Closework Global Review - Issue 3 by Celerant Consulting

EDITION THREE

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CLOSEWORK CELERANT CONSULTING Down on the ground helping to drive results up. Global Review 2011

IN FOCUS : LEAN Old guard or avant-garde in the 21st Century? The Earthmoving Consultants On the road in Oman Creating A Cultural Revolution An interview with the CEO of Valeo

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

Sao Paulo: The largest city in Brazil. The largest city in the southern hemisphere. The 8th largest city in the world by population. Home to Celerant Consultingâ&#x20AC;&#x2122;s new office. And new alliance.

CLOSEWORKÂŽ GLOBAL REVIEW 2011

n 2009, Celerant Consulting made a commitment to Latin America. Now we have officially opened an office in Sao Paulo. Weâ&#x20AC;&#x2122;ve also formed a powerful alliance with Tantum-Symnetics, a Sao Paulo based Operational Strategy Consultancy with offices throughout Latin America and the Middle East.

Tantum-Symnetics has more than 200 consultants specialising in proven methodologies that make strategy execution a competitive advantage. Our alliance creates the No.1 Operational Strategy & Implementation Consultancy in Brazil.

CLOSEWORKÂŽ GLOBAL REVIEW 2011

Down on the ground helping to drive results up

Driving Solutions IN FOCUS: LEAN

Driving Results 6

Rewriting The Book

An In-Depth Look At The Profits

Helping Bombardier Transportation write the

And Pitfalls Of LEAN

definitive software development handbook.

LEAN: Old Guard Or Avant Garde In The 21st Century Edwin Vercruysse argues that being LEAN in the 21st Century means expanding programmes horizontally and vertically to create significant, sustainable results.

Pushing All The Right Buttons A global 6 Sigma programme to help T-Systems create a One-Company approach.

20 Closework® Global Review is a magazine published by Celerant Publishing on behalf of Celerant Consulting Ltd. Edition Three: October 2011. Publication Director Thibaut Bataille

Dramatically improving performance for Cargill

LEAN Worked For The Venetians, Toyota And

Starches & Sweeteners Europe.

Frank Woollard. What’s The Best Way To Make It Work For You? An interview with Simon Elias of The LEAN

Full Speed Ahead? Revolutionising the Technip TMOS fleet in the UK.

Enterprise Research Centre.

Success Always Tastes Sweet

Helping The Innovators Innovate The Future With margins at its global manufacturing base under increasing pressure, DSM Nutritional Products appointed Celerant Consulting

Editors US & EMEA Marketing Teams Editorial conception and realisation Patrick Keating

to create LEAN Operational Excellence.

The Faster The Benefits Are Gained.

The fundamentals in our business must be

Creating 1 Company From 2

reconsidered and LEAN is the means to do that.

At Houghton International.

An interview with Jonathan Rennotte from Nestlé Waters.

Design conception and realisation Andrew Barnes-Jones

The Faster An Acquisition Is Completed

Global Project Snapshots Private Equity, Manufacturing, Metals & Mining, Government.

Contributors Celerant Consulting thanks all its Clients, Friends of the business and Celerant teams for sharing their exceptional experiences and knowledge with us.

Aerospace, Manufacturing, FMCG, Private Equity.

The LEAN Killers

its operations and saves more children’s lives.

3 killer obstacles that must be overcome to drive a successful LEAN Programme.

Increasing Supply To Save More Lives A leading US vaccine manufacturer transforms

Celerant Change Club members debate the The words, photos and images in this publication cannot be used without the express consent of Celerant Consulting Ltd.

Global Project Snapshots

Global Project Snapshots Energy, FMCG, Chemicals, Manufacturing.

The Muscle Behind LEAN Doug Newman says that to really drive

Driving Insights

Continuous improvement companies must alter the way their managers apply

celerantconsulting.com

8 38

CLOSEWORK® GLOBAL REVIEW 2011

OFDs=3N+P+C+T+2

Global LEAN Project Snapshots

Sal Puaar explains why this equation is key

Financial Services, FMCG, Manufacturing.

to reducing product complexity.

agenda 18

You Need A Full Line Of Sight To Develop A Vision.

Danish Production: It’s Time To Wake Up

Striving For Self Improvement

Cathy Johnson says that too succeed FMCG

From Our Coma

Patrik Andersson, CEO of Rieber & Søn, speaks

companies must build their future inside out.

Thomas Kock believes Danish companies must

to FoodChain magazine about the company’s

kick-start a productivity revolution to compete

successful ‘Our Future’ programme - and how

in today’s globalised economy. That means

Celerant Consulting was a vital ingredient.

working smarter. And harder.

Driving Change

The Christmas Present Nobody Wanted. Doug Newman explains ‘How To Prevent Food Recalls.’ on businessweek.com.

Brazil: Home to Celerant Consulting’s new offices. And new partnership.

Driving Relationships

How To Be No.1 On The Grid Henri Paul Missioux and Nicolas Pinglot detail the 7 Star Plan you need to guarantee a winning

The Earthmoving Consultants Leopards, pirates and blistering heat are just

performance at a GRID Corporation.

some of the hazards facing Celerant Consultants

An Analysis Of Why So Many Root Cause

Jean-Paul Sacy, Stefano Codega, Elie Al Kara

Analysis Programmes Fail.

and Bernard Sacy on a multimillion dollar road

Mike Schellberg looks at what can go wrong

project in southern Oman.

with RCA and to make sure it doesn’t.

Oman: Celerant Consulting expands its presence in the Middle East with new offices.

Closework®: When people know what is expected of them, companies thrive.

42 70

The Mining Consultants

Celerant Capital

Working on a major improvement Project at one

Celerant Consulting now has a

Looking Beyond The Pipeline:

of Europe’s biggest Mines Joni Heinonen finds

heavyweight strategic partner.

New Drivers, New Approaches To M&A

it hotter down below than it is on the surface.

Celerant Consulting’s Private Equity Centre of Excellence believe successful M&A is absolutely

key to pharma’s future.

The Celerant Institute

The Offshore Consultants

A global Centre of Excellence matching client

Survival training, a 2 week on-2 week off schedule

need with market trends and our service lines.

and and fire alarms going off in the night are

What Does It Really Take To Make Your

all part of working life for Celerant Consultants

Organisation Successful?

Maxime Brichet ,Pierre-Marie Derouin, Pedro

Mark Hughes argues that great theories and

Hernandez and Adrian Trenerry on a multi platform

elegant models will always come up short

programme in the North Sea.

unless they capture the imagination of the people on the ground.

Global Operations An interview with Brage Sandstat on

There’s A Major Difference Between Planning

A powerful presence in MEA.

For Growth And Actually Making It Happen. Rudi Bogaert says we may be in a growth

Down On The Ground Helping To Drive Results Up

transforming ConocoPhillips Norway.

Business Transformation

cycle, but unless organisations have a clear

An interview with Jacques Aschenbroich

plan for implementing sustainable change,

on his cultural revolution at Valeo.

Hands (And Feet) Across The Water Celerant Consulting in the community.

real growth will elude them.

Opportunity Amidst Recovery: The Value to Profit Model. The 2011 Celerant Consulting Impactability Study examines the value created within Organisations.

Printed by Corelio Printing

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Rewriting the book When Bombardier Transportation wanted to improve its software development processes, Celerant Consulting was brought in to help write the definitive handbook.

‘ Thanks to the active support of Celerant Consulting we are now in a much better position to collect measurable and honest data from the organisation, as well as to build more structure and transparency to make decisions based on facts.’ Director, Product Engineering.

CLOSEWORK® GLOBAL REVIEW 2011

BEST PRACTICE RESULTS • All new processes and supporting materials have been consolidated into a Software Engineering Process & Management Handbook which is now considered best practice at Bombardier. A short version is also on every engineer’s desk as a Pocket Guide. • Increased process transparency has improved organisation wide acceptance of Go/No-Go decision making points and reduced the number of software requirements being identified late in the development process. • The new processes, which are fully compliant with European regulation EN5012X ensure on time provision of high quality software, strengthening Bombardier’s position in the market. • Celerant Consulting also helped to apply the same principles in a subsequent systems development improvement project.

Working in partnership with cross-functional teams from all the main software development stakeholders, a Celerant-Bombardier Transportation Taskforce revised existing procedures and developed a commonly shared and accepted Gate Review Process, with checkpoints, detailed deliverables checklists and defined roles and responsibilities. The company is also constantly improving its software, so structured development processes are absolutely essential, not just for quality, but for the increasing normative demands for homologation. As a result, Celerant Consulting was appointed to analyse the way that Bombardier Transportation developed software and identify the root causes of over runs and delays. ombardier Transportation is the global leader in rail technology, a sector that’s growing rapidly as functionalities that used to be carried out mechanically or electrically are now performed by software and hardware. This has led to improved functionalities and flexibility, but also to the false impression that all software can be adapted at the last minute to add extra requirements.

Checkpoints and decision points Celerant’s analysis quickly highlighted the fact that each software development stakeholder had a different interpretation of the current development process, so requirement entry points and Go/No-Go decision points weren’t always being followed. An agreed, transparent, common process with a standardised document template was urgently needed.

Improving through Closework® feedback A solid software development MCRS® Management System was also developed which included a planning process, project status KPIs to aid management decision making and a revised meeting structure focused on effectiveness and efficiency. A pilot project was then selected to test and fine-tune everything. Celerant also used its unique Closework® approach to further improve the new processes by incorporating first-time user feedback. Then, before roll-out across all projects, a training plan was implemented and more than 130 people trained at sites in Switzerland, Germany and Italy. Each project team was also supported by the Celerant-Client Taskforce during the initial application phase.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

veryone agrees that complexity is a major factor in terms of profitability and how healthy an organisation is. At Celerant Consulting though, we go further. We believe that whether an organisation succeeds or fails is determined by the amount of complexity it has - and how that complexity is managed.

It’s always a surprise therefore that knowing how key this issue is most companies still don’t really understand complexity or how to measure and control it. They know when things take too long or are too costly. They say: ‘OK this is complex, but just how complex?’ Celerant believe that you can only control what you can measure. If you can’t measure it, you can’t control it and you’re left at the mercy of chance and in this respect, most organisations are left at the mercy of chance because if they do nothing complexity simply grows by default. Complexity isn’t bad. Some complexity is unavoidable and some is even desirable. The key is measuring and managing it. Organisations that learn how to manage their complexity - of products, processes, organisational systems and customer service - reducing it where it is unnecessary and increasing it where it is necessary, will be the leaders in the future. Start with the Voice of The Customer Most companies offer things that customers

CLOSEWORK® GLOBAL REVIEW 2011

don’t really need or value and that’s a waste. So find out what’s important to them. Once you know that you can develop the simplest way of giving it to them. You obviously have to offer all the features your customers require, but people don’t really care about what’s inside a product. They don’t care whether it's got 86 components or 247. The Japanese were the first companies to really understand this. In 1978 for example, when Canon brought out its first copier, it had around 1/3 of the components that a Xerox copier had. So they could make it cheaper and more reliable, while still meeting all the customer requirements. That was perfect for smaller companies and that’s how they eventually took the market from Xerox. How do you simplify your product complexity? Celerant Consulting has a very successful way of measuring product complexity. We use the formula OFDs = 3N + P + C + T + 2. It means we can put a Complexity Number on every product, whether it’s a chair, an insurance policy or a car. It also means that we can compare the levels of complexity between products. If you have 2 phones for example, we can tell you which phone is more complex. So complexity can actually help you do benchmarking. Product complexity goes hand in hand with process complexity. You can’t determine a product’s complexity just by looking at it. So Celerant Consulting ‘walks the process.’ We imagine that we’re the product and we measure

what it takes to build us. The key determining factor is the number of process steps it takes to make a product and here you have to be aware of all the technology that is available. If you make better use of technology you can make quantum leaps in process efficiency. The next factor is the number of parts in a product. If you can reduce the number of parts, you can reduce the complexity and therefore the cost. Once we’ve followed the process from start to finish, we produce a Complexity Number, which might be 852, for example. When you see what that number is made up of, you can then enlist the help of the people running the processes to reduce it. You can say to them ‘We want to reduce that number down to 520 - still meeting every customer requirements.’ And then they will start thinking of new ways of doing things, which is not always the case if you simply tell them to reduce the cost. All the time though you have to make absolutely sure that you’re meeting customer requirements. You can’t reduce product complexity if it means you don’t meet customer requirements. The customer requirement is always a given. You get a win-win number We have comprehensive data that shows that reducing a Complexity Number by10% means you will reduce your cycle time by 10%, your product costs by 10% and your inventory levels by 10%. You will also increase your quality and reliability by 10%, so your products will go wrong

IT MIGHT LOOK COMPLEX, BUT IT’S THE KEY TO REDUCING PRODUCT COMPLEXITY. You can’t control what you can’t measure. And you can’t measure if you don’t know what you’re looking for, says Sal Puaar, Celerant Consulting, Germany. That’s why he helped devise the renowned OFDs Formula. less often and you’ll get 10% less customer complaints. Sometimes it’s more than 10%, but there’s always a direct correlation between reducing the Complexity Number and all these factors. It’s never proportionate to just one thing, its proportionate to cost, time, reliability and so on. The lever is 4 times.

definitely want 5 different products, then it’s vital that you increase your product complexity near the end of the production process and not at the beginning. Most of the time though, people don’t want complex product options or complex products. They want simple to use products that can do complex things - just like the iPad.

A prime example of this was when a major manufacturer of heating boilers asked Celerant to help them develop a pan-European product. Using the methodology on their leading boiler we dramatically reduced the OFDs and that reduced the cost by 30%. We did the same for one of the world’s leading turbine manufacturers. We reduced their product cost by 25%. These companies didn’t come to us saying: We need to make our product simpler. They came to us saying: Our products are too expensive, how do we make them less expensive? Our reply was that In order to reduce your costs, we’re going to have to make your products and processes simpler. We use technology to simplify of lot of things and most of the time the right technology is there, but in a different industry, so Celerant can bring that over from our extensive experience of other sectors.

The question must always be: What does the customer want and how can you meet that in the simplest possible way? The answer is by achieving the lowest Complexity Number. Celerant Consulting can help you do that and if you do it better than your competitors for the same product, you will always win.

‘ Reducing a Complexity Number by 10% means that you reduce your cycle time, product costs and inventory levels by 10%. You also increase quality and reliability by 10%.’

How many different products you offer also plays a role within product complexity. Sometimes these products are so similar that customers think ‘This is confusing, why don’t they just make one product? If your customers

CLOSEWORK® GLOBAL REVIEW 2011

The Earth Moving Consultants

Leopards, pirates and blistering heat are just

some of the hazards facing Celerant Consultants Jean-Paul Sacy, Stefano Codega, Elie Al Kara and Bernard Sacy on a multimillion dollar road project in southern Oman.

Into the Valley of Death rode the 1,000. his 90 km road connecting two coastal towns is a massive project, one of the most impressive we’re involved with in the Middle East. The entire region is incredibly mountainous and it would have been much easier to build the road along the coast, but they’re very future conscious here, so they rejected that because it would have destroyed all the natural beauty there.

