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April 2000 12 Good Reasons to Hire a Consultant PURCHASING asked leading consultants in purchasing, strategic supply management, supply chain management and e-procurement to comment on the value they add. A directory of national players – and their self-described specialties – follows. Different consulting outfits pursue different business models. Some strive to be the particular sweethearts of senior business executives. They create strong reputations for obtaining results and can be trusted to decline business for which they’re not equipped. Others gain notoriety for deploying proven methodologies of for amassing vast bases of valuable benchmarking data. Some consulting firms emphasize cross-pollination, the transfer of big ideas across industry lines. Others emphasize deep understanding in certain industry segments or corporate functions. (Many do some of both.) Smaller consulting outfits tend to guard their independence, espousing simple solutions rather than rocket science. Larger consultant houses often carve niches by forming specific partnerships with providers of software or other system development capabilities. But despite their many differences (and differences of opinion), most consultants in the areas of purchasing, strategic supply management, supply chain management and e-procurement agree on how outside experts can add value. Based on their experiences with successful engagements, here are the consultants’ twelve best reasons for hiring outside experts- 1. Add capacity. Ken Stork of Storks & Associates remarks that supply management organizations often engage consultants when specific expertise is lacking and can not be created quickly. "This is a very common situation that results from years of corporate downsizing and decentralizing of supply management resources," he says. Steve Trecha of integrated Strategies notes that, often, there are competing initiatives taking place within a company. "If you’re currently going through a major ERP implementation, reorganization, or fundamentally launching a new business strategy, it’s likely that key resources will be tapped for those initiatives. In most cases, your initiative will also require key resources." 2. See where you stand. Stork observes also that many companies use outside experts in lieu of benchmarking. "If an organization hasn’t done much process benchmarking, it makes sense to engage an expert to assess use of appropriate best practices and to recommend action plans that address both short-term solutions and longer-term improvements." 3. Avoid reinventing the wheel. "There are many consultant who’ve implemented the same systems over and over in different situation," observes Tim Laseter of Booz, Allen & Hamilton (BAH). "Consultants fill important gaps for organizations that need unique levels of technical expertise for short periods of time." Says Trecha of Integrated Strategies: "Existing practices vary widely even within corporations. Consultants have an understanding of which practices are best in class and can be leveraged to other parts of a business." 4. Focus attention on problems. "Often, consultants succeed by simply focusing attention on problems. It’s called the Hawthorne effect," says Laseter of BAH. "Long ago, there was a study done to see how Western Electric’s Hawthorne plant might raise productivity. They turned the lights up and productivity increased. They turned the lights down and productivity also increased. Ultimately, the researches concluded that productivity rose simply because they were paying attention." Richard Ligus of Rockford Consulting concurs. "Lack of defined problems – symptoms known, solution unknown – is a common reason for bringing in outside experts." 5. Drive change across multiple functions, business units, or national borders. "Consultants can help clients implement non-traditional roles for procurement organizations around product design, material selection, supplier services, etc," remarks Peter von Loesecke of Arthur D. Little. Laseter of BAH says, "If you want to accomplish change across a number of functions, outside consultants can really add value and drive the process." Robin Palmer with KPMG Consulting agrees: "There are significant change management issues associated with things like e-procurement. Much of the heavy lifting involves the ‘onboarding’ of internal customers and suppliers." For example, Palmer says a global company might be looking to aggregate the purchasing power of hundreds of subsidiaries or locations – typically operating autonomously – around the world. "This raises serious issues of control, compliance, maverick buying. Consultants add value by continuously demonstrating business benefits to the entities that will be affected." James Holec, Jr. of PricewaterhouseCoopers says the firm is often engaged to help large companies achieve standards of quality and consistency throughout global organizations. "We become involved in change management that transcends national boundaries. We help companies transform themselves on a global scale by making processes consistent. One size rarely fits all, but many companies want to establish patterns of behavior that are consistent throughout the global organization. That’s why they’ve invested so heavily in ERP systems." 6. Collect and normalize data. "A company might with to pursue cross-functional change, but will encounter difficulty achieving necessary consensus in decision-making," observers Laseter of BAH. "With the burdens of their daily jobs, people don’t always have time to pull together the necessary data that allows them to make fact-based decisions. And people from various functions reach different conclusions because the draw from difference fact bases, making it difficult to achieve consensus." Consultants, Laseter says, and value by "doing the necessary homework and supplying a common set of facts for everyone involved in the decision-making." Trecha of integrated Strategies observes that, "Business units typically have multiple locations and each location may have its own culture, business processes, business systems and rules for making decisions. As you travel from location to location, a blanket order is not a blanket order, a supplier alliance is not a supplier alliance. In many organizations, data will be limited or inaccurate. In some, it will be nonexistent." 