Cover Story - Open for business

For the last two years the Management Consultancies Association has been encouraging its members to come forward with case studies of successful or instructive client assignments. It is an initiative that this magazine wholly supports. In a recent reader survey, 42 per cent of you felt that this magazine should place greater emphasis on case studies.

Unfortunately, our researchers weren’t primed with a follow-up question: how many of you will work with your clients to allow these case studies to emerge into the light of day?

For too long the cloak of secrecy which covers most consultancy projects has obscured the daily contribution which consultancy makes to the UK economy. Consultancy is virtually a hidden force, which gives a free hand to the snipers in the business press.

Client confidentiality is an honourable and well-kept tradition in consultancy, but it can be overdone. Much of what is good about successful assignments is not about secret strategies or competitive weapons but about achieving excellence in products or services. Even the most sensitive competitive issues fade with time.

Of course, a good case study has to have a “warts and all” aspect if it is to convey a sense of reality, capture the imagination of the reader and offer genuinely useful information. This doesn’t mean we should all emulate Gerald Ratner: memoirs are not confessions.

But a good case study should offer an insight into both the risks and rewards of a consultancy assignment, the setbacks and the triumphs, otherwise it runs the risk of being terminally dull. Admitting that one is not perfect is less damaging than spending a lot of effort producing a case study so anodyne it is universally ignored.

So it is gratifying to watch the growing popularity of MCA’s Business Improvement Awards, which this year attracted more entrants than before.

An eminent panel of judges comprised Sir Brian Jenkins, chairman of the Woolwich, Michael Scholar, Permanent Secretary at the Department of Trade & Industry, Anthony Coke of Andrew Weir & Co, Tim Dickinson of Financial Times Publications and MCA president Alan Reid.

The shortlisted entries demonstrated the wide variety of projects and clients enjoyed by MCA members. The overall winners, and winners of the Best Overall Transformation Project, were Motor Coach Industries and CSC Computer Sciences Corporation (see panel). Their case study was praised as “an outstanding case of collaboration on a project that transformed ICI. The meticulous attention that the study paid to all aspects of the business made exciting reading, and demonstrated what true management consulting was all about”.

CSC’s Mark Sealy worked on the project, to develop a radically new vehicle, for four years, including a period of secondment to MCI. The client was very enthusiastic about “going public” with the project, which also won an award for concurrent engineering excellence.

“It was largely about timing,” said Sealy. “MCI didn’t want anything to happen until the bus went into production, but now it’s done it’s super to make some mileage out of it. It’s good to look back at the huge things that happened and the lessons that we learned.” Sealy also welcomes the opportunity to show a different side of CSC: “We’ve developed a reputation as people who solve complex computer problems, but this is good, old-fashioned change: product introduction.” CSC also won the Best Strategy Assignment category with a project for Lucas Aftermarket Operations (LAO), which supplies aftermarket sales, marketing and distribution services to all Lucas Automotive customers. The LAO product catalogue contains more than 75,000 items, distributed over 120 countries. In Europe the key markets are the UK, France, Germany, Spain and Italy. In June 1996, LAO made the implementation of a “world class” supply and distribution chain a key strategic initiative. In the first phase the project team used CSC’s process benchmarking methodology to compare LAO’s current processes and aspirations to “world class” and identify how projects currently running would bridge the gap. This stage found that there was no coherent supply chain strategy. The second phase involved developing the future vision for the supply chain operation, identifying key process improvements.

Phases three and four covered the development and implementation of the “operational blueprint”, addressing the “domains of change”: business processes; IT systems and data standards; organisation roles and responsibilities; and physical infrastructure. Phase four is still underway, but cost savings already identified are: decreased stock levels; internal operating efficiency; and reduced infrastructure operating costs. Benefits identified so far have already exceeded consultancy costs by a factor of 20.

The winners in the Best Other Business category were Sun Microsystems and Kepner Tregoe, in a case study written by Mike Bird of Kepner Tregoe and Andy Taylor of Sun’s Customer Care Centre. This project was described in the case study as “that rarest of beasts – a project where consultants have enabled the client to change themselves, and the client has taken full advantage of that opportunity”.

