Thursday 8th Dec 2016 - Logistics Manager

Time for a consultation

Every business wants to grow and improve, which is exactly what consultants promise to help with. But it’s not always clear exactly what benefits are on offer, and defining the value can be a hotly contested boardroom debate, says Johanna Parsons.

Managing risks is just one aspect that consultants are typically hired for, and the recent fire at ASOS’s main DC is a perfect illustration of how a potentially devastating event can be mitigated through an effective recovery strategy. But this example also shows a level of preparation that not all firms bother to put in place.

“A lot of organisations feel that business continuity planning can be an unnecessary, costly exercise but in the face of disaster the cost of not having a plan in place could be devastating,” says Jonathan Gibson, head of logistics at Crimson & Co.

“In ASOS’s case, its Barnsley distribution centre housed 70 per cent of the firm’s entire stock; the fact that only 20 per cent was impacted demonstrates that an effective disaster recovery review had been undertaken.”

There are still dissenting voices, and it seems some business firmly believe they get greater value from the alternatives to consultancy. Paul Beasley is joint CEO of logistics trainer and recruiter Transline Group, parent company of Transline Logistics, and he says the firm has never used logistics consultants. “Consultants are useful to smaller operators in this sector, but once you reach a substantial size, it is always better to bring that expertise in-house.

“Consultants also rarely get the chance to spend the time with clients that in-house advisors do. Having that iterative relationship with customers is another central strand to how we work.”

Director and chairman of Davies & Robson, Brian Templar agrees that it’s of key importance to ascertain what kind of support is needed, specifically to distinguish between the requirement for consultancy and interim management.

While interim management will mean effectively embedding an extra staff member within a team on a short term basis, a consultant should be viewed as a more goal specific engagement.

“The best way to employ a consultant is to be very clear and defined about the brief – and closed ended.” He advises setting measureable goals, and defining a clear set of deliverables to be achieved.

The ultimate aim is to enable firms to continue the process of improvement, but Hugh Williams, managing director, Hughenden Consulting agrees with Templar on the value of defining the length and goals of a contract. “We just met with a prospect who was pleasantly surprised when we told him that our aim was to make his team self-sufficient in the shortest time possible,” says Williams.

But he warns that this could be particularly relevant for larger consultancies, perhaps with more of a boiler room ethos. “This approach isn’t generally in the interest of larger consultancies because their business models depend on staying engaged with clients as long as possible.”

Williams says this kind of structure makes integrity an increasingly difficult problem.

“Consultancies that operate in the traditional ‘pyramid’ model with large teams that need to train up legions of junior staff while billing out the senior people at staggering day rates… These companies are trapped in a paradigm that demands they sell as much time as possible, making it nearly impossible to operate consistently in the best interest of clients.”

He advocates “boutique” consultancies which he says typically hire more experienced staff, offer flexible working arrangements and crucially, are geared towards delivering outcomes rather than selling output. But he also cites vendor neutrality as imperative.

Templar says that when it comes to integrity it is vital not to attempt the impossible, but to be sure of your offering. He says any tender should be based on a concrete certainty that you have the skills to fulfil the given project, factoring in sufficient time and cost to make it a realistic recommendation.

And in an industry where Templar says some 80 per cent of their business is from returning customers, the key is to leave the client thinking they’ve had value for money, so that when they think of future improvements you are the person they call.

Gwynne Richards, director of Apprise Consulting agrees that credibility is earned through good references and a job well done. “One recent example from a client when asked why he chose us suggested that the other shortlisted consultancy had pretty much told the client they would write the report based on their requirements not what the consultant may have thought to be the best option.

“We tend to start with a blank sheet of paper and come up with our own conclusions,” says Richards.

That independence is often marked out as the true value of consultancy, being able to detach from relationships and everyday operational pressures to see the bigger picture. And while it’s true that a consultant may not spend as much one-on-one time with employees and clients, but Templar says that too much hand-holding would actually just be a costly waste of time. “As consultants, unless the client can keep up with us we probably wont be working on it full time.”