7. Facilitate highly politicized decision-making. Says Peter von Loesecke of Arthur D. Little, "We recommend that companies engage consultants when inside resources can’t make the tough decisions around supplier consolidation, outsourcing, product design and cost reduction." Ligus of Rockford Consulting agrees, suggesting that managers often hire consultants when they need "objective opinions." 8. Drive continuous improvement. "It’s difficult to keep continuous improvement going with internal people," says Laseter of BAH. "It’s not that consultants are more expert of smarter. Rather, they succeed because they’re dedicated to finding incremental improvements." 9. Take knowledge from other industries. "Consultants," says Tom Slaight, vice president with A.T. Kearney, "provide insight from a broad range of companies and operating environments. Often, they’ve developed proven approaches or methods to address recurring problems that companies may face." Adds Laseter of BAH: "Consultants play a role in transferring ‘best practices’ from one industry to the next. They have constant exposure to leading-edge clients and are not distracted by day-to-day tasks. They have time to synthesize ideas and to think about how the ideas might be applied in different setting." 10. Acquire skills. Stork of Stork & Associates remarks that, "Companies often retain external experts to conduct in-house educational classes tailored to their specific needs. They also retain external experts to coach and mentor their supply management resources and to ensure they take ownership making change processes successful." Linda Michels of ADR international says, "Companies that have not built appropriate supply chains are at a competitive disadvantage and are failing to maximize shareholer value. When this occurs, many chief executives turn to consultants to enhance staff competence and to restructure supply chains." "We strive," says Laseter of BAH, "to strike the right balance between driving results and building capabilities for the client. We need to achieve results because that’s how we earn our fees. However, we also make sure clients acquire new skills. My hot button is cost modeling. This is a core skill that is not well developed in most purchasing organizations, so we make sure every client learns how to do cost modeling." Stork notes that if companies are good at acquiring skills from consultants, if they learn to behave like consultants by benchmarking the processes of other companies in different industries, they can "reduce their future dependency on external consultants." 11. Accelerate process or systems implementation. Ligus of Rockford Consulting observes that senior managers often hire consultants when "they’re in a panic about something." Palmer with KPMG Consulting says speed is an especially big factor for companies wishing the lead the charge into the e-procurement space. "We see a world of fully integrated supply chains spanning whole industries. But in a network-based economy you can’t take two or three years to implement. Executives want to see benefits in just 90-120 days. W have tools and methods to implement solutions in very rapid fashion." These tools, he says, include such things as software hosting (ASP) capabilities (allowing clients to run pilots before purchasing software), suites of proven best practices, established business rules for various processes, organizational training and accelerated acceptance testing. "Rarely do we start from scratch. The consultants' toolkit allows us to start at 50% - sometimes up to 80% - of the final configuration," Palmer says. Tom Slaight, vice president with A.T. Kearny, observes that, "Many firms will hire consultants when they’re facing special new market requirements. They might need five people to lead a process and 50 people to bring it home." For example, he says when Barnes & Noble needed quick action to meet the challenge posed by Amazon.com, they brought in large numbers of experts to respond to their immediate need, then hired permanent people to keep it going. "The consulting practice is a source for very quick, intelligent temporary resources," Slaight says. "They provide specialized resources to help companies generate results for unique situations such as post-merger, geographic expansion, organizational or market change." 12. Assimilate sweeping industry changes and facilitate critical decision making. As Andersen Consulting’s Ed Starr puts it: "We’ve seen an explosion of new business models and new avenues for people to take in supply management. There are new vehicles that allow much greater access to suppliers, create entirely new mechanisms for making markets through B2B exchanges and auctions, and provide intelligent agents for sourcing. The number of potential solutions is far more numerous today than it has ever been, but all this is still fairly immature. Many companies are not familiar with all of the emerging capabilities. Even fewer have figured out how they can apply new capabilities to existing business problems. Consultants make it their business to understand the broad landscape. In the past year, we have greatly stepped up our research and market awareness capabilities in order to see what’s coming and how it might be used for our client’s advantage. Our job is to figure out the best solutions for our clients’ business strategies and operating requirements." Consultant directory ADR International 24 Frank Lloyd Wright Drive, Lobby C Andersen Consulting 161 N. Clark St Answerthink 1742 Georgetown Road Authur D. Little Acorn Park A.T. Kearney 222 West Adams Street Booz-Allen & Hamilton 101 Park Avenue Contract Manufacturing Consultants 500 108th
Avenue NE, Suite 800 Deloitte Consulting 1633 Broadway Dun & Bradstreet One Diamond Hill Road Ernst & Young 555 California Street Suite 1700 IBM 3039n Cornwallis Rd. P.O. Box 12195 Integrated Strategies 5000 Marsh Road, Suite 1 Ken Stork & Associates 2050 Alexander KPMG Consulting, LLC 1676 International Drive McKinsey & Company 21 South Clark Street, Suite 2900 PRTM 14 offices worldwide PricewaterhouseCoopers 11 Madison Avenue Rockford Consulting Group 7210 E. State St Century Plaza Suite 206 |