In August 1996 Sun contacted Kepner Tregoe as a result of a number of issues in its customer care centre, which employs 80 staff who deal with 3,000 service requests each month. Kepner Tregoe proposed the application of a problem-solving approach known as Analytic Troubleshooting (ATS), a structured questioning process designed for people whose jobs require them to solve technical or machine problems. The implementation process in which expectations and benchmarks were set, and a critical mass of engineers trained, took until April 1997. The launch programme which followed, set out to “make ATS a part of how Sun works” supported by T-shirts, a website, competitions, and “Dr ATS” surgeries. Results include a fall in “open” customer calls from 1,600 to 1,000, smoother movement of calls between engineers with more effective questioning and less duplication; and a troubleshooting training plan for all new hires. The introduction of a single approach to customer calls has created “problem portability”, in place of the previous variety of templates for different types of enquiry.

The winners of Best Use of IT were British Petroleum and PA Consulting Group. BP is committed to the “Billion Dollar Challenge” a project to reduce its spend on external suppliers by #1bn per year. In this context speedy access to procurement data is vital. “Project Oyster” was a BP-wide project to implement a data warehouse across its three operating companies of Oil, Exploration and Chemicals. PA agreed to create the IT infrastructure to a nine-month deadline, and on the basis of shared risk/reward. PA’s Rapid Systems Development approach, with its emphasis on “soft” issues, quickly established that the major challenges to the project were non-technical. Deploying the system via an intranet brought in the maximum number of users as quickly as possible. Standard commodity coding structures achieved transparency of data across parts of the business which codified their spending information in often widely varying ways.

The third challenge was to gain commitment from these sectors to the project. The project was finished on time and 20 per cent under budget.

Within six weeks the contribution of Oyster to procurement deals had realised savings of double the cost of the system.

Runner-up projects showed an equal variety of scope. Microsoft and Deloitte & Touche submitted a global SAP R/3 installation. Microsoft’s rapid growth meant that its systems were becoming increasingly unwieldy, expensive and inflexible. SAP R/3 was selected by Microsoft for its global capabilities and Deloitte & Touche/ICS was selected for the implementation and change management. The project, which used Deloitte’s FastTrack 4SAP methodology, involved five stages: scooping and planning, vision and targeting, redesign, configuration and prototype, and testing and delivery. The project began in August 1995 and from September 1995 to April 1996 headquarters modules were implemented. July 1996 saw the general ledgers up and running.

Rollout across 25 subsidiaries began in the UK and finished in South Africa in June 1997. It is too early to quantify results but users at Microsoft’s HQ are already reporting productivity gains.

In 1996, Ireland’s mobile phone operator faced the twin challenges of being spun out of Telefis Eirann and also losing its monopoly. Robson Rhodes conducted a benchmarking exercise against other European operators, and set targets for the company’s future operations, which it was asked to implement. Overall goals were to achieve customer focused service, and an empowered customer service workforce. “Quick wins” at the start of the project included the purchase of IR#100m of interactive voice response equipment, and introduction of easier-to-read bills. Customer service teams were reorganised into self-managing teams backed by support teams with specialist staff handling credit control and fraud. Every single measure of performance has bettered pre-project benchmarks.

British Gas, already facing competition in the domestic gas market, has opted for diversification into other areas. The first of a series of products is the Goldfish credit card, which offers customers discounts on their gas bill. Ernst & Young provided support for all stages of the project from development of a product and brand profile, to selecting a banking partner through to establishing the joint venture to launch the card. A financial model was developed which took into account not just the returns on the card but the overall effect on British Gas. Scenario modelling was used to develop the optimal methods for cost and profit sharing. The project team jointly selected agencies for brand development, advertising and public relations. The loyalty programme was refined to ensure a powerful customer proposition and broadened to include Boots and Asda as loyalty partners. E& Y’s VAT group advised on tax implications.

The card was launched in September 1996 and take up has exceeded expectations.

MMM Consultancy worked with the National Grid Company to improve the stores and logistics operations supporting its Strategic Services Branch.

MMM’s initial review recommended: store centralisation and rationalisation; review of stock levels for slow moving items; development of IT system support; and revised purchasing relationships. As a result of the review NGC decided to centralise its stores operations to a single site at Didcot.

