition.

Operations consulting can be used to implement new technologies and systems to improve operations in a variety of industries. For example, an operations consultant could work with a healthcare organization to implement a new electronic medical records system. They could help the organization to identify the right system to meet their needs and develop an implementation plan to ensure a smooth transition. By implementing the new system, the organization could improve patient care, reduce costs, and increase efficiency

The Operations Consulting Processes

There are many ways an operations consulting engagement can be conducted, but it would typically involve the following eight steps, similar to a management consulting process, as seen on Figure 1 below.

Figure 1. 8-steps consulting process

The eight steps are:

  1. Develop Vision & Objectives. It is critical for clients and consultants to agree and align on the vision and objectives at the beginning of any engagement. This is to prevent any disagreement in the future that might result in rework and ineffective recommendations.
  2. Understanding The Existing Process. It is impossible for an operations consultant to provide recommendations without knowing the existing process and where the gaps are.
  3. Understand the Process for Re-design. This is where prioritization comes into play. There could be many gaps to be solved, but limited resources. Operations consultants will typically focus on those processes with the highest benefits and lowest implementation difficulty.
  4. Identify Change Levels. It is important for an operations consultant to know how high up the ladder change needs to happen. In many times, the biggest improvement comes from change that involves the entire organization structure.
  5. Implement The New Process. Here, the operations consultant will work together with the clients, sometimes with the so-called “change agents” to start implementing the new process. At this stage, the client is not yet executing the change by themselves.
  6. Make The New Process Operational. This step is critical to ensure the change is sustainable and lasts, even after the operations consultants are gone. This step involves putting into place Standard Operating Procedures (SOPs) and other guidelines.
  7. Evaluate The New Process. Sometimes, it is important not to be complacent and satisfied with the improvement. Can it be improved even further? Are there any risks preventing the new process to stay? Is the new process realizing the benefits that were estimated at the beginning?
  8. Ongoing continuous improvement. Here, the consultant, together with the client, works on instilling the mindset of continuous improvement to the organization. This ensures that the organization will continue on innovating and figuring out ways to improve their processes even more in the future.

Tools and Frameworks of Operations consulting

Operations consultants use various tools and frameworks to help businesses optimize their operations. Some of the commonly used tools include Lean Six Sigma, Business Process Reengineering (BPR), and Total Quality Management (TQM). These tools help consultants to identify inefficiencies, analyze processes, and develop strategies for improvement.

In operations consulting, some commonly used tools and frameworks include:

These tools help consultants identify inefficiencies, analyze processes, and develop targeted solutions to improve business operations.

The 5-Whys, as seen in Figure 2 below, is a problem-solving framework used to ensure we focus on the root cause of the problem rather than the surface level observations. In an example below, running the red light is not the root cause of the problem. The root cause is the person forgetting to check the battery of their alarm.

5 why frameworks used operations consulting
Figure 2. 5-Whys

The Plan-Do-Check-Act (PDCA) framework, as seen in Figure 3 below, is a continuous improvement framework used by organizations to implement new operational initiatives. It starts with planning an activity (Plan), testing it (Do), checking if it resulted in the same outcome as on the plan (Check), and act, whether it is to implement it or to go back to the planning stage (Act).

Plan do check act framework
Figure 3. Plan-Do-Check-Act
The Ishikawa, or commonly called as the FishBone Diagram, as seen in Figure 4 below, is a problem solving framework used to ensure all potential aspects contributing to a defect is taken into consideration. The branches of the diagram highlights the different aspects such as Measurements, Materials, Personnel, Environment, Methods, Machines.
Fish bone diagram used in consulting to identify root cause of problems
Figure 4. Ishikawa (Fish Bone) Diagram
Total Quality Management (TQM), as seen on Figure 5 below, contains 7 key principles of Customer Focus, Leadership, Engagement of People, Process Approach, Continuous Improvement, Evidence-Based Decision-Making, and Relationship Management.
TQM components and definition used in operations consulting
Figure 5. Total Quality Management

Just-In Time Management, as seen in Figure 6 below, is a system in operations management under which the production is made as per the demand at that particular moment. There is no prior production for any anticipated demand. Under JIT, the manufacturing process is highly efficient with limited wastage, high quality control, adherence to schedules & a seamless continuous throughput.

Just in time definition for lean and process improvement
Figure 6. Just-in-Time Management

An example Case Study

An operational consulting company was engaged to help improve the operational efficiency of a paper mill in South East Asia. OEE (Overall Equipment Efficiency), measured in percentage of productive time of a paper press machine, was low compared to both internal and external benchmarking.

The company was engaged and did both quantitative and qualitative analysis on the operation. Many areas were addressed. One focus area turns out to be the low percentage of available time due to frequent equipment failures.

There were two frameworks used on the analysis:

  1. The 5-Whys
  2. The Ishikawa/Fishbone Diagram

An example of 5-Whys in real life usage below.

  • Problem: machine A tends to break down a lot.
  • Why: because component B breaks down a lot.
  • Why: because component B is of lower quality.
  • Why: because an after-market part was used to replace component B.
  • Why: because the Standard Operating Procedure (SOP) instructed the workers to do so.
  • Why: because the after-market part is considered lower in cost by the management.

Using the 5-Whys approach, we identified that a mindset and cultural shift needs to be done, and this shift needs to start from the top leadership, down to the frontline workers.

Through the use of this analysis, the consultant provided a few recommendations such as:

  1. Updating the Standard Operating Procedures to focus more on equipment reliability rather than cost-cutting. Equipment reliability needs to be a higher priority as the effect on revenue and customer satisfaction can easily overshadow the benefits from cost cutting measures.
  2. Changing the culture of the company from the leaders down to the frontline workers by implementing a leadership influencing framework. This includes creating a change story narrative, implementing systems, and rewarding good behavior.

Conclusion

In summary, operations consulting is a critical function for businesses looking to optimize their internal processes and achieve their goals. Businesses can achieve this goal by working with an operations consultant, who are experts in their field and are equipped with the relevant frameworks and methodologies to achieve this goal.

References List

Five Echelon. (2023, January 30). How to Know If You Need a Business Consultant. Retrieved from https://fiveechelon.com/how-to-know-if-you-need-a-business-consultant/

Kanbanize. (n.d.). 5 Whys Analysis Tool. Retrieved from https://kanbanize.com/lean-management/improvement/5-whys-analysis-tool

Kanbanize. (n.d.). What is PDCA Cycle? Retrieved from https://kanbanize.com/lean-management/improvement/what-is-pdca-cycle

MBA Skool. (2020, December 31). JIT (Just-In-Time) Definition. Retrieved from https://www.mbaskool.com/business-concepts/operations-logistics-supply-chain-terms/1657-jit-just-in-time.html

VKsapp. (n.d.). Total Quality Management. In VKsapp Dictionary. Retrieved from https://vksapp.com/dictionary/total-quality-management

Wikipedia. (2021, May 4). Ishikawa diagram. In Wikipedia. Retrieved May 8, 2023, from https://en.wikipedia.org/wiki/Ishikawa_diagram

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