There were these ice-cream machines which I needed to observe. This particular client produces dairy products such as milk, yogurt, cheese, but also ice-cream.
I got a list with the amount of workers per machine and should observe if there was any "room for improvement". I spent many hours in that factory observing and observing. I wrote a list with possibilities for workforce reductions, drew machine plans with suggestions and presented that very proudly to my project manager. I saw a huge dollar sign lurking over that factory.
After that discussion I learned what "station filled positions" are. These are manned positions at a machine which are either there for health & safety reasons, or, when leaving those positions unmanned, the risk of discovering a production fault, hence higher scrap rates and poor quality, would be far too high.
And suddenly the imaginary dollar sign shrunk. I found a little bit though.
Saturday 31 January 2009
Friday 30 January 2009
Humbly Bowing one's Head
I found that 1/2 person. Later in my consultant life there were more of them. It is difficult to describe how one feels when being held responsible if someone gets sacked. I told my friends and their reaction was somewhat mixed - some found it actually funny, some where understanding, and some asked me how I felt about it meaning they were shocked.
Initially, it is difficult to justify this part of my job. And that first company I worked for specialised in that. It is the old American way of thinking that most problems lie in too high a headcount. Nowadays this is far too simplistic and a consultant has to come up with more clever solutions to cash problems than sheer manloading.
Back to my reaction. I felt bad and tought a lot about it. I justified by saying that if it were not me, it would have been someone else who did the job. But that's not good enough.
All in all, I know I am selling a service to my client. This client wants a company which runs on the lowest possible cost and should deliver the highest possible service to the market. A company is not a welfare state, it has to be profitable to survive. And a job is not a lifetime guarantee anymore. Bearing this in mind will make this part of my service offering acceptable. I would do it over and over again.
Initially, it is difficult to justify this part of my job. And that first company I worked for specialised in that. It is the old American way of thinking that most problems lie in too high a headcount. Nowadays this is far too simplistic and a consultant has to come up with more clever solutions to cash problems than sheer manloading.
Back to my reaction. I felt bad and tought a lot about it. I justified by saying that if it were not me, it would have been someone else who did the job. But that's not good enough.
All in all, I know I am selling a service to my client. This client wants a company which runs on the lowest possible cost and should deliver the highest possible service to the market. A company is not a welfare state, it has to be profitable to survive. And a job is not a lifetime guarantee anymore. Bearing this in mind will make this part of my service offering acceptable. I would do it over and over again.
Climbing up from 50,000 to 550,000
Back to my target: 1 POP which meant CHF 50,000.
When I looked at the activity lists I saw that there were lots of tasks of which I thought were not really value added. I handed those lists back to the purchasers and asked them to undertake an A-B-C Analysis. A tasks are vital, B tasks not too important but have to be done, and C tasks are of no value. They were stuffed with C activities.
I asked what they would do in case there were no C tasks anymore. And they came up with A tasks like more negotiating, tendering, and what else a purchaser does.
Since they knew I was after their naked lives, well, sort of, I suggested the following and we made a deal: They should write down all the projects which needed re-negotiating and tendering, come up with a nice savings amount, and we all get rid of their C activities.
The result was astonishing: They all could keep their jobs, we got rid of C activities, reserved time for more A activities, henceforth gained CHF 550,000 of savings, half a million more than targeted! Hooray!
Nonetheless, it must be said, I still found half a person in the warehouse (which also belonged to purchasing) and this one had to leave the company.
When I looked at the activity lists I saw that there were lots of tasks of which I thought were not really value added. I handed those lists back to the purchasers and asked them to undertake an A-B-C Analysis. A tasks are vital, B tasks not too important but have to be done, and C tasks are of no value. They were stuffed with C activities.
I asked what they would do in case there were no C tasks anymore. And they came up with A tasks like more negotiating, tendering, and what else a purchaser does.
Since they knew I was after their naked lives, well, sort of, I suggested the following and we made a deal: They should write down all the projects which needed re-negotiating and tendering, come up with a nice savings amount, and we all get rid of their C activities.
The result was astonishing: They all could keep their jobs, we got rid of C activities, reserved time for more A activities, henceforth gained CHF 550,000 of savings, half a million more than targeted! Hooray!
Nonetheless, it must be said, I still found half a person in the warehouse (which also belonged to purchasing) and this one had to leave the company.
The Nasty Business of Activity Lists
So there I was, in the client's purchasing department with no real clue. I was told to do "activity lists". This is a spread sheet into which all purchasers had to list their activities, starting with regular phone calls, correspondence, contract negotiation, till the annual inventory and stock counting at which they helped. After having written down all activities and how frequently they occur (e.g. phone calls were daily, stock counting annually) they had to also estimate how often they occur and how long the average task takes.
Suspicious clients can normally sense that they are trapped. The ones who think are clever estimate their time so that an exact 40-hours-week was the result of the exercise. Most just overestimate and end up with 80 hours or in that region.
Little do clients know that the consultant now starts with a new phase in the process and that is the observation phase. Consultants apply the Pareto rule that about 20% of activities take up 80% of time. These 20% are now being closely watched, volume tallies implemented and consultants spend days with their clients measuring all those activities, not with a stop watch as it would call trade unions for action.
The result now is clear. All activities are broken down to a weekly level, counted volumes and measured times are being applied (clients even have to sign observed times and volumes; they sign their own death sentence), an average absenteeism rate (given by HR) will be added, and the result is a "manload", the calculated need for labour in a specific department.