So we’re literally moving mountains to create this road. It’s already 60 % complete and now we’re facing the most difficult section, a place known as the Valley of Death. We have to cross this 4 km valley and then blast through the remaining mountains to reach our final destination. Untouched by man Up till now only wild animals like leopards have walked the Valley of Death. You can see them prowling around. This is the first time man has walked here. There are also pirates in the area. Somalia is very close to Oman and these pirates have set up remote bases inland to collect frankincense. This land was once controlled by the Queen of Sheba and frankincense has been traded here for more than 5,000 years.

CLOSEWORK® GLOBAL REVIEW 2011

The pirates collect the resin from the frankincense trees and sell it. We met some of them when we visited the caves where they sleep. We call them pirates because they come from the sea, but they’re not armed and they don’t look like the pirates you see on TV. They’re just poor people fighting to survive. Men as tough as machines Almost 1,000 men work on the road. Roughly 20% are Omani and the rest are Indian or Pakistani. This represents an additional challenge because we have to understand each group and forge a strong relationship with them when we want to introduce changes. Our task is to improve performance and throughput. We make sure that the site workload is properly planned, people work the way they're supposed to and maintenance operations are conducted on time. We do this by implementing the Celerant MCRS® Management System which is all about driving the right behaviours and making sure that the right information is available to the right people at the right time, so they can make fact based decisions. Working this way we’ve already increased throughput by 15 -20%, saving our client almost $25,000 a day.

CLOSEWORK速 IN ACTION

CLOSEWORK速 GLOBAL REVIEW 2011

The Earth Moving Consultants

Starting in the middle The project began in 2009 and is scheduled to finish in 2014. It didn’t begin at one end, it began in the middle with the construction of an access road right out in the middle of the desert. This is where the main camp is and it takes 6 hours to get there by 4x4 from outside the region. Once that camp was fully operational they began building the road outwards in both directions. The basic principle is that you blast the mountains, then excavate and either throw the extraction out of the alignment or compress it and build the road on top. The ground needs to be stabilised every half metre or metre. So if you’ve got a valley that’s 100 metres deep and you’re extracting stuff all the time, you have to ensure that you’ve always got access to go down and compress it. That’s why it’s such a long process and very equipment intensive. There are around 300 machines working on this road - diggers, excavators, bulldozers, drilling rigs, water tankers. Sand blasted and wind whipped 3 to 5 Celerant Consultants rotate on site at any one time. We start work around 5.30 am, there’s a pause in the middle of the day from 12 - 2pm and then around 6pm we come back to camp and have meetings till 8pm. It’s a very intensive day.

CLOSEWORK® GLOBAL REVIEW 2011

We have to check that operations are being conducted correctly at 7 different work fronts on the road, some an hour away from camp. Conditions out there are incredibly hard. Temperatures reach over 45o, so the men are completely covered up against the sun, sand and wind and everyone avoids being outside as much as possible. We help the site management and the workforce identify and solve issues. One time for example, several machines were out of action because the A/C was not working. We had to check whether that was really the case and then negotiate with the men because working on that equipment with no A/C is tough, but it’s doable. We added compensation payments to get them moving, but we also made sure that from then on broken A/C was fixed as fast as possible by reducing the lead time for maintenance operations on technical equipment. Clean plates and cricket balls When we first arrived at the camp conditions weren’t that great. The food quality was not very good and it was impacting on workforce moral. So that was one of the first things we tackled because it was relatively easy to fix, it’s a highly visible change and when you’re working hard food is one of the few pleasures you have.

CLOSEWORK® IN ACTION

Better food made a big difference to the men. They have just 2 days off a month. They’re well paid, but conditions are incredibly tough. So we also helped the Camp Boss build a cricket pitch and a recreational area and made sure that the camp was always cleaned properly. Conditions changed radically and it had a huge impact on performance. People saw that we were delivering what we said we would. Leaving a lasting mark Skills transfer is one of the things we do naturally with our unique Closework® approach, but it’s extremely challenging out here. You push for it as much as you can and if, after 5 weeks, up to 50% of what you’ve designed is still working, you’ve done well. The key is keeping things simple and avoiding the trap of over architecting. Many consultants create complex things because they think it justifies them being there. Our strong belief is that keeping it simple is the best way to guarantee sustainability. Simplicity doesn’t mean easy. Simplicity has nothing to do with implementation. If you make it simple you increase the chances of it being sustainable. The tough part remains working on the behaviours, working on the conditions

people have, developing their technical skills and making sure that performance is rewarded. These things are definitely not easy, but they’re not complex. You will not be able to impact all the people. The rule of thumb is that 60% of the people will be completely indifferent to what you are doing, and 20% will be pulling in the wrong direction and will need to be neutralised. That leaves 20% that you need to radically work on because they’re the people who have the potential and the desire to change and will be able to do so - and they’ll continue making an impact after you've gone.

‘ We’re up here, working in some of the toughest conditions on earth, and every day we can see paradise down there on the coast.’

Paradise down on the coast This amazing road is a key project for Oman. The whole area is directly on the Indian Ocean and it’s extremely beautiful, so when it’s finished there’s massive potential for tourism. It will be directly accessible from a regional airport and it’s a paradise. White sandy beaches and blue ocean. We can see all this from up here in the mountains. We’re up here, working in some of the toughest conditions on earth and every day we can see paradise down there on the coast.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

CLOSEWORK速 GLOBAL REVIEW 2011

As part of Vision 2020, Oman aims to diversify its economic base and sources of national income, upgrade the skills of the Omani workforce and develop human resources. Celerant Consulting is already helping companies in Oman achieve these aims. Now weâ&#x20AC;&#x2122;ve expanded our presence in the Middle East with a new office here. CLOSEWORKÂŽ GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

PUSHING ALL THE

RIGHT BUTTONS. T-Systems has the ambition to become one of the world’s Top 5 players in the ICT sector. To achieve this, they launched a global 6 Sigma Programme to create a One-Company approach. And selected one company to support it on the change journey.

‘Celerant has accompanied us from the early pilot phase to where we are now with Six Sigma integrated in our everyday processes.’ Head of Operational Excellence

CLOSEWORK® GLOBAL REVIEW 2011

perating in the highly competitive ICT market, with price pressures and increasing customer quality expectations, T-Systems has the ambition to become one of the world’s Top 5 players. So it decided to implement a global Six Sigma programme that would create a One-Company approach to quality improvements - and deliver Operational Excellence and real Behavioural Change throughout the organisation.

Supporting every step The programme began with a pilot of 10 projects in the ICT Operations Division and Celerant Consulting was asked to support the whole change journey by implementing an overarching programme governance, qualifying and developing internal resources and coaching projects to ensure benefits and project success. Leveraging experience from all their past major deployments, Celerant’s experts quickly set up an effective programme structure and supported the global roll-out in all the regions, engaging local management and ensuring the success of the new One-Company approach. A strong focus on the development of internal talent then made it possible to hand over step-by-step responsibility to the client and bring the project to where it is now: An established, successful, global change and improvement programme.

RESULTS • Significant process improvements have been achieved, impacting both service quality and cost. • Customer satisfaction has risen by 20% according to an external survey. • The focused development of internal resources has produced more than 20 Master Black Belts and 100 Black Belts. • The One-Company programme has been rolled out in 20 countries.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

You need a full line of

‘A holistic perspective and process allows management to make the right decisions, improves Riding a recessionary rollercoaster with limited capital, demanding retailers and canny consumers, FMCG companies must learn to work more efficiently without compromising customer needs. Cathy Johnson, VP at Celerant Consulting UK, believes that to succeed they must build their future inside out.

ig when others zag’ may be a cliché, but it’s a cliché because it happens to be true - and right now it’s consumers who are zagging like mad. Household budgets have never been tighter, so their attachment to particular brands is under intense scrutiny and the concept of shopping around has taken on a whole new meaning.

‘

This in turn has led to retailers putting the squeeze on traditional FMCG categories with new introductions and a demand for innovative solutions to expand more profitable categories. So how should a company ‘Zig instead of zag’ and prepare itself for a future that’s so much in flux? Blow up the silos Increasing gross margins and product innovation are the clear route to the future. A long period of economic uncertainty means that growth must come from both new and existing channels, as well as completely different business models. Companies must ask how they can satisfy consumer and retailer expectations on issues like value for money, health or convenience and then quickly structure their organisation and operations to achieve that.

CLOSEWORK® GLOBAL REVIEW 2011

For example, right now across Europe more and more consumers are focusing on the quality and environmental aspects of the food they buy. They want to know how far it has travelled; whether there’s a local alternative; what are the ecological consequences of its packaging? So smart businesses are looking for ways to offer their customers the top products and services that address these concerns by introducing Fair Trade products, limiting product packaging and taking steps to reduce their ecological footprint. Industry leaders are going further by trying to anticipate what exactly consumers will want in the future and then innovating solutions to provide that in an agile, flexible manner. None of this can happen though, if a company operates in silos with a focus on departmental performance, rather than effectiveness across the whole organisation. To move forwards everything must be re-aligned to the new vision. And the best way to do that is from the inside out. Get a full line of sight The drivers of innovation are consumers and the market, but the enablers of innovation are a company’s people and its capital. Capital can

sight to develop a vision.

communication and reduces the negative effects of errors from one department to the next.’ either be harnessed externally or from within and in the current climate the most obvious and profitable option is to see what you can get from the inside. To do this leaders need a full line of sight on what they have available to them financially, operationally and from a people perspective. They must be able to see the real facts and cut through the fair weather reporting. So the line of sight must be holistic, yet on the pulse to deliver the right information at the right time and provide: • A full overview of capacity – with the right measurements which link to the shop floor; • The ability to manage the finances to allow innovation to succeed; • The leadership to motivate and inspire people to deliver their best every day of the week. In the current climate, innovation and project financing are more challenging and more expensive than they’ve ever been, so companies must focus on what they can actually control, cash and cost. They must become a lean operation and align their supply chain to respond proactively to rapidly changing markets. This means casting a critical eye on the amount of product sitting in the supply chain, whether in the form

of purchases, semi-finished goods or finished goods, then launching an efficiency review of the whole order-to-cash process, from the time between receiving an order and shipping the product out the door to receiving payment. CFOs must also carefully examine the real return on any acquisitions, the capacity management of previous investments and the willingness and ability of their COOs to make the best use of existing and available capacity. Develop an innovative vision and share it Companies must also factor in the real cost of innovation, not just for R&D and consumer testing, but also for the corresponding implementation. A change in packaging will probably require equipment upgrades or a reconfiguration of factory floor lines. On the human resources side, the skill levels required in innovation are increasing, so employee development has to be a priority, even during a recession. People must be steered in the right direction to allow creativity and inspiration within the framework of good business principles. Whether a company is looking to optimise cash or cost, the key is putting the right information in the right hands at the right time. Managers

need to be focused on the right key performance indicators (KPIs) and to reject fair weather reporting in favour of an accurate, data-based picture of reality. Providing this information is not just the role of an IT system, but an integrated supply chain information flow from executive level to the shop floor. To achieve this, leaders must examine specific roles and ensure that the right employees are performing the right tasks. Loosely defined roles, undefined expectations, and ineffective practices create a frustrating daily work experience with a great deal of lost time. Implementing a simple architecture with clear accountabilities is the first step in breaking this cycle, and each new role must be aligned with measurable expectations and supported with the tools necessary to achieve them. A holistic perspective and process allows management to make the right decisions, improves communication and reduces the negative effects of errors from one department to the next. More importantly, a team that understands its contributions and feels connected to the entire business is more motivated to deliver results.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Success always tastes sweet. When Cargill Starches & Sweeteners Europe wanted its 2 production sites in The Netherlands to dramatically improve performance, Celerant Consulting was the catalyst for change.

argill is a leading edge, global manufacturer and marketer of products and services in the nutritional, agricultural, industrial and financial sectors. One of its major Business Units, Cargill Starches & Sweeteners Europe, operates in a fiercely competitive market with seasonal and increasing raw material costs, so it had to become more competitive. 2 production sites in the Netherlands were crucial in the European network and had the potential to dramatically improve performance, so Celerant Consulting was appointed to help design and implement The Catalyst Project, aimed at restoring accountabilities and increasing cost control through aligned processes, increased ownership and genuine Behavioural Change.

A robust analysis shows the future Celerant’s experts conducted a robust analysis which revealed that production output, energy usage, logistics costs, maintenance efficiency and procurement spend could all be strongly improved. As a result, Operational Excellence and Performance Management were designated as the key workstreams, with a robust project

CLOSEWORK® GLOBAL REVIEW 2011

management structure aligning both plants on approach and best practice sharing. Using Celerant’s unique Closework® approach, a multidisciplined Celerant - Cargill team focused the project’s first phase on designing processes and developing a performance structure. The first benefits, including a 25% time improvement in production bottlenecks, appeared rapidly, engaging all team members. Connecting production to customer demand Celerant Consulting also worked with the production and maintenance departments to implement a sustainable management approach on plant production performance, aligned with the supply chain function. Connecting customer demand to daily and weekly production performance enabled the supply chain function to optimise product switches and manage inventory. Celerant also guided the restructuring of the purchasing spend, so that improved procurement processes were implemented with a robust vendor management system.

RAPID RESULTS RAPID BUY- IN • Operational savings worth millions of Euros per year have been achieved from solid yield improvements, energy efficiencies and improved productivity in every operational department. • Competitiveness and teamwork have been restored at both plants. • A genuine drive for Continuous Improvement has been installed, driven by agreed KPIs and clear roles and responsibilities from operator level right up to Plant Management.

‘ I am very proud to see the whole team go through the change curve and deliver real savings. The challenges ahead require more hard work, but when we have everyone pulling in the same direction it’s just a great way to do your job and be part of a winning team.’ Plant Manager, Bergen op Zoom.

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IN FOCUS LEAN

LEAN: OLD GUARD OR AVANT-GARDE IN THE 21ST CENTURY?

Too many companies are still doing LEAN instead of being LEAN, says Edwin Vercruysse, Vice President Operations & Operational Transformation Service Line Leader. Being LEAN in the 21st Century means expanding programmes horizontally and vertically to create significant, sustainable results. hen Toyota developed LEAN in the 1950’s it delivered phenomenal results on the shop floor by reducing waste, increasing flow and developing a culture of Continuous Improvement. Over the years the tools have evolved and the principles have been applied in most major industries, but as the USA Today Business* survey opposite shows, the results have been nowhere near as impressive. So is the concept of LEAN running out of steam?

Celerant Consulting believe the opposite is true. LEAN is entering a new era. An era brought about by changes in the operating model from local to global, mid size to multinational. It’s a new world now, globalised, complex and instant and companies need to develop a LEAN model that fits with that. Focusing on the shop floor is no longer enough. LEAN programmes must be vertically and horizontally expanded to mobilise everyone - and leadership has a key role in making this happen. Transform your business horizontally In the 20th Century, most businesses only had to worry about competition from their own country or region. That’s changed dramatically, but for most companies the LEAN concept hasn’t. It’s still focused on the shop floor. Transforming your business to a new way of thinking and working cannot be successful if you only concentrate on one area such as production, sales, logistics or admin. This is the difference between doing LEAN and being LEAN as a business.