NGC asked MMM for project management assistance with the warehouse design and planning. MMM prepared a detailed stock accommodation plan, taking into account the awkward shapes of the components which range from small electronic components to items weighing over 20 tonnes. Another major task was the movement of stock from existing locations while maintaining normal customer service. The project was completed on time and within budget, and savings have exceeded expectations. The value of sites released by centralisation was greater then expected, and staff costs were reduced by 30 per cent.

These case studies show the breadth and depth of consultancy work, revealing the “hidden hand” of consultants behind some extremely high profile initiatives.

We can only hope that the MCA’s Business Improvement Award attracts an equally good crop next year, while both consultants and clients are encouraged to go public and stop hiding their light under a bushel.

TOP MARQUES: CSC COACHING PUTS MCI BACK IN DRIVING SEAT

When the largest coach builder in North America is building coaches like a small manufacturer, it’s time to change. And when your competitors are stealing a march on you with newer, more exciting designs with “kerb appeal”, it makes the need to change that much more pressing.

This was the situation facing Motor Coach Industries (MCI), which despite efforts in reducing costs, inventory levels and factory throughput times, was in danger of causing MCI to lose more market share. It needed to bring a new, exciting model speedily to the market to keep and improve its competitive position.

CSC’s involvement with Motor Coach Industries started about three years ago, when it was asked to help with a “business diagnostic”. The problems facing MCI became clear immediately. Its current products had evolved with too many parts, too much welding, high build hours and little similarity between models. There were also too many design changes after each new model started production. The company clearly focused on the needs of the coach operators, but it was often unclear what the passengers really wanted.

One of the first tasks was a gap analysis. A combined MCI/CSC team set out to identify what coach features would be valued five years ahead, in addition to identifying existing product deficiencies. This included interviewing new, existing and former customers to compare existing products with the competition. There were also discussions with passengers, drivers, service garages, insurance brokers and tour firms.

As part of the overall business assessment, the team conducted an internal systems analysis. It evaluated the good and bad aspects of previous product introductions. Industry benchmarks were determined for “time-to-market” and the number of changes dealt with before “job1”. It was clear that MCI’s existing design and production systems had substantial opportunities.

Moreover, existing CAD systems needed consolidation and investment.

A strategy was formulated to redesign the product introduction process, rebuild the product line from scratch, make improvements to purchasing procedures, and adopt best practice manufacturing methods in the redesign of three factories to build the new coaches. MCI’s existing product was five years behind the competition for customer appeal. Although the product was an excellent workhorse, it wasn’t exciting. Manufacturers such as Prevost, VanHool and Setra had raised the market’s expectations. Customers really wanted kerb appeal, with a range of “exciter” features. A lower operating cost per mile was taken for granted.

The team proceeded with a “steady state” design. Here, it wanted to determine the equipment, computer tools, people, resources and processes needed to do the job. Once that was understood, design of the “coach studio” could begin.

The CSC/MCI team worked out: where we would place all the people; how we were going to integrate supplier and customer involvement; how we were going to run workshops and clinics; and how we would create a combined design office and prototype workshop in one room.

The coach was then divided into a number of zones, which became the basis for the design of the studio. The “steady state” design took just six weeks of the overall project schedule. This was a significant achievement, given the fundamental thinking that needed to be done. The team had to get the union agreement amended to allow hourly and salaried people to work in the studio together as well as obtaining planning permission for the combined fire regulations of an office and workshop!

The team then recruited two trained teams and implemented the studio.

This included structural work and getting computer systems organised.

It also recruited styling and suspension consultancies. A new engineering data management system was also implemented to run the CAD equipment, which was used to implement a three-dimensional solids master model for the entire vehicle. Once this was achieved, development started on the new coach. The concurrent engineering process involved about 20 significant first tier suppliers who co-developed major subsystems.

The establishment of co-located teams was critical to the success of the project. Indeed, the team attributes 70 per cent of the success to having these co-located multidisciplinary teams. Much work was undertaken initially to determine team skill requirements through the life of the project. The teams were also dynamic – changing four times already – and there are currently 18 teams on the programme, from purchasing and design to factory tooling.