Can consultants play around to attain their target? Yes of course, because they decide which observed time go into the manload and so forth... This can be a nasty business if targets are high.
Conceptually, this tool is great and water-tight. As a new consultant, who thinks he can change the world for the better, it is a wake-up call as he decides on the amount of people needed, or better said not needed.
Suspicious clients can normally sense that they are trapped. The ones who think are clever estimate their time so that an exact 40-hours-week was the result of the exercise. Most just overestimate and end up with 80 hours or in that region.
Little do clients know that the consultant now starts with a new phase in the process and that is the observation phase. Consultants apply the Pareto rule that about 20% of activities take up 80% of time. These 20% are now being closely watched, volume tallies implemented and consultants spend days with their clients measuring all those activities, not with a stop watch as it would call trade unions for action.
The result now is clear. All activities are broken down to a weekly level, counted volumes and measured times are being applied (clients even have to sign observed times and volumes; they sign their own death sentence), an average absenteeism rate (given by HR) will be added, and the result is a "manload", the calculated need for labour in a specific department.
Can consultants play around to attain their target? Yes of course, because they decide which observed time go into the manload and so forth... This can be a nasty business if targets are high.
Conceptually, this tool is great and water-tight. As a new consultant, who thinks he can change the world for the better, it is a wake-up call as he decides on the amount of people needed, or better said not needed.
Grüetzi alle miteinand
I started as junior consultant with a US company based in Florida. Through a strange freelance agreement I had with them, where nothing was clear, they suddenly called up telling me I had to fly to Bern, the Swiss capital, and meet the project team. That was in January 1997. I was nervous. The rules were clear for this company; flying out every Sunday with the latest possible plane (which could well be in the afternoon) and flying home Friday afternoon. If there was no work I would stay at home and not being paid. This was called "being on the beach". But as a junior who has just left university everything was possible. I must admit I was glad I found that job. Little did I know how much it would change my life.
I arrived Sunday night, got picked up at the airport, received a quick briefing, and met the full team for breakfast the day after. I was told I was responsible for purchasing with that client. My goal for the next 3 months was to generate financial annual savings of CHF 50,000, which was 1 "POP" as they called it, 1 Person Off Payroll. And off I went, purchasing was all mine. I had to learn to swim...
The project team was small; there was one project manager, 3 consultants, and a part-time trainer who did the management training.
I arrived Sunday night, got picked up at the airport, received a quick briefing, and met the full team for breakfast the day after. I was told I was responsible for purchasing with that client. My goal for the next 3 months was to generate financial annual savings of CHF 50,000, which was 1 "POP" as they called it, 1 Person Off Payroll. And off I went, purchasing was all mine. I had to learn to swim...
The project team was small; there was one project manager, 3 consultants, and a part-time trainer who did the management training.
Thursday 29 January 2009
The Genetic Imperative towards Efficiency Improvement
Why on earth would anyone like to become a management consultant? This is a question I have been confronted with at quite some dinner party. My standard answer is that I am German and efficiency is a genetic default for us bunch.
The real answer though is another one. I, like so many others, am driven by improving situations, helping my clients to make positive changes, sorting out their inherent inefficiencies in their processes and organisations, and want to leave those organisations bearing in mind that I added some value to them.
At university, I studied Economics in Nuremberg, one of my focus areas was called "Lean Management", by Professor Pfeiffer. For me it was similar to going to church. I just loved it, absorbed every word, and knew that's where I want to be in my life. And funny enough that's where I really ended up. My first management consultancy company focused on operations improvement. Those were the hardest years in my life, but my learning curve was rather steep. It was thrilling climbing up there. And the air up there was thin.
The real answer though is another one. I, like so many others, am driven by improving situations, helping my clients to make positive changes, sorting out their inherent inefficiencies in their processes and organisations, and want to leave those organisations bearing in mind that I added some value to them.
At university, I studied Economics in Nuremberg, one of my focus areas was called "Lean Management", by Professor Pfeiffer. For me it was similar to going to church. I just loved it, absorbed every word, and knew that's where I want to be in my life. And funny enough that's where I really ended up. My first management consultancy company focused on operations improvement. Those were the hardest years in my life, but my learning curve was rather steep. It was thrilling climbing up there. And the air up there was thin.
Another Blog for this World
I have never read Jamie Oliver's book "The Naked Chef" as I am pretty useless when being put in front of an oven and prefer someone else to take over this nasty task. But the title of the book is fabulous. So I do what consultants do best, I steal it and sell it to the world as something fantastic. Well, maybe not steal, let's call it adapt, change, re-invent, alter, improve, spice-up...
I want to write about my life as management consultant; my dealings with clients, tools I implemented, tactics on projects, war stories, some technical advice, everyday tips, how to handle a 'client of hell', how to fire people, and so forth.
Why am I doing this? I am a freelancing management consultant and corporate coach and have read a couple of self-marekting books recently. They all suggest (in fact it is more like an imperative) that one needs publicity through the web. Here we go, another blog for this world is born.
I intend to update this blog very frequently and invite everyone to take part or share ideas and comments.
I want to write about my life as management consultant; my dealings with clients, tools I implemented, tactics on projects, war stories, some technical advice, everyday tips, how to handle a 'client of hell', how to fire people, and so forth.
Why am I doing this? I am a freelancing management consultant and corporate coach and have read a couple of self-marekting books recently. They all suggest (in fact it is more like an imperative) that one needs publicity through the web. Here we go, another blog for this world is born.
I intend to update this blog very frequently and invite everyone to take part or share ideas and comments.
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