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LEAN IN FOCUS

The point was driven home by Norman Bodek1 in reference to Toyota’s 2010 recall of 1.7m cars when he stated: ‘Had the tools of the Toyota Production System been extended from the factory floor worker to every employee who makes contact with the customer, Toyota could have dramatically reduced the resulting financial impact and human tragedy.’ Feed long term vision with short term results Global Programme Design & Deployment: Celerant Consulting are change experts. We understand what makes LEAN work and have designed and delivered hugely successful transformation programmes in Manufacturing, Services, Innovation, Green and 6 Sigma. Our research shows that LEAN programmes either focus too much on training and not enough on results, or the exact opposite. We know that only a combined approach can drive behavioural change and produce sustainable results, so a well-balanced programme must: • Be an Integral part of the company’s operational strategy Not linking LEAN to the overall strategy is setting it up for failure. A company must define where the biggest improvement opportunities lie in its end-to-end value stream and draw up a road map of projects they want to implement. That way, even if LEAN starts in a small scope, it’s still part of the bigger strategy. • Ensure clear targets are set and understood by the workforce Before we begin a LEAN programme we ask Management: How are you going to cash the cheque? Companies shouldn’t wait until oper ational benefits are realised before deciding how to cash them. This could jeopardise the credibility of the LEAN set up with the work force because if it looks like restructuring, it probably is restructuring. We believe that LEAN is about doing much more with the same and as companies look for growth we’re helping them use the same number of people in a smarter, more effective way. • Combine operational with tactical results One challenge to creating a LEAN programme roadmap is ensuring that small scoped LEAN initiatives deliver results at the top level in an acceptable timeframe and that everyone is involved in the LEAN journey. In our experience, this is best achieved with a combination of large, cross-departmental projects with more of a re-engineering character that focus on

middle and senior management as change architects (their impact is significant and measured directly in P&L) and LEAN projects that focus on rendering parts of a process more efficient and effective (their impact is significant on an operational level). Moving beyond manufacturing Value AccelerationTM: A second implementation challenge to a LEAN business transformation is that although the same LEAN principles apply in production, R&D, finance or sales, the actual tools and techniques must be adapted to each environment. The key to building sustainable results is accelerating the pace at which people go from waste identification to elimination. This is central to Celerant’s Value Velocity concept. To be able to adapt quickly a company must identify opportunities, engage its workforce and build the right systems to measure performance and ensure Continuous Improvement. That way it can iterate its operational value stream cycle and attain top value velocity.

In a survey of 2,800 CEOs and Business Unit Managers in the US, only 19% were satisfied that their LEAN programmes had delivered what was intended.* Ensure there’s life after LEAN Sustainable Capability Build: Transforming a business is a never ending journey, so having a strong internal change capability is crucial. But we often see that Change Agents who act as task forces during a project have no formal role once it ends, finding themselves in limbo with no direct boss, clear targets, feedback or career prospects. To maintain their effectiveness it’s vital that companies: • Create clear roles and responsibilities between internal Change agents and the business to determine who is responsible for

Continuous Improvement, targets etc. • Offer an attractive career path that shows what accreditation/promotion looks like and explains whether they report to business or corporate. • Build expertise throughout programmes by for example, sharing individual project learnings through quarterly meetings of Change Agents. Integrate LEAN vertically LEAN Leadership: LEAN initiatives deliver great results, but if they’re not linked to an improvement roadmap they risk creating a great buzz on the shop floor, but going unnoticed in the board room because the benefits they generate are often undermined by low performance elsewhere. This lack of leadership recognition will kill off Continuous Improvement. That’s why you can’t look at LEAN from a single department perspective, you have to look at it end to end and involve everyone, particularly middle and senior management. CEOs and Senior Management generally have a rough vision of what LEAN can achieve, but are unclear about their role in the set-up and deployment process. That’s why vertical expansion is critical. It involves all layers, gives them a practical and active role and creates true LEAN Leadership. In the set up to any LEAN programme, Leadership’s most important task is to create the climate for successful change by ensuring their organisation is both willing and able to change. They must challenge the status quo, create a vision and making sure that a strong plan is in place. We help senior management move from the board room to where the money is actually made - to go and see, ask why and show respect. That way, they take on a more visible leadership style that engages with the actors of change. We recommend regular Gemba walks (walking tours) throughout the whole company. But directors and managers don’t always know what to look for, so like people on the shop floor, they must to ‘learn to see’ the waste and it starts with the basics like understanding the process flow and its performance. This is where management systems (MCRS®) come in. Contrary to what some people might think, we advise that performance boards are brought in from Day 1, because if you understand it, you can draw it and involve others to improve further. Only when there is a clear understanding of performance can leaders genuinely challenge and support their managers and workforce.

1.Norman Bodek is an author and the President of PCS Press. Since 1999 he has focused on Toyota’s second pillar ‘Respect for People, employee-development and employee-empowerment’. * USA Today, Business. CLOSEWORK® GLOBAL REVIEW 2011

IN FOCUS LEAN

LEAN worked for the Venetians, Toyota and Frank Woollard. What’s the best way to make it work for you? EAN has always been good for business, says Simon Elias from the LEAN Enterprise Research Centre, but it delivers the greatest benefits when it’s a complete business philosophy.

Is LEAN constantly evolving? How has it changed since the 90s? The ideas that underpin LEAN have been around for years. Some commentators believe that Venetian ship builders were using LEAN in the 15th Century. Of course, they didn’t use the word LEAN, but the point is whenever man has looked at the task of making something better, simply by applying common sense you can end up with what we now label LEAN. Bob Emiliani, a contact I have in the States, came across a man called Frank Woollard who worked in the British automotive industry in the 1920s and he wrote a book called ‘Principles of Mass and Flow Production’ which was somehow lost until Bob discovered it a few years ago. When you read it, it predates the whole Toyota Production System. It absolutely is LEAN. And yet no one has heard of him. That’s an important message about LEAN. It’s not a new kid on the block, it’s just that we’re very good at rediscovering it.

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In the past LEAN was primarily used to improve one specific area of a business, but to really make it work you’ve got to deploy it right across a business. That’s the message that LERC has been putting out for some time. We produced a paper a few years ago called ‘Learning to Evolve: A review of contemporary LEAN thinking’ and that was one of our keys messages: LEAN isn’t a series of quick fix tools, it’s a complete business philosophy. In the 90’s LEAN had a manufacturing, shop floor orientation. Companies focused on tools and techniques and the logic was ‘Let’s apply what worked for Toyota.’ The evolution since is that LEAN has moved into other sectors and there you need to take a much broader view of what’s going to work - what works in a manufacturing sector is not necessarily going to work in a services

LEAN IN FOCUS

The LEAN Enterprise Research Centre is one of Cardiff Business School’s major research centres, with a track record of innovative Research, Executive Education and Engagement activities. Its mission is to research, apply and communicate LEAN thinking and it’s one of the largest centres of its kind in the world. Simon Elias joined LERC in 1997 and as Commercial & Education Director is involved in e-learning, SME, automotive research, LERC’s commercial projects and the development of its education portfolio.

environment. We see LEAN now as a business philosophy, a business system, rather than just an occasional set of projects based on the shop floor. This evolution positions LEAN as a business solution where the focus is on creating value for customers, rather than manufacturing or operational service delivery. Most organisations still have a long way to go to use LEAN like this, but that’s where it’s going.

Do you think the word LEAN itself is a problem? That label was first popularised in the book ‘The Machine That Changed The World,’ which described the successful Toyota Production System, but it stuck for better or worse. Our view is that it doesn’t matter what you call it. It’s best not to get bogged down with the word LEAN, particularly as it has some negative connotations about cutting things. The other problem of course is that LEAN is often used to cut things. Many big organisations have used it to reduce head count and once it’s positioned as a negative cutting tool, it gets a bad reputation and that leads to problems when you try to implement it in a positive, sustainable way. It’s difficult to change a culture when people perceive LEAN negatively, so the first thing you have to do is change perceptions. LEAN needs to be positioned as part of the value system. You have to move beyond tools and techniques to a complete business philosophy.

‘Once you define LEAN as a business philosophy, you realise that it actually has a cultural change dimension and that’s what really underpins its successful implementation changing people’s behaviours.’

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IN FOCUS LEAN

Do most companies really understand LEAN, or have they just got some idea about it? Many companies still define LEAN the way it was defined in the 1990s, a tool based approach for improving operations. Everyone’s got some idea of what LEAN is, but it’s pretty broad. So one of our challenges is to communicate a modern definition. It’s not just about cutting waste. It can be positioned as a growth strategy, a means to create capacity, enhance value and develop new opportunities. Very few organisations have that focus though. They still think we’ve got to take out waste and LEAN’s the way to do it, whereas we see waste reduction as the means for creating capacity, to let you focus on value and growth.

What are the big challenges to implementing Lean? The first one is understanding exactly what LEAN is because if you just see it as a series of tools for cutting waste that’s how you’ll use it and you won’t get the bigger benefits. You really have to appreciate LEAN’s bigger impact on the whole business system. You have to take a systemic approach and not simply use it for the quick fix. Once you define LEAN as a philosophy, a business system, you realise that it actually has a cultural change dimension and that’s what really underpins its successful implementation - changing people’s behaviours. The human element is absolutely critical, you have to get all your soft factors in place. You have to carefully manage these processes because they’re the principal enablers for successful LEAN change. It’s not easy to change people’s attitudes and behaviours, so you have to be in it for the long haul and it’s got to have top management and middle management support. That’s another big challenge. Companies also have to understand that there’s no prescriptive solution for LEAN application.

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Every company has its own circumstances and its own needs, so they must come up with their own solution because they know their circumstances best. We call it developing a contingent approach. You’ve really got to work out a solution that’s right for you. I often use an analogy that likens a LEAN journey to getting fit. If you tell 2 or 3 people to get fit they will all come up with different programmes. That illustrates our point about developing a contingent approach, because you can’t just go and borrow someone else’s programme and expect it to work for you.

So planning your LEAN approach is the critical first step? It’s absolutely key and this is where Policy Deployment and strategic alignment is so important. You’ve got to ensure that everything you do links with the overall company strategy, making sure there’s a logic to what you do and that it fits into the overall objectives of the organisation. The human dimension and the strategic dimension have to be brought together so that the things you do first have the most impact for the organisation.

How do you balance the need for quick wins against LEAN being a business philosophy? It’s not easy, especially in an environment where shareholders demand a quick return on their investment. You can’t say ‘You’ll see the benefits in 5 years,’ you've got to demonstrate short term benefits as well. From the human point of view too, you’ve got to show that change is happening, things are getting better. There’s often a lot of low hanging fruit you can attack first. It may not be part of the systemic solution, so you’ve got to have

a 2 pronged approach, attacking the low hanging fruit and attacking the systemic issues. The first gets you the quick wins and builds up people’s confidence and the second puts the longer term changes in place to start altering behaviours and influencing the culture to create one of Continuous Improvement. You need to do both simultaneously.

Now LEAN has moved outside manufacturing where can it be most impactful? In most western economies around 80% of people work in the services sector, so that’s where the real opportunity lies. There’s already been a shift into the big transactional services sectors like financial services and insurance processing. It’s at an early stage, but it is happening and a recent study that LERC conducted showed that the improvement opportunities there are often greater than they are in manufacturing. The public sector has its own challenges. The NHS has been looking at LEAN from the bottom up perspective and there are an awful lot of NHS trusts, like Bolton for example, that are doing a lot of good work with LEAN. There’s still much creation of islands of excellence rather than systemic change, but that’s the reality of how big, complex organisations apply LEAN. HMRC and the Dept of Work & Pensions have been on LEAN journeys for a few years now, but they’re clearly not businesses that can grow, so it’s been about cost cutting. That’s one of the real challenges for the future, how does LEAN apply in the public sector if one of it’s main tenets is about creating a capacity to grow? So there are many challenges going forward.

LEAN IN FOCUS Change is the constant, the signal for rebirth, the egg of the phoenix.

65 %

Over 65% of the programmes and projects that Celerant Consulting is currently involved with are Operational Transformation. All over the globe, we are down on the ground helping to drive results up through analysis, implementation and our unique Closework速 approach.

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IN FOCUS LEAN

Helping innovators With margins at its global manufacturing base under increasing pressure, DSM Nutritional Products appointed Celerant Consulting to create LEAN Operational Excellence through real Behavioural Change.

nnovation has helped DSM Nutritional Products become the worldâ&#x20AC;&#x2122;s leading supplier of vitamins and carotenoids to the food, pharmaceutical, cosmetic and feed industries. Senior Management was confident that it had the right high level strategy in terms of structure, global location and output, but if that strategy was going to deliver consistent results, Operational Excellence was essential at its manufacturing plants across the globe.

Margins were under real pressure, so Celerant Consulting was brought in to help drive a major LEAN transformation programme that would focus on 4 key areas: Core manufacturing processes, Performance Management systems, overall Programme Management and Operational

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‘ Celerant absolutely matched our ambition and really adapted their approach to help us steer our manufacturing base. Showing improvements and successes really helped anchor the changes in the organisation. Enthusiasm is back in the heart of our people and it was a great experience.’ Jos Schneiders. President, DSM Netherlands.

innovate the future. Excellence supported by a suite of LEAN/6 Sigma tools. Overcoming programme fatigue Dr Konrad Brueggemann, Vice President of Manufacturing & Technology knew that changing behaviours on this scale was going to be a tough challenge: ‘There were lots of superimposed programmes already in place and a degree of programme fatigue. The PEP initiative was yet another programme, so it was going to be very tough to get buy-in.’ To overcome this, a joint Celerant Consulting DSM team was established to optimise existing knowledge and develop the ‘next practice’ using input from every level of the organisation. This enabled a stronger and faster acceptance

of the improved ways of working, and allowed much greater emphasis to be placed on building and training an organisation that could quickly adapt to change. Local knowledge leads the way The PEP programme was successfully piloted in Europe. Then, as part of its global implementation, local LEAN competence networks were created to ensure that all the changes would stick, and even evolve, after the programme had finished. Using these local networks to transfer knowledge as quickly as possible enabled DSM to take full responsibility for the programme, energise its entire workforce and create a real culture of Continuous Improvement.

FAR REACHING RESULTS • Over €270m of sustainable savings have been achieved. • Increased predictability of supply has created improved customer satisfaction. • Productive interaction between employees has been achieved, using competence networks to exchange best practice. • DSM is now is fit for the future with maintained and improved margins.

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IN FOCUS LEAN

‘The fundamentals in our business must be reconsidered and LEAN is the means to do that.’

Why did you decide to launch this programme? At Nestlé Waters, LEAN is fundamental to the company’s long term strategy to attack a difficult marketplace. Jonathan Rennotte, who leads one of the practice areas for LEAN at Nestlé Waters, explains how everything from out-ofstock to legal fees is being transformed. Jonathan Rennotte leads the Goal Alignment practice area for Nestlé Waters, a division of Nestlé SA. Goal Alignment is a pillar in Nestlé’s worldwide LEAN programme ‘Nestlé Continuous Excellence’. Jonathan is the former Director of Talent, Performance & Learning for Nestlé Waters and in a career spanning 17 years has held senior HR management roles in Europe, North America and Asia.