The teams set their own targets based on their own customer analysis.

Each team leader is responsible for the recruitment of the team, its budget, plans, suppliers and all its activities. Targets (weight, cost, timescales etc.) were not mandated, but rather set by the teams through analysis.

Everyone gets excited at the start of these initiatives and believes they are going to change the world. However, to keep a sense of balance, the team created a radar chart to express the realistic main choices for management. Either we could design a vehicle for export, or we could push towards a North American model but with greater capability. This meant imperial units, left hand drive only and just one stair well. The process helped the executives to decide the priorities. As part of this participative approach, the following step change “targets” were established: passenger excitement; problem free miles; whole life cost of ownership; schedule adherence.

These aims became paramount in everything. There was concern initially about pushing cost into third place. However, a coach can have excellent economics, but if it constantly breaks down or fails to attract passengers, cost effectiveness becomes largely irrelevant. By understanding these issues, the team was able to determine whether individual design features satisfied the step change targets.

KANO MODEL

A Kano Model was used during the analysis of product features as a useful mapping tool. This allowed the team to take the features of a product and section them into basic ideas, performance ideas and exciters. Everyone expects basic features, such as an auxiliary heater. Customers may be willing to pay more money for performance improvements, such as better fuel economy. An exciter, on the other hand, is a really new feature that everyone is keen on. Examples of an exciter ranged from karaoke entertainment to rear wheel steering.

Many exciters were examined and some problems were experienced keeping the features in the product design. The team learned to hang on to a select few exciters with determination to ensure the end result would be differentiated from the products of MCI’s competitors.

Kano worked out what should be standard equipment and what should be pioneered quickly to maintain a competitive lead. It was also a useful tool for weeding out impractical features. Approximately 25 per cent of ideas suggested by passengers were dismissed quickly; also several ideas, such as nappy change tables and sleeper berths for drivers, were killed by the company’s lawyers.

The team used QFD (Quality Function Deployment) for product requirement definition. This helped it to translate a large “wish list” into tangible and measurable design parameters. In one example, QFD was used to create definitions for passenger comfort. A particularly important definition was the time for old people to enter and exit the coach. The time it took to safely unload 60 65 year olds needed to come down. This had major implications for step heights and other key design parameters. These requirements led to a spiral staircase that has been patented in seven countries. Classic QFD proved its worth as a powerful communication tool throughout the project.

Whole life costing was also used to help MCI understand where the “cost drivers” were. In previous projects, the purchase financing was always targeted for cost reduction. In reality, it is a difficult way to achieve significant savings. Easier ways were discovered through reducing vehicle maintenance, diesel consumption and driver costs. Market segmentation charts were used to position the coach with respect to the market place.

This was essential to ensure transition from the status quo.

DESIGN FOR MANUFACTURE

Factory workers, tooling engineers and process engineers lived in the studio and helped with DFMA activities. Most of a coach was built in plywood and foam board to understand building issues. The new frame is now twice as accurate with only half the parts and half the weld time.

Before the project began, MCI’s commendable streamlining efforts had achieved only a limited amount. Development of the new coach has focused much more on increasing the value of the product – another way of becoming more competitive and profitable. This meant new methods of product design and introduction. Reducing waste and improving schedule adherence with current models was not going to sustain MCI’s future.

CSC and MCI always knew that lead time to market was vital. It needed to take it from five years to three. This could only be achieved with substantial concurrent engineering. This meant working in parallel, not sequentially. It also meant the involvement of a very wide cross-section of the business, throughout the project.

Concurrent engineering derives a product that neither the factory, customer service, salesforce or purchasing want to change. It’s about creating something that the industry and business agree with.

MCI has made a very large commitment, probably unprecedented in the industry – certainly in North America.

The project has also produced a number of intangible benefits including: excellent vendor participation; and extremely positive customer reaction; significant skills enhancement within programme personnel.

MCI has launched its revolutionary vehicle to public acclaim. A successful conclusion brought about by a complete business diagnosis and re-design of its production processes, implemented by CSC.

Mark Sealy is the head of new product introduction practice, CSC.