But he points out that the collaborative way a consultancy works will mean that the very best of expertise will be available for each niche task, perhaps meaning two or three individuals with different and specific experience occasionally helping any one project, whereas any one interim manager probably won’t have that scope of knowledge.

As with many investment, cost is often a barrier, and return on investment is particularly hard to measure for a function which can sometimes appear abstract. But Templar believes that overall the market in general is finding it ever easier to appreciate the value of consultancy.

“The recession forced companies to question the value they’re getting from any service. But there’s now a willingness to see the value in temporary support, it’s become much more acceptable.”

Mike Danby, chief executive of logistics firm Advanced Supply Chain, explains that they have a logistics consultant on its board. “A number of specialist consultants help us along the way, offering expertise and knowledge not readily available within our own management team.

“We view this as a normal management practice, in just the same manner as finance and legal specialists would engage with the business.”

Danby also picks up on Templar’s idea that consultants can be conduits to a huge range of very specific knowledge, adding value beyond just getting more hands on deck.

“Our consultants bring numerous resources we would be unable to access in any other way. To have an impartial, objective and fresh viewpoint, backed by specialist experience are ideal attributes we need within the business.”

And he also points out that by working at something of a remove form everyday operations can be an advantage. “There is a lack of distraction from the core task at hand with consultants that senior managers can never achieve as they are pulled in various directions. Analytical skills also ensure their time is spent resolving issues in the best way possible.”

This concept of being outsiders with specialist knowledge of different aspects of a business is something that Oliver Wight has championed with its new partnership. The consultancy has joined with optimisation technology and prescriptive modelling specialists AIMMS and logistics solutions consultancy Districon to offer a more integrated service, aligning business and supply chain strategies.

Les Brookes, CEO of Oliver Wight EAME says: “Modern day organisations need the capability to respond quickly and intelligently to the ever-changing supply chain challenges at a strategic, tactical and operational level. End-to-end optimisation is essential to extract the best possible value from the supply chain.

So while there is still debate as to the optimal terms and length of consultancy contracts, the market for such services is pretty open, and boardroom attitudes generally agree that in the aim to get to the top, hiring in the experts can only help.


 

CASE STUDY: Delivering change at Cargill

Cargill India provides the manufacturing services for Cargill Animal Nutrition, whose extremely large and complex product assortment is delivered by more than 16,000 employees across a global network spanning 37 countries.

Cargill India engaged Hughenden Consulting in June 2013 to deliver a change and education programme to optimise planning and ensure that organisational supply chain knowledge was being deployed, moving towards integrated business planning.

This was delivered in two sequential streams: demand planning and Supply (Network) Planning with a major enterprise planning software implementation running in parallel.

Cargill India’s established forecasting methodology was reckoned internally to be about 60 per cent accurate, but upon closer review with Hughenden it turned out to be significantly lower.

The first change was to start forecasting with much longer lead times, initially moving from 15 to 30 days.

Sripathy H S, supply chain manager, Cargill India is leading the demand planning education programme. He said: “My highest priority was making sure that we brought all the relevant stakeholders along with us on the journey of change.”

Hughenden advised Cargill India that its first step should be educating and winning over the top team by running an executive road show. This was a one-day workshop that explained the highlights of what would be delivered to 16 key executives, including a chance to ask questions and air any concerns.

Raghavendra Joshi, financial director, said: “We can now see how small changes to our processes, like forecasting, can deliver immediate benefits to our working capital that continue to accumulate.”

The next step was “Involvement Sessions,” designed for top and middle management in areas including finance, sales, logistics and operations.

The third and final level was specialist education for demand planners, commercial team members and later, marketing team members.

Hughenden also called for bringing in marketing intelligence much earlier, before the commercial inputs, where before it had been added at the end.

These changes have increased forecast accuracy by roughly 5 – 8 per cent, with more improvements to follow.

 Originally printed in Logistics Manager 08/2014