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Many companies do LEAN for marginal efficiency gains, cost or headcount reduction, but the following statement really gets to the heart of why we’re doing it: ‘Nestlé Waters has launched a global transformation, involving our people in transforming their day-to-day activities into more and more value for the customer. The aim is to generate a new way of doing business that will ultimately become Nestlé Waters’ key competitive advantage.’ We call it ‘Nestlé Continuous Excellence’ or NCE, our path toward a LEAN enterprise. Like virtually all the big FMCG’s, the 2008 financial crisis confronted us not with a short term problem that needed a short term fix; it gave us pause to take a long, hard look at the fundamental assumptions by which we operated day to day. Our industry is difficult-trying to make money carrying a product any distance that weighs as much as water does, and costs as little as water does. So LEAN has become our theme in our long-term strategy to attack a difficult industry and a volatile marketplace. The fundamentals in our business must be reconsidered and NCE is the means to do that.

LEAN IN FOCUS

You are going slowly so that change becomes deeply embedded. Is there any danger of a loss of momentum? I would say no, because Nestlé is a very patient company. Internally, we have had a saying for many years: ‘evolution, not revolution’. Of course, there is always the pressure from the business expecting results in the very short term, but it’s a healthy tension. The long-term orientation of NCE is the consistent message of our company management. They have shown patience and trust in the system of NCE. Managers have specific incentives built around short-term outcomes; that’s normal. So the risks lie largely at the levels of execution because LEAN is known to actually cause some performance setbacks in the short term if you’re building it right. You suffer a little bit in order to gain a lot in the long term. We have been fortunate to experience only a little of that so far in our 3-year journey.

A LEAN Institute survey showed that middle

management resistance is a key obstacle to overcome. Did you find that? Yes, and it remains the key to this journey continuing successfully or stalling. It had a lot to do with the ingrained ways of getting business results that were being challenged by NCE. Imagine that I’m the Sales Director heading a national sales organisation. I suddenly have people coming to work alongside my team who call themselves ‘LEAN’ experts and they’re working with my people to help sales people to question the way things are done and improve the work, a little bit each day. Of course I’m going to be sceptical. I don’t need anybody to help me improve sales-that’s my job and I’m good at it! LEAN change agents tend to underestimate the importance of this personal threat felt by middle and senior managers, and it can lead a LEAN programme to fail. I’ve got an HR background and have always believed the Change Management principle that support for a transformation initiative is most difficult to generate in the front line employee population. But in NCE, it’s not true Take the example of a front-line saleswoman: she gets to remove some of the irritants to the customer; things that she was always trying to highlight

to management as obstacles to her work, or hindrances to customer satisfaction. Her job improves; her work becomes more interesting! But it doesn’t make her boss’ job any easier and that’s the irony of this - the front line employee stands to gain more that her boss. Her irritants go down, her customers are happier because she’s more available and responding to their needs, and problems are systematically raised and dealt with at the root. But a middle manager will often feel disintermediated from the work and certainly from his traditional levers forinfluence. ‘Why, they have the ways and means to address problems without always escalating to me? But I have all the managerial experience-that's the value that I add!’ So the critical question is: Can a manager change their mindset to see themselves as an orchestra conductor, a facilitator of the successes of others? Most managers didn’t sign up for that set of competencies, but it’s the essence of what it means to be a manager in a LEAN company.

Do you give them specific training to overcome this? Yes, and that is a distinctive aspect of the way Nestlé implements LEAN. We give managers a lot of support, but we don't find that training is

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IN FOCUS LEAN

‘You are changing the culture. It’s one little brick at a time. The culture changes as the mundane, daily, ‘insignificant’ little behaviours change.’ the answer. I often call training the ‘car wash effect.’ People can be all clean and sharp, but in a few days they’ll be back in the operational environment where it’s going to rain and get muddy, and then they’re going to default to behaviours that worked for them in the past. So training is an important element, but it’s not the whole answer. Most of what we do is better termed ‘shadowing’ and ‘accompaniment’ in the work. Our NCE coaches work alongside managers for the first 6-9 months. We support, ask questions, and give feedback to them. We’re a sounding board for their own frustrations with the NCE ways of working. We try to raise their comfort level with the change while increasing their independence, so that they can manage the NCE way on their own. We put a bunch of tools in the hands of our internal change agents and we equip them to support our managers and help them understand what they’re getting into with NCE and overcome the obstacles that are bound to occur. It’s not a one-time push, it’s ongoing. If you look at any given business or any part of that business, they’re at different stages of managers developing self sufficiency on NCE behaviours.

Are all LEAN changes generated by internal agents? Most of them. The pilot was conducted with an outside consultancy, but the initiative cannot be run sustainably from outside. People will be won over by results and it’s our own people that will convince internal stakeholders the best, and they indeed become evangelists after seeing the results. That’s the approach we’re taking. We piloted NCE in France, then seeded our next implemention in Italy by bringing to

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Italy two team members who had participated in the pilot, and so on. We keep propagating the capability that way internally.

How long was the French pilot? 9 months. Now the NCE work in France has progressed to more sophisticated levels of application.

And it was in every aspect of the business? NCE hasn’t touched every aspect of the Waters business yet, but it will. There’s no HR example, but almost every other function has been touched one way or another. Customer Service, Head Office, Marketing, Field Sales, Demand Planning and Transport. Even Legal, the processing of litigation has come in scope and significant financial gains were made there. So it’s a full company initiative. NCE reached our factories first, actually. Many of them are now moving beyond foundational NCE work into TPM, ‘Total Performance Management’, a system which is based on LEAN thinking that is specific to production environments.

Where do your biggest opportunities lie? Many people use LEAN to ‘manage the denominator’: to cut. But we use it for both the numerator and the denominator and if we have a choice we’ll choose to grow the numerator.

For example, in one European market, the Sales field force found an enormous amount of waste in their work: 30% of their time was waste that they could take out right away. But they didn’t lay a single person off; Nestle does not use NCE to lay anyone off. To the contrary, the teams chose to use that extra time to increase their visits to stores by 25%. Obviously if they’re visiting more stores they will generate more revenue. That is top line, ‘numerator’ effect. We hear stories of companies that identify waste and cut it out like it was cancer. For us, our company is our people and Nestlé keeps that commitment. If we had cut people, then in the next phase of NCE, you can imagine that everyone would be far less cooperative and enthusiastic. So, for a number of reasons, we’re not going to take people out. We redeployed them and said: ‘OK, you’re now freed up from all this wasted activity, you have x number of stores per month to visit,’ and that has made a huge impact in the first year of a phenomenal turnaround in a very difficult water market.

Have there been other brakes on implementation? The most significant is our sheer capability to expand NCE. You need people who know it and we’re not going to hire fleets of people. So that’s a limiting factor and it slows us down, but in a sense it fits our model because it creates an impatience in the business. People hear about NCE’s success in other markets and say ‘When is it going to be my turn?’ But it’s a constraining factor when we have so few people with years of experience in applying NCE. That’s a huge brake on our speed and our scope. But some might say that’s not a bad thing - we do it well, we do it in depth and we take our time. There’s another factor which is a challenge for us even now: how to do this in a company like Nestlé with over 140 years of history. We’ve got ways of working that aren’t even written policy any more, they’re just the way things are done. There’s also an enormous amount of written policy which is very direct and uncompromising. The Nestlé Group has set up this initiative despite the fact that our company culture carries

LEAN IN FOCUS

with the complexity that comes with all large multi-nationals. We need a common approach to NCE, but the danger is that we become too rigid, too prescriptive, too needlessly complicated. The beauty of the approach of NCE is that it starts and ends with value as defined by the customer. That creates a powerful simplicity. So we’re caught in a tension of ensuring consistency while at the same time creating agility and that’s going to be an ongoing challenge. That dilemma is summed up by a quote I read from two of the gurus of LEAN, Dan Jones and James Womack who said: ‘The change agent is typically something of a tyrant, hell-bent on imposing a profoundly egalitarian system in profoundly inegalitarian organisations.’ So there are some dynamic tensions as Nestlé establishes its LEAN approach. Every company has to customise LEAN to its own specific culture and you’re going to have some cuts and scrapes along the way as you fine tune it and make it your own.

Where have the big wins come? One is the perennial challenge of our product being ‘out of stock’. Water is a unique product: if a consumer goes to a supermarket and one of our waters isn’t on the shelf, he typically won’t go to another supermarket looking for it. No, he’ll just pick up a water of similar price-from our competitor. So, what happens with product availability at the point of sale is crucial to our business. Also, our contract with retailers carry penalties for us if we’re out of stock, especially during a promotional event. If we’re offering special prices and the supermarket has advertised for them and consumer shopping in their store can’t find the ‘Buy One Get One Free,’ then the retailer penalises us. So we lose a sale and additionally get a penalty claim against us, a double negative Now the easy assumption is that out of stock product was a Supply Chain issue, but in applying NCE principles with the front-line salespeople, they have found that two-thirds of the factors are in their hands. So the Sales team members have looked at the issues themselves and

identified what they should do differently. They developed their own solutions using NCE problem solving, to get to the root of the problem and solve it for good. They had things under their own control that they didn’t even realise until they were given the support and focus to look at them. Doing this, the sales teams have decreased out of stock levels by 30 to 40%. That’s a huge amount of money that we're no longer wasting. Well, Sales and Supply might be considered obvious places to discover financial opportunity, but one of our big wins has been in the Legal department. We were losing enormous amounts of money in litigation-not in the courts, but due to our internal processes taking so long. We assumed we were handling it correctly, but as so often happens when you apply NCE to office processes you start realising how waste was hidden in the ways of working. For example, a file gets placed on a legal analyst’s desk and then tomorrow two more get placed on top of that. Generally, people deal with the one that’s on top of the pile, so we were processing based on a ‘last in, first out’ process: completely the wrong way round because the file that we really need to treat is the one that’s been waiting the longest. Of course, we get penalised the longer we have a claim outstanding in litigation. The interest and the fees on it mount quickly beyond 180 days, and we didn’t think that we could do much about that. The amount of money that we were leaving on the table is really stunning. That is not the basis on which we want to create successful partnerships with our customers in retail. So, we are now focused on what creates value mutually.

tactics and measures in alignment with that, from the ground up. So, it captures the best of the ‘top-down’ and the ‘bottom-up’ approach. The NCE ways of working are fixed, but the specific business outcomes are not. We believe in putting NCE in the hands of the teams. We don’t know what they’re going to invent, but we’ve seen enough to know that what they’re going to come up with will be good for them and create breakthroughs for the company. It’s not possible to steamroll a company by saying we’re doing LEAN as a management directive, take this template and copy and paste it everywhere’. But by supporting people in finding a different way to run a meeting, by speaking a different way about what we measure, you are changing the culture. It’s one little brick at a time; the culture changes as the mundane, daily, ‘insignificant’ little behaviours change. Nestlé works like that, evolving and adapting in time. NCE has given Nestlé the means to continue to do that in spite of the new levels of ambiguity and volatility in the economies where we do business. We’re excited to see where this NCE journey takes us.

Where is LEAN taking you? The whole point about LEAN is that the outcome is not fixed. I couldn't tell you what the business in Italy will look like in 2015 and some of managers really don’t like such ambiguity. Imagine knowing that things are going to change, and that the specific points of the change are in the hands of your front line teams. Managers react very strongly to that message. That’s where ‘Goal Alignment’ is so important. It starts with the organisation’s business strategy and builds the

CLOSEWORK® GLOBAL REVIEW 2011

IN FOCUS LEAN

First launched in France at the end of 2008, The Celerant Change Club is a unique Club where Change Management professionals share experiences, ideas and ambitions. It is a neutral zone where members can confront their own challenges with help from other specialists and discover new ways to prepare for them. The club is open to all managers who have experienced a business transformation project and welcomes representatives from every economic sector and managerial function, as well as academics, journalists and key influencers. pplying the principles of the LEAN approach imposes profound changes in organisations which are likely to generate resistance. The natural reflex often consists of fighting them or trying to by-pass them, whereas one should be taking them into consideration, understanding them and listening to them. In truth, resistance means that the project has not been adequately explained or that some elements have not been correctly analysed, for it must be recalled that the staff out in the field are the best placed to grasp the difficulties that any change in the organisation may cause. Moreover, the necessary time to implement a LEAN approach may also cause some difficulties.

1 Cultural resistance A study carried out amongst industrialists and published in iSixSigma Magazine (2009) revealed that the most difficult point to overcome is related to the change in culture and the behavioural aspect, and not the deployment of tools for a specific process. To secure the buy-in of staff for a change in their mindsets and their working methods is a complex, yet essential exercise. 2 Middle-management resistance Middle-management resists for it finds itself caught between two stools by the directives imposed by the hierarchy that it has to implement, and by the staff in the field who reject them. It may also be faced with a fear of loss of power. Sometimes, middle-management can see an overlay in the LEAN approach to a current or previous organisational change and that it is likely to lead to disruptions in working teams. These obstructions may lead to a refusal to cooperate or to comparisons being between

CLOSEWORK速 GLOBAL REVIEW 2011

THE

LEAN KILLERS At their recent 11th Workshop in Paris, Celerant Change Club members debated the 3 killer obstacles that must be overcome to drive a successful LEAN Programme. This is an Executive Summary:

LEAN IN FOCUS

units, whereas the approach focuses on a global harmonisation of practices. In general, middlemanagement defiance reduces over time as it understands that the tools and working methods proposed will simplify the organisation and when it notes the satisfaction of the teams in the field. 3 Operation/Front-line workers resistance Operational teams and field-teams are focussed on technical quality and not on a culture of figures and financial control. The intervention of consultants into their professional environment is generally viewed with distrust, as the teams fear that it is a cost-reduction project which will involve a brutal reduction in staff numbers. To respond to these anxieties, confidence must be generated by presenting the achievements due to the approach, by involving the operational teams in producing solutions and building tools and by explaining the secondary importance of seeking gains in the spirit of the approach. The decompartmentalisation of teams also enables different units to work together in a collaborative approach and to give meaning to the tasks of each and every worker. Building the success of the Lean approach The LEAN approach creates a coherent system of complex concepts, so 4 critical steps must be followed for it to be successful: • Explain and communicate at all levels in the company to the people who will be involved in the approach. • Implement dedicated resources for the approach and reserve a specific budget for it. • Have springboards at all levels of the organisation by relying on a task force to relay and disseminate the approach. • Identify the ‘human nuggets’, or in other words the people capable of delivering change, and the ‘achievement nuggets’ which deliver the proof of the success of the approach by the presentation of visible results. Managerial attitude and long-term strategy The framework context plays a pivotal role in the approach as it must lead to the buy-in of staff-members to the project. To achieve this, managers must: • Have a managerial attitude of listening and knowing how to let staff-members have their voice heard, so that they are encouraged to reflect and propose improvements to the

productive system based on their direct experience of situations in the field, • Ensure ownership of the approach by the teams via a collaborative design of solutions and the quest for a consensus, • Know-how to explain the role of each person and training, to keep everyone within the approach. • Understand how to identify leaders, but also those staff-members who are putting up the most resistance in order to determine the best method of securing their buy-in to the approach. Therefore, the tangible benefits which will enable the daily situation of the most reticent to be improved must be identified, plus it must be explained how the gains of the approach are to be managed. The company must also favour the long-term stakes by describing a global objective and committing to it sustainably in the future. The way forward. Be positive, be clear. The success of the approach implies that some hurdles, likely to lead to the failure of a LEAN programme, must be avoided as far as the technical or behavioural aspects are concerned. It is therefore recommended: • Not to abandon the leaders once the project is launched by imagining that it will take its natural course and without any hand-holding, but to leave them a sufficient degree of freedom to favour initiative-taking. It must also be understood how to place responsibilities at the right level, by training the staff-members and rolling out adapted tools. • Set objectives and the scope of the project and do not stop the approach whilst it is ongoing. • Promote dialogue with the industrial relations partners. • Reposition the role of the consultant or the expert as a guarantor of the method with the objective of providing support and to avoid allowing the idea taking hold in the minds of the operational teams that the approach is the project of the consultant and/or the expert. In fact, the LEAN approach must not be carried by experts but by the organisation as a whole. It must constantly be recalled that the LEAN programme is very much a corporate level programme and the teams must be made aware that it is not a question of an additional approach, but of a long-term strategy founded

on a vision of the future. • Avoid detail overload as the project aims to simplify and harmonise tasks and practices to facilitate continuous improvement by the elimination of non-value creating tasks. • Do not instigate a LEAN approach to respond to a fashion effect. • Convince middle-management of the need to have a dedicated team if possible with a new eye in the company in order to avoid any biased analyses. This task force must then be sustained and must revisit the operational aspects to ensure that the spirit of the approach remains within operations. Recourse to experts must be avoided at all costs as they will depersonalise the approach. It must also be avoided that these task forces become empty shells by implementing dedicated resources for these activities. Ensuring the sustainability of the project over time requires that staff members are able to view the future progression of their careers.

