Find a good fit
When the decision was first made at LSI Logic , now known as LSI, to work with San Francisco-based consulting firm Bristlecone , it was to address a specific problem, says John Flebut.
“LSI Logic was attempting to light up the Demand Planning module of SAP’s Advanced Planning and Optimization [APO], and had run into some pretty steep difficulties,” says Flebut, former director of business data systems at LSI Logic, a provider of products, systems, and software used to power storage and networking solutions. “We turned to Bristlecone because we needed some fast results.”
After Bristlecone successfully helped with the project, LSI Logic did what many companies do: It worked with Bristlecone on another project.
“After Bristlecone got us out of our sore spot with Demand Planning, it was clear they had the experience and knowledge to continue the process of LSI Logic’s IT road map,” explains Flebut. “That led us down the path to implement the advanced planning engine, SAP APO.”
Old and new guard
Everyone knows that selecting the right consulting firm plays a critical role in a project’s success. Just ask anyone who has worked on a project that either stalled or never got finished. Considering the potentially costly ramifications of poor project execution, it makes sense for manufacturing executives to ask: Which consulting firms know manufacturing best?
Naturally, “There’s no quick answer,” says Bob Parker, VP of research for IDC Manufacturing Insights , a Framingham, Mass.-based market analysis firm. “There are a lot of consulting firms, led by a dozen of the biggest. The so-called ‘old guard’ includes Accenture, IBM, Deloitte, Hewlett-Packard, EDS, and CSC,” says Parker. “Then there are another six Indian companies making names for themselves: Satyam, Wipro, Infosys, TCS, Cognizant, and HCL [Technologies and Infosystems].”
The trick for manufacturers is to take a hard look at consultants to determine where their strengths and weaknesses are, Parker says. For instance, some firms focus on IT outsourcing, while others concentrate more on consulting/systems integration. Second, some are stronger in discrete markets than process. Finally, some have a better global presence, while others have established relationships with regional firms.
“To evaluate consulting firms, manufacturers need to complete due diligence, find and talk to direct references, and listen to analysts’ perspectives,” Parker says.
One of the reasons big firms have so many global clients and are known for their results is they simply are able to bring more resources to bear on a project, says Michael Reopel, principal, Deloitte Consulting LLP .
“For help implementing a specific tool or technique, a manufacturer can go to a boutique consulting firm,” Reopel says.
On the other hand, if they’re looking to do a major business transformation—such as doubling throughput—that’s something else. “Now they need a consultant like Deloitte that has people with IT smarts, plus those who understand manufacturing and are willing to roll up their sleeves and get their fingernails dirty,” he says.
Those are two entirely different yet complementary skill sets Reopel says companies place value on when they need new IT solutions, but they also know IT alone isn’t the answer to overcoming business challenges. A project may call for connecting a plant-floor sensor with an enterprise system, but there’s considerably more to it than the IT aspect.
“Competitive advantage in manufacturing has a very short life today. Adding IT or going Lean can bring advantages, but they also are highly repeatable by competitors,” Reopel says. “So while the idea for a project might be to connect the plant floor with an enterprise system, the real driving force is to improve decision-making abilities so the company can address bottlenecks and improve capacity—then look for other areas to address.”
It’s important to note that the strategic advantage won’t come from putting IT in place to gain a view of manufacturing, or even make a one-time manufacturing change, Reopel says. Instead, what may turn into the real defining competitive advantage is the ability to identify problems and then make quick decisions—but do it cost-effectively, Reopel says.
“That’s not an IT issue but a transformational issue because slow executive decision-making is a killer,” he says. “Companies need IT, but they also need to change business processes to put a continuous-improvement process in place that is consistently driven by good decisions. A company that wants to continually look at the business and put the right resources at the right places at the right time typically turns to a consulting firm that understands both IT and manufacturing.”
All this, plus globalization
While the largest consulting firms are known for their depth of experience, manufacturers also value the global presence that comes with their size. That’s ever so much more important now as companies look to extend their supply and fulfillment chains.
According to Amit Gupta, partner in the supply chain practice at New York-based Accenture , a global enterprise naturally will seek out a consulting firm with requisite experience and perspective, as well as the global presence to take on and complete multisite initiatives because there typically is so much at stake.
