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.

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.