‘Apply the approach to all levels of the company, including the top level which must also be experienced in the performance culture and lead by example.’ • Ensure a relevant layout of LEAN sites identified by arbitrating between the fear of wasting time at the set-up of the approach and the time-savings gained once the project is accomplished. ‘Quick Wins’ to be launched at the outset of the project must be very visible in terms of daily irritants and in terms of time gained by operational staff. Then the extra time-effort required for deployment of a LEAN approach will be better accepted by the players involved which will leverage global buy-in to the approach. • Be clear on the expectations, the results and the vision of the success with all the relevant population groups by specifying how the gains generated through the approach are to be managed. The generation of false fears (redundancies) must be avoided as must false expectations (bonuses and/or promotions). • Define the added-value of a task which contributes to a process from the point of view of the customer, by listening to the customer and closely analysing his problems and opportunities.

CLOSEWORK® GLOBAL REVIEW 2011

IN FOCUS LEAN

The search for sustainable results makes implementing change an ongoing effort, says Doug Newman, Senior Vice President at Celerant Consulting Americas. To really drive Continuous Improvement companies must alter the way their managers apply knowledge and tools. hen companies seek change, leadership and managers at all levels understand that there will be challenges. Companies will need a platform and a programme, they will need assistance from outside experts, and they will have to trust in a new way of looking at their enterprise. Whether they implement LEAN Manufacturing, Six Sigma, or a combination of these and other disciplines, they expect their company will be stronger, faster, better. When an improvement project is scoped out, managers might toast to a new dawn, sit back and await the much-anticipated ROI.

The Muscle behind LEAN:

Strength & Vision are the lynchpins of sustainable change.

CLOSEWORKÂŽ GLOBAL REVIEW 2011

But there is a stark reality that is frequently left out of their mental preparation: transformation is not an isolated event. Once the project is over, the change goes on; the organisation must act differently to achieve different results, or the benefits take their leave soon after the implementation team. The search for sustainable results makes implementing change an ongoing effort that stretches from end to end of an enterprise. As it unfolds companies must alter the way their managers apply knowledge and tools to drive Continuous Improvement. To gain and maintain the product leadership or process leadership that is central to business strategy, the tone must be set at the top by strong managers, and the â&#x20AC;&#x2DC;musclesâ&#x20AC;&#x2122; of the enterprise those who take action and leadership roles - must understand and adapt to the change. The ability

LEAN IN FOCUS

to build a team that rises to this challenge will be the lynchpin that keeps the organisation on track for long-term success. The process of ‘muscle building’ must be executed in lock step with the launch of a LEAN transformation, with 3 primary considerations that will guide leaders: 1. Create a vision and environment of success Leaders must understand that transformation cannot be delegated away. Their vision must become the organisation’s vision and the entire workforce must own and value the change together. To ensure that the environment takes root and is maintained as the new paradigm, leaders must articulate the vision, share ownership, establish Key Performance Indicators and then monitor and communicate progress to encourage ongoing buy-in. The glue in all this, and one of the things that distinguishes the best run companies, is a comprehensive Performance Management system that helps information flow quickly from executive level to the shop floor and back again. The system should encourage real collaboration, ensure timely decision making and action at each level, role model the optimal set of behaviours to drive a culture of performance and relentlessly focus on the discipline of getting things done. As change takes shape, executives must clearly and continuously let the workforce know how their efforts are contributing to success and how the transformation is translating into results. In the long term, it is these managers and employees that will make the difference – not just the team that spearheaded implementation. 2. Foster a self-sufficient culture of change A common thread among companies that will benefit from a LEAN transformation programme is that they often lack the managerial strength necessary to implement it. Legacy operational methods that may be inefficient or have not evolved with the market are ingrained in these organisations and changing those routines is no easy task. With that in mind, reorienting the management team and a critical mass of supervisors is often the first step to a sustained improvement programme. It is not enough to devise a solution and point the team in a new direction, they must be empowered to use the same techniques and processes that consultants use to create a LEAN environment.

Managers should first engage in training on the finer points of their new organisational system. Devoting just one or two hours per day to learning the ropes can make a tremendous difference during the first 6 weeks of implementation. Managers get a better grasp on ideas such as how to use Kanban cards to track production and product movement, how downstream processes need to obtain pieces from upstream and how the production process needs to ensure quality. This new knowledge should be put to work immediately in order for the teams to see results and experience firsthand how the workforce adapts. It is one thing to have outside firms police the workforce, it is entirely another and more effective approach for the teams themselves to be part of the integration. When training is complete, managers should work hand in hand with consultants and/or internal project teams to get a feel for the full range of activities and potential. Within 3 months, teams will be self-sufficient, stable, and able to independently maintain a climate of continuous change.

metrics and tools with which to launch, allowing the workforce to apply their new mind set and generate quick, tangible results. As they see the value of the first set of pragmatic tools, they will be more willing to ramp the system up to its full capacity. In this way, their initial enthusiasm will extend – and that is the key to sustainability. Knowing their value is more motivating than knowing their position, and once they have a grasp on their contribution to results they will be a powerful force in carrying the transformed company to higher levels of productivity and profitability.

‘Managers must set the tone by words and deeds as they embark on a transformation. Aligning the efficiency

Bringing in managerial talent from other organisations can also provide tremendous lift. When supervisory positions are at least partially staffed with horizontal hires from the outside, they bring with them experience, skills, and methods from their former companies that a vertical hire would lack. This kind of turnover not only provides an incentive for current managers to remain on top of their game, but it also keeps the company fresh. By relentlessly infusing the organisation with new ideas and skill sets, they can dramatically improve their long-term performance.

of LEAN with the

3. Start on a strong note Once managers and technicians understand the goals and are on board with their roles, infusing a company with a results-oriented culture will be a continuous learning experience. One of the most important choices leaders will face as they embark on such a project is whether to launch immediately and trust that momentum will gather under the new philosophy, or whether to set in stone a full foundation of process and metrics before taking true action. The best path may lie in between. For a company that is developing new metrics, it can take months to establish comprehensive measurement tools and processes to support them. The attractive alternative is to create a small set of critical

term goals met

muscle of directed vision creates an environment where day to day impact is appreciated, long and ROI sustained.’ Sustaining strength When organisations pursue Six Sigma and LEAN Manufacturing without first explicitly tying these approaches to clear operational and business objectives, the tools lack the legitimacy of compelling purpose. That means there will be misunderstanding, misconception and mistakes in implementation; results will be short lived because the long term objectives were never very clear to begin with.

CLOSEWORK® GLOBAL REVIEW 2011

IN FOCUS LEAN

Clicking on LEAN IT

13 LEAN Snacks

BUSINESS CHALLENGE The client is a major Banking & Insurance company which, like most organisations in their sector, had come under intense pressure because of the financial crisis. More demanding customers and stricter legislation and supervision meant that cost levels needed to be dramatically reduced. IT & Change is a key part of the organisation as a professional partner for the exploitation of existing IT systems and facilitating change. It now needed to transform into a LEAN operation, cutting costs and improving customer satisfaction, so Celerant Consulting was brought in to help build the learning organisation that would be essential to achieve this.

BUSINESS CHALLENGE The client is one of the world’s largest food companies with sales running into $billions. Its US Snack Food Division is a 13 plant network where volume and production can be transferred from site to site. Each sites had its own challenges, while others such as change-over and problem-solving affected the entire network. Daily management meetings and maintenance planning and execution were dealt with independently and problem resolution and Continuous Improvement were inconsistently organised. Consistency and reduced costs were priorities, so the company launched a major LEAN programme and appointed Celerant Consulting to help.

CELERANT SOLUTION Following an in depth analysis, the Celerant Consulting - Client team defined 4 Workstreams that would transform the department into a LEAN operation: Software Maintenance & Development, Information Management and Management System MCRS®. The focus for the first 3 was on implementing LEAN processes, introducing KANBAN (software maintenance), SCRUM (software development) and implementing an integrated resource planning for business and IT. The Management System MCRS® focused on establishing Continuous Improvement by creating transparency and developing client leadership with regard to ownership, leadership, pro-activity and the ability to change. All 4 workstreams were supported by the implementation of a redesigned organisation, with less complexity and reduced overhead and Celerant's experts used its unique Closework® approach to help the client taskforce facilitate real change and create a self-sufficient change capability.

CELERANT SOLUTION Celerant’s approach consisted of 3 Phases: Design and Integration, Analysis and Implementation. Design and Integration was conducted as one 6 week event using Celerant’s PACE process which brought together 38 representatives from the 13 plants to deliver training and develop standardised implementation playbooks for 4 major workstreams: Production Excellence: Implement a visual MCRS® Management System with integrated leading and lagging KPIs and SICs to serve as the standard project platform for Snacks. Leadership MCRS®: Implement an improved leadership system to help integrate Production & Maintenance. Maintenance: Implement improved, consistent work order planning to improve wrench time and reduce downtime and emergency work. Reliability: Implement an asset reliability strategy for the Snack Food Division involving preventive and predictive maintenance care plans for critical assets and bad actors. Continuous Improvement events were also launched at all sites to improve processes and standardise problem identification and resolution.

RESULTS Significant and above plan cost reductions from programme milestones and SIS delivered on time, in full. •A culture of Continuous Improvement led by a client taskforce of over 30 people. •Dramatically improved customer and employee satisfaction.

RESULTS Projected annualised savings of $millions by 2012 end. •Increased OEE. •Increased awareness of systemic waste now addressed via LEAN implementation strategies. •A new Standards Office. •A sustainability programme involving organisational alignment and periodic gap assessments. •A standardised solution that provides a common language for business improvement and Continuous Improvement. ‘This project accomplished in one year what we’ve been trying to do for 10 years. ’ Team Member

Financial Services

CLOSEWORK® GLOBAL REVIEW 2011

FMCG

LEAN IN FOCUS

A LEAN Vision

Leaner Performance. Bright Future.

BUSINESS CHALLENGE The client is global technology company that designs and develops visualisation products for a variety of professional markets, including medical imaging, media, entertainment and infrastructure. The demand for its products was growing, so it saw its future as a LEAN manufacturing organisation with optimised processes, aligned departments and rules of interaction for planning & scheduling. Celerant Consulting has worldwide experience at designing and implementing LEAN programmes, so it was appointed to help drive this vision.

BUSINESS CHALLENGE The client is one of Europe’s leading solar module producers. It’s a vertically integrated company, producing final product modules, cells and basic wafers, but it’s a growth story with particular challenges. The company faced increasing and fluctuating demand and greatly increased competition. So to protect its position and prepare its production platform for the future, it decided to launch a comprehensive Operational Transformation programme. Celerant Consulting was brought in to help because of its extensive experience and unique Closework® approach to implementation and behavioural change.

CELERANT SOLUTION Working closely with the Client Team, Celerant designed a LEAN organisation with clear roles and responsibilities and a comprehensive LEAN deployment process which included LEAN tools and methodology and was centred around a sustainable MCRS® Management System. Over the following months this LEAN deployment created a culture of Continuous Improvement that enabled the workforce to reduce waste and LT and improve supply, production & warehousing OTIF. Celerant also used it’s unique Closework® approach to help reduce manufacturing throughput times and WIP and improved production effectiveness planning & quality by implementing Kaizen, Right First Time, 5S and Poka Yoke. RESULTS LEAN competences embedded within the organisation, creating sustainable results and culture of Continuous Improvement. •One common New Product Introduction process leading to less overruns and improved quality. •A LEAN shop floor with optimised WIP and throughput times. •LEAN tools in production, final assembly, warehouse and delivery pool. •Realised benefits of €3.5m through reduced time and material waste, reduced lead times/WIP and increased OTIF delivery. ‘Celerant approached our project in a methodical and thorough way. Yet, they left enough room for my company’s specific way of doing things. They have the range to jump into very detailed matters, while keeping the big picture in view.’ Business Unit Group Vice President

Manufacturing

CELERANT SOLUTION The programme’s aim was to increase productivity in the short and long term by just over 30%, reduce cost per peak watt and right size the headcount. Working closely with Client Management, Celerant confirmed the original productivity target and a multimillion Euro business case was in sight. The entire workforce was mobilised and aligned to drive beyond the performance limit. Action plans were immediately implemented to address the extensive use of contract employees and detailed plans were designed and implemented to optimise a complex production line. Using LEAN, 6 Sigma and other methodologies and tools, Celerant helped the workforce build Process Excellence and create a culture of Continuous Improvement. RESULTS Long term targets became short term targets. The long term business case was doubled and increased capacity of over 30% was in sight. •Significant yield and throughput improvements within the first 3 months. •Full project tracking with standardised templates to professionalise the approach. •Key people trained by Celerant in soft and hard tools to enable them to continuously improve the company and train others. ‘It was good teamwork, focused on the right themes. Celerant really contributed.’ Project Manager

Manufacturing

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Technip T-MOS (Marine Operation Services) is a world leading subsea contractor for the Oil & Gas industry, but its ageing UK fleet required CAPEX upgrades which adversely impacted charge out rates. In addition, the crewing challenges of an ageing workforce and HSE/IMCA crewing restrictions meant there was a real possibility that the company would not be able to handle current and future business and operational challenges - or deliver the 20% reduction in project costs that were absolutely essential.