The nature of manufacturing and its supply chain increases in complexity as companies become global players. Manufacturers need help to successfully navigate IT solutions, business process changes, and global geographies, Gupta says. That’s when they turn to a large firm to identify a manufacturing strategy, build a global supply chain, and work optimally within that supply chain.
“Essentially, Accenture clients achieve operational excellence because we help them develop and implement a global strategy. We identify the types of information they need to put leading indicators in place to become predictive rather than reactive,” Gupta says. “That’s what it boils down to: having the predictive ability on a global scale to act in advance and minimize the impact of a particular supplier’s performance, or changing demand.”
Those types of capabilities offer potential for significant returns at companies such as Siemens Networks , a Munich-based electronics division of Siemens. Siemens Networks had invested heavily in planning and forecasting tools, but determined its traditional approach did not sufficiently allow it to keep costs down while enhancing service.
Accenture was selected by Siemens Networks to improve planning and forecasting capabilities, and ultimately, performance. Figuring most prominently in the selection was the supply chain planning expertise Accenture demonstrated during an initial blueprint phase, as well as its ability to leverage cost-optimized local and remote resources split evenly between Germany and Accenture’s Supply Chain Center of Excellence in Barcelona, says Thomas A. Schramm, a supply chain management partner with Accenture in Germany.
During Phase 1, Siemens Networks and Accenture mapped the planning and forecasting processes along with the necessary technology landscape, including a prototype of SAP’s APO with demand planning (APO DP) features. They determined that APO DP-driven forecasts could help factories develop better supply plans by more fully considering the requirements of purchasing, manufacturing, distribution, and transportation.
Phase 1 concluded with a detailed business case and implementation plan focused on adopting and maximizing SAP APO DP.
Phase 2 involved a seven-month design and implementation of APO DP. During this period, a new process environment was developed, and technology activities for design, build, test, and go-live were completed.
Forecasting more gains
Accenture’s implementation of the SAP solution—and the concurrent redesign of related processes, says Schramm—helped Siemens Networks achieve several significant improvements:
A 33-percent decrease in target forecast error;
A 50-percent reduction in nonconformance costs resulting in savings of $5 million;
A new ability to perform statistical forecasting on an aggregated level; and
More streamlined data flows between forecasting and planning.
Schramm says the resulting planning and forecasting processes developed for Siemens Networks—supported by SAP APO DP—also improved collaboration, increased user acceptance at the headquarters level, revealed new opportunities to access and share information across divisions and customers, and enabled faster detection and remediation of anomalies across the supply chain.
Of course there are plenty of instances where large companies complete projects with big consulting firms, but smaller organizations have plenty to offer companies of all sizes.
For example, Bristlecone, the consulting firm that worked with LSI Logic, counts more than 100 engagements with global companies including Applied Materials, Exxon Mobil, Flextronics, Mahindra, Motorola, Nestle, Nike, Palm, Qatar Petroleum, Ranbaxy, Unilever, and Whirlpool.
The reason for that success is simple, says Bristlecone VP Anil Gupta: Bristlecone is focused on increasing staff knowledge of the supply chain, and how the firm can best deliver that domain expertise, he says.
“We have very deep knowledge of SAP’s supply chain solution and tools, as well as how the supply chain works,” says Gupta. “Another advantage is we’re smaller and more flexible than bigger firms, so we can get in and get done quickly. That offers tremendous benefit for clients because rather than taking six months to complete a project, we can be done in three or four months. Consequently, they begin gaining returns and competitive advantage sooner.”
As consulting firms strive to differentiate themselves, the key point for manufacturers to remember is they are selecting what IDC’s Parker terms a “strategic integrator,” which involves a human element as well.
“Consulting firms all have different strengths and weaknesses. At the end of the day, it’s really all about who gets it and who doesn’t,” Parker says. “Manufacturers should look for a consulting firm that understands what the company wants to do, and why it’s important.”
|Revenue ($M)||Discrete manufacturing share (%)|
|Source: Manufacturing Insights, an IDC company, 2007|