FULL SPEED AHEAD?

‘We revolutionised T-MOS while still delivering operational performance and driving company wide initiatives.’ Willy Gauttier, T-MOS Vice-President.

CLOSEWORK® GLOBAL REVIEW 2011

elerant Consulting is a world leader in operational projects in the Oil & Gas sector, so it was brought in to design and deliver major improvements. Working closely with the T-MOS Team, Celerant’s experts implemented 4 Workstreams to reduce spread rate and increase operational effectiveness:

An Organisation Effectiveness Workstream that created a simplified onshore organisation, ensuring that the right people were always in the right position, with clear accountability and supported by appropriate management systems to speed decision making and support transversal activities and greater predictability. Offshore initiatives were also introduced to decrease crew costs.

A Procurement Workstream that enhanced supply chain management development and delivery of Service Level Agreements. A Vessel Availability Workstream that improved the relationship between Technip’s Business Units by developing and delivering Service Level Agreements. A Life of Asset Management Workstream that ensured ‘right first time’ engineering through a clear CAPEX selection and prioritisation process and a robust project management process. With these new workstreams up and running Technip was transformed into a right sized organisation, redesigned to deliver greater business efficiency and client delivery through an integrated MCRS® Management System with the right KPIs. A profound change in procurement strategy and behaviours also took place, moving from uncontrolled sourcing to supplier rationalisation, onshore procurement and competitively priced frame agreements.

DEEP RESULTS • By the end of the project a significant annualised OPEX reduction had been acheived against a multimillion pound target. This comprised of a reduction in onshore headcount, a reduction in offshore personnel costs and procurement savings through frame agreements, settlement discounts and retrospective rebates.

• An annualised reduction of CAPEX (13% of budget) was also delivered against a target of 7%. This was achieved by cancelling unnecessary projects and tightening control of ongoing projects with a rigorous project management process. • Overall performance visibility has improved, is better managed and internal customer satisfaction has also improved.

CLOSEWORK® GLOBAL REVIEW 2011

The Mining Consultants

NORTHERN EUROPE.

5.30 AM. -30 DEGREES. TIME TO GO TO WORK. 1,240 METRES BELOW THE EARTH.

WORKING ON A MAJOR IMPROVEMENT PROJECT AT ONE OF EUROPE BIGGEST MINES, CELERANT CONSULTANT JONI HEINONEN FINDS IT HOTTER DOWN BELOW THAN IT IS ON THE SURFACE.

CLOSEWORK速 GLOBAL REVIEW 2011

CLOSEWORK® IN ACTION

f you’ve never been down in a mine before it can be quite a hostile environment at first. It’s loud, dark, dusty and the whole place is buzzing. It’s like a small city with roads, tunnels and canteens. This one is huge, so there are massive machines everywhere and it has more than 100 workers - production operators, drivers, maintenance personnel, infrastructure people, foremen and the guys that do the prospecting and blasting.

The company has been mining in this region for a long time and it’s closely bound up with the local community. People are very proud to work for it and proud of what they do. Natural metal prices are rising too, so it’s also a very important company for the Swedish economy. Striking gold The rock is rich in zinc, copper, gold, silver and lead and production takes place on every level. Tunnels spread out everywhere and huge trucks carry the rock up to the surface on a big ramp in the middle. The blasting cycle is drill, load, blast and then make the mine safe again. And it repeats like that day and night. All the rock that’s blasted out then gets taken to the mill, where the ore is separated out. But it’s still not pure, so after that it goes to the smelters where it’s converted into the finished product. Celerant have a team working here and the aim of the project is to help the miners improve every aspect of their operation, particularly the tonnage of ore they mine. They’re very experienced professional, so we’re learning a lot from them too, because being a team is the only way you can operate down here in the mine. From 21 blasts a week to 25 One of our main tasks is to lower the machine failure rate. That means the worst performing critical machine should not break down more than once every 30 hours. That’s the big target because it supports the overall target of going from 21 blasts a week to 25. The work these machines do is incredibly tough, so they break down a lot. One critical machine could breakdown every 6 hours. So we need to implement preventative maintenance

and do first line maintenance and have a problem solving team in place to work out why the machine keeps breaking down and what we can do to make sure it doesn’t happen again. That’s why we spend a lot of time down in the mine making sure that what we’ve designed is actually happening. You’ve got to work with the maintenance teams to find out exactly what’s happening on the shop floor. How is first line maintenance doing? Are the operators completing the work they're supposed to? How are we complying with the standard times that we’ve set for tasks? How are we recording work orders? Tough men, Tough questions The mechanics and operators are tough men, you have to be to work in a mine, but they’re easy to communicate with. They have a mentality which is very down to earth and honest. So as long as you adjust to their culture and embrace their way of talking, their way of reasoning, it’s easy to get on with them. Most people have worked in the mine for a very long time, so they’ve got a lot of opinions about what’s best for the mine and what’s best for the future. That’s understandable. If you’ve been in a mine for 30 years and you’ve now got Consultants saying perhaps we should do it like this, or plan our cycles like that, you’re bound to question things. So we’re constantly pushing ownership and responsibility for the project over to the managers, the foremen and so on.

the information, but it’s impossible to get everyone else in the same room at once, so we have to give the same workshops and the same information over and over again to guarantee that everyone understands exactly what where we are in the project and where we’re going. It’s hard, but very rewarding when you see the results.

‘ The whole place is buzzing. It’s like a small city with roads, tunnels and canteens.’

Designing a great strategy on paper is a whole lot easier than actually making things happen on the ground. So a big part of our job is making sure that people are in the right place on the behavioural curve. Right now they’re probably thinking this is never going to work and hoping the Consultants will go away soon so they can get back to working the way they used to. But that’s because this is one of the most intensive periods in the project. Maintenance and production work 24 hours a day at the mine and it’s the same in the mill. That’s 3 shifts, so making sure everyone is at the same point is a big problem, especially now that we’re installing these improvements. The managers work during the day so they get all

CLOSEWORK® GLOBAL REVIEW 2011

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

CLOSEWORK : Companies run more efficiently because their workers connect as empowered individuals, not components. Layers and departments collaborate rather than compete. They’re given precise ways to measure what they do and can use their initiative to improve. Operational areas perform better because they have a stake in the process of setting goals and can see what is being achieved. Single individuals understand their role and their personal impact on performance, ®

CLOSEWORK® GLOBAL REVIEW 2011

so their work becomes more satisfying. Everyone plays a part in setting the targets, so they become a shared objective and a point of personal pride.Wariness and rivalry give way to real respect and teamwork. Optimum improvements continue to be achieved long term because people feel central to the results they create. Real behavioural and organisational change takes place. Knowledge is power. When people know what is expected of them, companies thrive.

CLOSEWORK速 GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

THE FASTER AN ACQUISITION IS COMPLETED, THE FASTER THE BENEFITS ARE GAINED. When AEA Investors acquired Houghton International, they knew that the global supplier of metalworking fluids and chemical management services was an excellent platform for growth in a fragmented industry. Upon appointment, new Houghton CEO Paul DeVivo stated that he planned to ‘grow profitability by increasing volume and improving efficiency.’ Celerant Consulting was selected to work with the management team to achieve this vision.

CLOSEWORK® GLOBAL REVIEW 2011

elerant was initially engaged to omplete a capability assessment of Houghton’s global processes. As a result of their findings, Celerant continued the engagement to implement an Operational Excellence programme focused on process improvement and achieving significant efficiencies. In tandem, Celerant was further engaged to complete a thorough Operational Due Diligence and Merger Integration programme of Houghton’s first major external growth initiative: the acquisition of D.A. Stuart, another mid-market, global maker of metalworking fluids.

Identifying the springboard for growth Celerant’s analysis quickly uncovered two key areas for growth. First, familiarising Houghton’s Management Team with the merger integration process so that they could efficiently integrate a company over half their size. Second, utilising the Operational Excellence programme to increase Houghton’s platform profitability. The Houghton programme team identified $34m in annual recurring EBITDA benefits that could be achieved independently of the acquisition, by re-engineering its sales and marketing, purchasing, supply chain, R&D, finance and HR functions. They also identified an additional $32m in onetime working capital improvements that would provide a powerful springboard for growth. Executing the deal smoothly and synergistically The Celerant and Houghton team now began their biggest task - preparing the Houghton Leadership team for the acquisition of D.A. Stuart. The Celerant team had already estimated that $33m in annual recurring EBITDA synergies could be realised from acquiring D.A. Stuart, in addition to $3m in one-time working capital improvements, and now geared up to support the transaction effort on several fronts:

• Providing operational due diligence support to aid development of the acquisition’s commercial terms. • Working with both Houghton and D.A. Stuart to plan all aspects of the integration, from creating a successful merger platform, to preparing a seamless Day 1, to all subsequent integration activities that would be needed once the companies were officially joined. • Training the Houghton Leadership Team throughout the process. • Documenting all work in a ‘Houghton Playbook’ that could be used to support future due diligence and merger integration projects. Executing the deal smoothly and synergistically The due diligence team was tasked with analysing Houghton’s current state operations against those of D.A. Stuart. They developed an operational opportunity assessment for D.A. Stuart to support Houghton’s transaction decision-making, valuation and financing modelling, which was later used as a component within the overall synergy analysis. Also included in the analysis was an operational opportunity assessment within each functional area across the businesses, as well as a review of the strategy and business plan viability, organisational capabilities and effectiveness, asset footprint, operational CAPEX and revenue, resource and supplier stability. This effort culminated in the assessment that $33m could be gained from synergy benefits. 5 Integrated Workstream Plans for a successful Day 1 The integration planning effort consisted of developing Day 1 and post-Day 1 integration plans to support the resource, organisational and functional requirements that would be necessary to operate as a single entity. The integration planning team formed 5 workstreams: Finance - accounting, billing, accounts payable and insurance. Operations - manufacturing, purchasing, logistics and sales and operations planning.

‘ Celerant commanded the situation with a professionalism and grace that kept us involved and satisfied, while making Houghton International feel comfortable that their best interests were at heart.’ Gary Cappeline, Operating Partner AEA Investors

Technology - R&D, technical services and EH&S. Support Services - HR, corporate communications and legal. Customers & Products - sales, marketing and product management, customer service, marketing communications. These were supported by an Integration Management Office and an overall steering committee to expedite decision making and issue resolution. As Paul DeVivo explains ‘The key outcome of our planning effort was to ensure that Day 1 was executed flawlessly, with little impact on customers, employees and suppliers. The merged business should not skip a beat on Day 1. The other target was to craft a robust synergy assessment and capture plan so that we could immediately begin executing redundancy elimination and consolidation efficiencies post-close. We are continuing to work with Celerant to implement their integration recommendations so that we can emerge from the merger as a stronger, more competitive business with a broader geographic footprint and base of products.’

RESULTS • Almost $34m in annual recurring EBITDA benefits were achieved independently of the acquisition, in addition to $32m in one-time working capital improvements. • Almost $33m in annual recurring EBITDA synergies were realised from acquiring D.A. Stuart, in addition to $3m in one-time working capital improvements.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

Driving Operational Excellence at a GRIDS Corporation isn’t easy, say Henri Paul Missioux, Vice President Operations and Nicolas Pinglot, Principal Manager, at Celerant Consulting France. You need a 7 Star Plan to guarantee a winning performance.

ver the last few years, GRIDS Corporations have undergone dramatic change; opening up to competition, standardising working methods, slashing costs and trying to install a culture of Continuous Improvement. The huge geographical reach of these networks however, and the numerous sites required to cover their territories, have made the traditional routes to improving operational performance far more difficult. So managers with ambitious targets for their organisation have to go back to basics. To be successful, they have to motivate their operational teams and place them at the centre of a dynamic Change Programme.

Sustainable change needs high ambition To be No.1 on the GRID, organisations need to move forward on 3 distinct fronts: • Orientating the management towards a culture of Continuous Improvement. • Managing all aspects of change and its consequences within the organisation. • Achieving significant and sustainable operational and financial improvements in a short time-frame. This can only be achieved if change is driven by high ambition - and that means tackling potential obstacles like inertia, tensions between Head Office and the regions, and resistance to a performance culture head on. The key is to get everyone involved in the organisation’s ambition.

CLOSEWORK® GLOBAL REVIEW 2011

Time and again across the globe, Celerant Consulting have demonstrated that to really succeed, major Change Programmes must identify new potential in the field, strengthen the links between corporate strategy, management requirements and operations, recognise the contribution of different support functions, and most importantly, change the working habits of every individual. Successful outcomes need daily buy-in The most complex challenge that faces any organisation is to engage employees in the implementation of the strategies decided upon by the company management. Imposing solutions, even the most costly, rarely works. Celerant Consulting has therefore developed a specific response; a robust, pragmatic approach to performance improvement that combines both the technical and the human aspects, so that, positioned at the heart of our approach, employees will voluntarily contribute to accelerating change throughout their organisation. The Magnificent 7 Celerant Consulting has developed 7 key success factors for performance improvement in GRIDS Corporations: 1. Embed the Project Team in the regions Our Project Teams are always deployed in the field, very close to local management. To motivate the teams in place, our experts have the advantage of multi-disciplinary expertise, in particular

HOW TO BE No.1 ON THE GRID. management control, information systems, engineering and communications. In addition, they can rely on a coordinated approach through weekly training sessions, strict guidance and the regular certification of their skills. 2. Set up a direct link with the field Leaders and managers often find it difficult to grasp the reality of the operational performance of their teams and the value creation processes, because numerous filters can distort the gap between them and the field. To remedy this, our consultants spend as much time as possible out in the field where direct observation enables them to place operational aspects at the very centre of their thought processes, and therefore validate the changes undertaken. 3. Place local managers at the heart of the project Successful change primarily depends on the 1st Level Leadership of the teams in the field. Local managers are normally well aware of the problems they encounter on a daily basis and can rapidly identify potential for improvement. Our project teams work closely with them to apply appropriate solutions and this two way collaboration enables significant results to be achieved quickly and limits any resistance to change. 4. Achieve a global grasp of the overall functional operations of the corporation An approach that’s too partial or simplistic runs the risk of failing to solve the underlying

problems, the ones that severely restrict the functional operation of a Corporation. That’s why a successful transformation requires comprehensive action on 3 levels: • Organisational: Getting involved in the assignments, objectives and reporting lines. • Management Systems: Integrating technical metrics (indicators, follow-ups, dashboards) and the human dimension leading to action (analysis, meetings, and planning sessions). • Operational: Improving the processes for transformation and the creation of value by optimising the production phases for goods and services. 5. Develop local solutions for a global vision A GRID network is a complex and geographically dispersed organisation, so it’s impossible to involve all managers in all subjects at the same time. Therefore a pilot unit has to be identified for each subject. This will enable existing practices to be identified and potential improvements within its scope to be highlighted. This pilot unit can also develop and test solutions in the field by involving recognised experts in the subject and formalising a benchmark for an organisationwide deployment. 6. Identify best practice and involve the key players Rolling out best practice within organisations enables the sign-up to a Continuous Improvement approach. This involves the performance meas

urement of each situation and the factual assessment of what is and what’s not working. Attention must also be paid to identifying the key players, the decision-makers, influencers and recognised experts within the organisation who will accelerate change if they have been appropriately involved.

‘Every member of the team must be prepared for what’s around the corner.’ 7. Embed the changes in the history of the corporation The ambitions of management and the project team also play a crucial role in ensuring the success of a Change Programme. Communicating the continuous evolution of the Corporation enables the local managers and the experts who are the real drivers within the organisation to become even more motivated. The provision of training for managers in Continuous Improvement techniques and Performance Management must also form part of corporate operations. On its own, this will not be sufficient to obtain significant results, but it’s absolutely essential to sustain the changes and increase future successes.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Carving Out A Joint Future

Power To The People

BUSINESS CHALLENGE The client is a leading Private Equity firm with a focus on controlled buyouts in 4 industry sectors: Value Added Industrial Products, Specialty Chemicals, Consumer Products and services involved in these sectors. Celerant Consulting was engaged to partner with one of its Specialty Chemical holdings on a complex carve-out acquisition and subsequent integration of a division of a large global provider of specialty oils. As a result, the holding would gain significant strategic resources to substantially expand its ability to service customers in Europe and in rapidly growing markets such as India, Brazil, China and Russia. The challenge was to extract the division from its previous owner and integrate it without missing a beat.

BUSINESS CHALLENGE The client is a leading player in the fiercely competitive US retail electronics sector. A decade of consistently profitable growth is hard to achieve, but even harder to maintain without some kind of radical renewal in strategy and operations. Yet the CEO was also convinced that the company still had potential to achieve substantial performance improvements. Celerant Consulting was given the task of identifying where this potential lay and helping to design a project that would turn it into real dollars.

CELERANT SOLUTION Celerant Consulting embarked on an extensive 8 month Design & Integration Planning exercise to achieve a flawless Day 1. The Celerant team played a significant role in ensuring that all Day 1 activities were successfully implemented at over 25 locations across the globe. Following the first day of new ownership, Celerant ensured maximized value and strategic direction were implemented in the new organization through a 100 Day Integration program. The 100 Day integration areas of focus are service delivery and retention, customer retention and maintenance, order to cash execution, brand transition management, SG&A, and Phase I functional integration and synergy capture. The Program Management Office continues to track critical path milestones and synergy results during the integration phases, leveraging a standard toolkit for all activities. RESULTS The program was hailed as ‘Best In Class by all parties.’ •A one time working capital release of €2.2m and €9.06m in synergies have been achieved to date. •Key Customers and Employees were retained from the acquired firm. •A flawless Day 1 was executed with uninterrupted customer service. •The merged company was left with an MCRS® Management System, processes, systems and virtual playbooks which mean it now operates as one global firm.

Private Equity

CLOSEWORK® GLOBAL REVIEW 2011

WORLDWIDE

CELERANT SOLUTION Celerant’s analysis found real improvement potential right across the business: sales and profit planning; product life cycle management; marketing and advertising; forecasting; inventory and vendor management; strategic sourcing; sales channel and operations; distribution and logistics management; product portfolio and assortment planning. Turning these opportunities into reality hinged on the implementation of a robust MCRS® Management System in all key operational functions. The company knew that simply achieving efficiency improvements would not be enough. It needed a new mind set and new capabilities so that employees at every level would have the skills and motivation to keep pursuing higher performance. For some employees, letting go of the rule book was challenging, so Celerant collaborated closely with Senior management to give people the support and strength they needed to make the change. RESULTS 12 weeks into the project, significant results started to emerge. •$millions in hard benefits from inventory efficiencies, including reduced cost of goods, reduced inventories, improved vendor terms and logistics and distribution improvements. •$millions in cash flow freed up via reduced inventory demands. •Rationalised product lines. •A culture of Continuous Improvement. ‘With Celerant, we’re really understanding how the company works. We’re identifying opportunities to improve and making the right decisions to sustain great performance.’ President and CEO

Manufacturing

Rock Steady Op Excellence

Analysing Fact From Fiction

BUSINESS CHALLENGE The client is one of the world’s largest manufacturers of limestone products, a task which requires great technological knowledge. One of its strongest divisions in Europe produces quicklime and hydrated lime for the iron, steel, chemical, building and water processing industries. Its main activities include quarrying and processing limestone, calcinating and purifying quicklime and shipping finished products. Demand for these products was growing rapidly, so the company decided to use this site as Operational Excellence pacemakers for the Group by launching a series of projects to optimise its Rotary Tube Furnaces, processing, systems, structures and maintenance expenses. Celerant Consulting was brought in to help achieve these goals.

BUSINESS CHALLENGE In the 1990s when the client, a major U.S. Government Agency, assumed responsibility for managing ground fuels at the retail level, it applied the same tolerance criteria it used for bulk fuels. The Agency suspected that this might not be the optimum way to maintain efficient and effective accountability. As a result, it decided to commission an independent review of the established gain/loss tolerance criteria and its relationship to throughput, rounding of sales and volume-correction procedures - and identify the root causes of inventory gains and losses through a better understanding of commercial petroleum industry practices. The client allocated 1 year for this analysis, but Celerant Government Services was appointed after convincing it that 5 months would be sufficient for a comprehensive analysis.

CELERANT SOLUTION The programme’s implementation was scheduled over 32 weeks of intensive activity. The goal was a step change in performance across all divisional functions, so the joint Celerant-Client implementation teams placed great emphasis on the interrelationships between functions. This enhanced overall effectiveness to unprecedented levels. Individuals, teams and groups were able to play to the company’s functional and cross-functional strengths, while using disciplined methods to identify and pursue opportunities to dramatically improve product development and customer management. RESULTS The strategic foundation was laid for more cost effective Sales & Marketing organisations. •Benefits of over $1m were achieved in just 20 weeks. •Maintenance expense saving of around $0.5m were executed. •The new stage-gated product development process added nearly $5m risk adjusted. ‘Thanks to good cooperation with employee representatives, organisational changes were introduced without problems. Here too, Celerant have done a great job.’ Director of Technology

Metals & Mining

CELERANT SOLUTION A team led by Celerant Government Services that included fuel management experts from Military and Government backgrounds, as well as a researcher and data analyst skilled at supply chain logistics began work. The team quickly gathered information via historical data analysis, stakeholder interviews and Military and commercial site visits. The data analysis phase showed no correlation between in-tolerance end-of month reconciliation and location, throughput and seasonality. This led Celerant to hypothesise that people, policy and processes were the primary contributors to the sites’ inability to meet gain/loss variance criteria. The Team interviewed 27 personnel in various disciplines and their perspectives helped to focus its visits to 8 Military and 5 commercial fuel sites. Each site was then evaluated in: Experience & Training; Procedure Adherence ; Fuel Receipt Process; Storage & Inventory Process; Dispensing Process. RESULTS A comprehensive Final Report that included the analysis findings and a SWOT analysis. •The Report included 5 broad recommendations to improve ground fuels accountability, including the adoption of certain commercial best practices, as well as a recommendation that each potential improvement be tested in a series of operational pilots.

Government

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Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

CELERANT CONSULTING NOW HAS A HEAVYWEIGHT STRATEGIC PARTNER Celerant Capital is an operationally oriented Private Equity firm focused on acquiring and managing established, mid-market companies with revenues of $50m - $500m across a broad range of industries. The company is managed by a highly experienced deal team with a successful track record. The Managing Partners have invested in over 100 companies across various market cycles. Working with owners, corporations and other PE firms Celerant Capital partners with Management teams to improve operational and financial performance and provides the market expertise to deliver rapid growth through M&A and global expansion. Celerant Capital has just completed its first transaction - an ownership position in SDI, a company that is at the forefront of maintenance, repair and operations integrated supply services.

CLOSEWORK速 GLOBAL REVIEW 2011

CELERANT CAPITAL NOW HAS A HEAVYWEIGHT STRATEGIC PARTNER Celerant Consulting is one of the world’s Top 5 Best Positioned Operational Management Consulting firms* with a core focus on Performance Improvement & Behavioural Change. The company has over 650 team members with offices in 13 countries and implements customised solutions that capitalise on existing systems, processes and people to deliver substantial benefits for Clients. Celerant Consulting’s strategic partnership with Celerant Capital is a major differentiator and a huge advantage because it provides us with the expertise and scale to dramatically improve the operational and financial performance of our portfolio companies. Celerant Consulting is now actively involved with Celerant Capital in the SDI investment.

*Kennedy Information Global Survey 2009-2012. CLOSEWORK® GLOBAL REVIEW 2011

The Offshore Consultants

‘It’s like being an astronaut and going out to another planet.’

CLOSEWORK® GLOBAL REVIEW 2011

CLOSEWORK® IN ACTION

Survival training, a 2 week on-2 week off schedule and fire alarms going off in the night are all part of working life for Celerant Consultants Maxime Brichet, Pierre-Marie Derouin, Pedro Hernandez and Adrian Trenerry on a multi platform programme in the North Sea. efore you can go offshore you have to take a 3 day survival course in Aberdeen to get a certificate and if you don’t get the certificate, you can’t go. In those 3 days you learn about first aid and how to escape from an underwater cockpit, which is very challenging.

They run 7 different training scenarios and before you’re even allowed into the helicopter simulator you have to spend a lot of time in the water in your life jacket, learning how to move with all that equipment on. Everyone is then given a rebreather, which is basically a plastic bag, and you blow air into that and then you can breathe through it for up to 30 seconds. You go down under the water with the rebreather for 30 seconds or so and when you’ve proved you can do that, you get strapped into a seat on the helicopter simulator.

There are 4 of you in the helicopter simulator and in the first scenario they lower you into the water, but you don’t go all the way under. Then they dump you in sitting the right way up. You do one escape without the rebreather, then one with the rebreather. They tell you to count to 7 on your first escape because there’s air in your suit and you might struggle to get out if that isn’t released. Most people count a very fast 7 seconds. The worst scenario is when they dump you underwater, upside down with no rebreather. Your nose and mouth fill with water and because you might be sitting on the opposite side of the helicopter to where you normally sit, you’re escaping upside down, in the opposite direction. So there’s a lot of coughing and spluttering when you hit the surface. Flying out to the big blue The first 5 minutes in a helicopter are exciting, but then you notice that all the crew from the rig crew are sleeping. They’ve done this dozens of times and they know that the smart thing to do is to get some sleep. It takes about an hour to get out to the various platforms and the helicopter makes a lot of noise, so you have to wear ear plugs. At the beginning of the flight you look outside to see the sea, but after a while you don’t bother anymore because it’s always the sea.

CLOSEWORK® GLOBAL REVIEW 2011

The Offshore Consultants

‘It’s not easy to just step outside for a break, you have to check the weather first.’

CLOSEWORK® GLOBAL REVIEW 2011

CLOSEWORK® IN ACTION

It can be really windy on the trips and it’s not easy to land in those conditions, even though the pilots are very experienced. Sometimes you can’t even see where you’re landing because you’re in the middle of the helicopter and nothing really prepares you for being there the first time. When you do touch down on the helipad its right at the top of the platform. So your first impression is: This is a very big platform - and very small helipad. You look around and you’re surprised by how many other platforms you can see. The closest one might be only a few miles away and there are always others on the horizon. Everything in the offshore industry is driven by safety, so sometimes when you’re booked on a flight to go out, you get bumped off because there’s a greater need for electricians or maintenance people. Consultants aren’t considered core crew. Or if you’re booked to come back and there’s a medical emergency on another platform, they always go there first and then continue onshore. So sometimes you can be in the air a very long time. Groundhog Day? You work solidly for 2 weeks out on a platform, so it’s easy to lose your sense of time because every day is pretty much the same. You have the same meetings at the same time and the same fixed hours for breakfast, lunch and dinner. One of the crew said ‘Every day is Monday here’ and that feels true. You also lose your sense of space because you live in a very small world. Your time is split between your cabin and your desk and that can be only 3 or 4 floors apart. You can’t always go outside if you want to either. You have to check that

the weather’s OK first and you have to wear your PPE protection helmet, glasses and so on, so it's not easy to just step outside for a break. At the beginning it’s a strange life, but you get used to it. It’s a bit like a military life. 2 Consultants rotate on each platform, one offshore, one onshore and our job is to help the crew improve all aspects of their operation. A working day usually starts around 5 or 6am, but if for example you have to attend a maintenance shift changeover meeting, you’ve got to wake up at 4.30am. You’ve also got to manage some logistical issues. You share a cabin with a member of the crew, so if your roommate also has to get up you’ve to decide who takes the first shower. We finish about 9pm in the evening and go to bed around 10pm. There aren’t many things to do anyway. Most of the crew on the rig work 7am till 7pm. Then they go to the gym or the lounge to watch a movie. There’s a cliché about platforms where you think that you’re going to meet plenty of tough guys, but people are actually very normal. It’s a high pressure, demanding environment, but most of the workers have a family and that’s their focus back on shore. One of the big things about change management out here is that the crew is constantly changing, so you have to repeat and repeat and repeat to make change happen. You have to constantly check that people understand what you’re trying to achieve because even if you design something with your colleague, when the change over happens you have to convince the new person that this was the right thing to do. Depending on what shift pattern people are on there are times when you don’t see some crew members

for 8 weeks. Obviously your back-to-back is seeing them, but you yourself don’t. So when people come back from their break they have to understand the new ways of working that have been implemented while they’ve been away. You have to get them thinking not just about their tour of duty, but the next crew and the crew after that. 4.10am: General Platform Alarm There’s a safety drill every week where you practice going to your muster stations or your lifeboats, depending on what scenario they want to run. On one platform recently the wind was blowing in one particular direction and it blew exhaust fumes from the turbines into a room with a smoke detector. So at 4.10am it set off a general platform alarm and that meant everyone had to go to their muster stations until the source of the alarm had been checked. You’re lying their half awake and you hear this really loud buzzing and you think that’s not my alarm - then you realise what it is and scramble to get your protective clothes on. No matter how fast you are though the Offshore Installation Manager is always faster. They get to the Control Room really quickly to take charge of a situation like that. It’s a unique experience being out on an offshore platform and you need a special mindset to be involved in projects like this. It’s a tough environment. You don’t have any intimacy and you have to share everything. When you first board that helicopter in your life jacket you feel a bit like Bruce Willis in the movie ‘Armageddon.’ It’s like being an astronaut and going out to another planet. You can communicate through the internet or a phone call, but nobody can call you. So you have tremendous respect for the client crew who do this for a living. They are special people.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

An analysis of why so many Root Cause Analysis programmes fail. RCA can be one of the most difficult reliability, line efficiency and quality programmes to get right, says Mike Schellberg, Manager Operations at Celerant Consulting Americas, but the competitive advantages from success are huge. So what’s going wrong and how can you fix it?

oot Cause Analysis is one of the most underutilised improvement tools in manufacturing. Virtually every organisation can benefit from an effective programme, but few have achieved a level of excellence where RCA is used to continually improve overall performance. In most cases, it’s simply used to analyse major production loss events, asset damage, or other crises.

In all instances, RCA is driven by the urgent need to know what happened and why. Problem solving can be effective when it’s focused and prioritised, but applying RCA this way does not create a process for improvement because the results are usually focused on preventing a single event from reoccurring. Developing a successful RCA organisational work process To really understand why RCA is underutilised, we need to remember that an organisational work process is a system that provides a framework for completing tasks in a repeatable, consistent manner. These tasks are driven by organisational objectives and time lines, there are clear expectations for the outcomes and individual roles and responsibilities have been assigned. Most RCA programmes don’t have the benefit of this type of work process. It’s often unclear what is to be done, when it is to be done, who will do it and how corrective action will be initiated.

CLOSEWORK® GLOBAL REVIEW 2011

Most organisations simply assume that RCA training is all that’s required for individuals to be successful. In reality, most people who have had RCA training are pretty ineffective without a work process because it is very hard to eliminate problems without organisational support. Don’t go it alone The other problem is that anyone who attempts RCA as an individual will usually run into conflict with other people who aren’t sympathetic to their objectives. The reason is organisational culture, which has been defined as ‘observable patterns of behaviour that have been positively reinforced over time.’ Most organisational cultures are focused on urgent, task oriented activities, with individuals encourage to accomplish short-term objectives, but Root Cause Analysts focus on improvement issues that may not be viewed as important by others. That’s why their daily work priorities are questioned. This is most common where individuals in a department have been trained to complete RCA, but no overall organisational agenda exists for improvement. So management begin to view the participants in these conflicts as problem employees, when the true cause of the conflict is the absence of work processes and defined goals and roles for those involved. Many RCA advocates experience frustration at this conflict situation and lose enthusiasm so that RCA training fails to deliver long-term results.

Involve the right people at the right time A successful RCA organisational work process requires clear roles, responsibilities and timings. The most effective way forward is to: Engage the shop floor. Operators and mechanics hold the most valuable information for successful RCA, so it is absolutely critical to have your shop floor personnel involved in the RCA process from beginning to end. Without the most knowledgeable people involved in the process, true root cause identification will be very difficult. But while formal classroom training can give shop floor personnel a good understanding of an RCA process, it cannot teach them to use it effectively. That’s why Celerant Consulting’s unique Closework® approach provides a critical side by side learning experience that allows employees at all levels to see how the tools and processes work and the benefit of using them. Set time triggers & an escalation process. Timing is everything in a good RCA process. Setting timing triggers to problem solving is the framework for ensuring a downtime event does not go unresolved for too long, because individuals tend to get so involved in trying to solve a problem themselves that they lose track of time, negatively impacting plant performance. Time triggers let you clearly define the urgency on how a downtime event is addressed, who gets involved at what level and who has accountability for the problem the longer it goes unresolved. For example: • Downtime lasts 5 minutes - Operator calls Operations Supervisor. • 15 minutes - Operations Supervisor calls Maintenance Supervisor. • 30 minutes - Operations / Maintenance Supervisors call Operations Manager. • 120 minutes - Operations Manager calls Plant Manager. • 240 minutes - Plant Manager Calls Director / VP of Manufacturing.

The Root Cause: What was the true cause of the issue? The Countermeasure: What was done to prevent the issue from happening again? It’s important to capture as much information as possible about the problem, so standardising this approach to using RCA tools will provide the optimal structure for capturing it. Step 1 is designed to give the Operator, Mechanic, Operations Supervisor and Maintenance Supervisor a chance to get to the root cause of the problem within 30 minutes. This is normally successful with less complex problems and doesn’t require any formal documentation. Step 2 formally starts once the downtime event exceeds the 30 minute timing trigger. The issue is now escalated to the Operations Manager and the formal documentation process begins. The individuals who have been involved with the downtime event to date need to be included in the Step 2 process. Different types of document can be used as long as they are designed to use good RCA methodologies, but it’s essential to use a simple form that is understood by floor operators all the way up to the Plant Leadership. An effective form should capture at least some of the following: Problem Description; Problem Statement; Point of Cause; Fish Bone Analysis; Why Analysis; Containment Measure; Identified Root Cause; Corrective Countermeasure.

to Step 3, such as a problem being contained within 120 minutes and no root cause identified, or a repeat issue where corrective action has been tried in Step 2 without success. If an issue is escalated to a Continuous Improvement, it must be scheduled and conducted within 48 hours and include everyone associated with the problem since the beginning to provide the best chance of getting the facts out for discussion and identification of the true root cause. The potential is huge Developing an effective Root Cause Analysis work process requires effort and persistence, as well as new thoughts on organisational structure and resource priorities. It will require linking resources from the ground floor to the Operations Leadership. Without these resources, RCA will not be as effective as it can be because ground floor personnel hold the most important information when trying to get to the root cause of a downtime event. The potential improvements from an effective Root Cause Analysis work process are significant. Most manufacturing processes have opportunities for improvement and cost reductions that have not been obtainable with current efforts. In some cases, these opportunities could represent real competitive advantages in manufacturing strategies and processes. So examine your performance, review your potential and develop an RCA work process that will help you reach it.

All the information collected on the Step 2 form will be critical to reviewing the issue with everyone involved and escalating it to Step 3 if necessary. Step 3 requires a formal Continuous Improvement event. It begins when the downtime event exceeds 120 minutes and needs to be escalated to Continuous Improvement. Several other factors can also lead to an issue being escalated

Create a 3 Step problem solving process The final element in developing an effective RCA work process is the utilisation of fundamental RCA tools as the downtime event moves through the escalation process. The objective is to get to 3 key pieces of information - The Problem Statement: What happened to cause the downtime event?

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Mission Accomplished

Every Part Counts

BUSINESS CHALLENGE The client is an international, high-technology Group operating in the aerospace, defense and security markets. It needed create a highly competitive supply chain in a complex environment. As part of a Group wide initiative led by Purchasing, a supplier excellence programme was launched to roll out performance improvement projects at preferred suppliers. Celerant Consulting was appointed to set up the initiative, create internal Supplier Development (SD) resources and support first analysis.

BUSINESS CHALLENGE The client is one of the world’s leading manufacturers of automotive parts, renowned for quality and reliability, but it was struggling to meet a big increase in demand from its biggest customer. This company already accounted for around 25% of the volume on a specialist cylinder part and Senior Management knew that increasing output to the extent that was now required, while still maintaining quality, would be a significant challenge. So Celerant Consulting was brought in to analyse the entire operation, then help plan and implement a major programme of sustainable improvements.

CELERANT SOLUTION Celerant used its own value chain model from Sales to Project to build and deliver the approach. We positioned the client buyers as sales people responsible for developing a new supplier relationship and provided them with sales briefs, credentials, engagement tools and Supplier Development (SD) support according to needs and negotiation steps. We then transformed them into analysts and projects managers by training them in tactical and technical analysis methodology and the basics of asset management, quality management, monitoring system and Sales & Operation planning. We also supported them during the first analysis to monitor the new process, secure results and create ownership of the methodology. Backed with a robust business case and a shared vision with individual supplier management, these internal SD assets were then able to negotiate sustainable price reductions. Project deployment was built up to achieve the expected results and ensure that a culture of Continuous Improvement was embedded into preferred supplier organisations. RESULTS Substantial and sustainable price reductions. •Future supplier performance and ability to ramp up secured. •The creation of an SD team within Purchasing, supported by internal LEAN Sigma resouces and qualified to launch and deliver qualitative analysis and projects at suppliers. •Celerant also engaged the buyer community in developing a new vision of their role. ‘Beyond the technical approach and the quality of the studies we delivered, I’m pleased that we created so much interest and enthusiasm at our suppliers.’ Head of Supplier Development Department

Aerospace

CLOSEWORK® GLOBAL REVIEW 2011

CELERANT SOLUTION A joint Celerant - Client team quickly identified all production bottlenecks and sources of waste and began to implement LEAN Manufacturing tools and processes right across the organisation. Celerant experts supported and coached the client’s staff at every level. Whether explaining bottlenecks and how to minimise them to the management team, or encouraging ideas and enthusiasm from resistant shop floor operators, Celerant adapted to the client culture, keeping the project on track and maintaining everyone’s commitment to change. A new cross-functional MCRS® Management System was designed and installed and, combined with an effective communication programme, played a vital role in changing behaviours and monitoring progress towards increased capacity. Celerant also trained supervisors to develop and implement new management routines and worked with middle management to identify KPIs that would give real control over process performance and put a name and number on the causes of disruption. RESULTS Millions of Euros in annualised savings. •Greater alignment between product and material flows and customer demand. •A 40% capacity increase on a bottleneck line and improved line yields across the entire shop floor. •New shop floor management routines have transformed behaviours and performance. •A culture of Continuous Improvement has been created. ‘Celerant’s commitment and engagement with our staff had a steady impact on behaviours. I could see people’s habits changing on a daily basis.’ Managing Director

Manufacturing

Unwrapping A New Future

Swiftly Uncovering Potential

BUSINESS CHALLENGE The client is among the world’s largest FMCG companies. One of its factories in Australasia supplies finished products for the ANZ domestic markets and exports to finishing plants in Australia, Pakistan and China. Demand was growing rapidly, but the site was failing to deliver, resulting in poor customer service and increased costs. It had a siloed structure, with broken processes and a substandard performance that raised questions about its longevity in the ANZ market. Senior Management decided to launch a major Change Programme and Celerant Consulting was appointed to help.

BUSINESS CHALLENGE The client is one of the world’s most respected Private Equity firms with investments spanning various industries and enterprise values from $1bn - $15bn. It commissioned Celerant Consulting as a strategic Operational Due Diligence partner to support it through the bidding process and development of an understanding of potential operational and cost improvements. The target is a retailer with 130 stores and multiple distribution centers. As a world leader in Operational Management and global provider of pre and post acquisition services, Celerant Consulting was an ideal partner to establish the baseline understanding of the target business and an overall value creation thesis to support the transaction decision-making, valuation modeling and financing.

CELERANT SOLUTION The joint Celerant-Client team designed and implemented a new way of working focused on people and processes. By understanding the layout issues at the factory and listening to the concerns of the operators, the team developed new tools such as SCIs to provide total visibility and help deliver the daily and weekly totals. An integrated planning process improved interdepartmental communication, a new, site wide MCRS® Management System helped embed the new culture and Celerant’s unique Closework® approach changed behaviours, so people bought into the concept and the site moved rapidly forward. RESULTS Sustainable financial benefits worth millions of dollars. •Customer Service improved to over 98%. •Volume increased by over 50%. •Production Compliance improved by over 80%, with a much closer relationship between Sales and Production. •Major behavioural changes have been implemented throughout the organisation with operators now owning their layouts and senior managers leading their teams. •The site wide MCRS® Management System has created an interdepartmental work ethic where decisions are results focused and based around KPIs and a balanced scorecard. ‘The support and coaching provided by the Celerant team has been outstanding. Since engaging with them our site has moved from an environment of disorganised chaos to one that is organised and in control. People now speak with pride about the site.’ Site Manager

FMCG

CELERANT SOLUTION The Celerant Team conducted its assessment of the target’s business operations through a desk-top data analysis of external data supplied through the CIM and Data Room and original Celerant generated operational data from on-site interviews, facilities tours, field studies, functional forums, industry executives and cross-team working sessions. All work was done within 2 weeks to comply with the bid process timeline and the final Operational Performance Assessment Report included a summary of the key operating items impacting financial and performance; an organisational effectiveness assessment, including spans of control and layers of management review, and an understanding of the key processes and best practices across the stores and distribution centres. RESULTS Celerant’s opportunity assessment showed that $53m - $88m in EBITDA and $151m - $210m in cash release could be achieved by focusing on: Merchandise Management. Broad, indiscriminate policy deployment was driving increased complexity, cost and inventory levels. Pricing, Sourcing, Demand planning and S&OP processes were immature. Supply Chain Management. Adjusting operations to better synchronise the flow of product with promotions, seasonality and other demand factors would substantially improve margin and reduce inventory. Operations Management. The merchandising replenishment workload could be substantially improved by instituting more effective inventory management practices at stores.

Private Equity

CLOSEWORK® GLOBAL REVIEW 2011

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

It is our vision that Celerant Consulting becomes recognised as the leading Management Consultancy for Operational Strategy & Implementation.

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The Celerant Institute is the global Centre of Excellence that is helping us achieve this vision. The Celerant Institute is our research and development engine, powering the continuous improvement of our services to better address clients needs. Our research delivers deeper business insight which is used to develop our market offerings, skills and knowledge. The institute works across our entire value chain, focused on 4 pillars of excellence: Thought Leadership: Developing sharp and relevant points of view, by harvesting years of project work and collaborating with leading international experts. Client Advantage: New and better ways of working. Service Lines: Building new capabilities in eight service lines which address specific business challenges with innovative solutions and market-leading expertise. Client Advantage: Commitment to results. Knowledge Management: Improving the way we produce, harvest and apply our intellectual capital to deliver better value to our clients. Client Advantage: Effectiveness of thought and action. Education: Creating a learning organization, which enables the continuous growth and development of our people. Client Advantage: Theory put into practice to deliver results.

CLOSEWORK速 GLOBAL REVIEW 2011

Driving Relationships Celerant clients, former clients & friends of the business share their expertise and experience.

Brage Sandstat is Manager, Norway Operations.

‘We’re not doing a project. We’re not doing a programme. This is the way we work.’ W

hen ConocoPhilips Norway launched their ‘Good to Great’ Initiative

nearly 10 years ago, they were determined that it would leave a genuine legacy. Brage Sandstat was one of the Leadership Team who made sure that it has.

Why launch Good to Great at that time? The short answer is to create a culture of Continuous Improvement, but it was also a matter of timing. Back in 2002 - 3 things were good for us. The price of oil was good and our operations were steady. So we said to ourselves ‘It’s always a good idea to repair the roof while the sun is

CLOSEWORK® GLOBAL REVIEW 2011

shining, rather than wait for the rain.’ We’d also just completed a major reorganisation across the North Sea and naturally, after implementing a new organisational structure you want improvements to follow. So we decided to launch Continuous Improvement. Our objective was to create a legacy and that the exact word we used. We wanted to leave a legacy of Continuous Improvement within Conoco Phillips and Ekofisk. Now this organisation has existed for 40 years and it was never a poorly driven asset, so there was really no great need to do anything. This was a very proud organisation, a steady, stable organisation and the largest single oil asset in Norway. So driving any type of change here was like pulling teeth without anaesthetic. No one could really understand why we needed to do this because we were already very good.

Global Production Excellence

The team here was one of the best in Norway, they were benchmarking very highly. So what really drove it was us thinking that the time was right. We’d had various improvement initiatives over the last 20 years and you learn something and create something every time. But they didn’t deliver a lasting legacy. So the ambition and desire we had with Good to Great was that we were going to start something and carry it all the way through and leave that legacy.

How many North Sea assets were involved? All assests were included. Today we have 1,300 people offshore at any one time, which means about 4,000 people offshore and 800 onshore. That’s the full complement over the entire organisation, including finance, procurement, logistics and operations - the whole spectrum, including contractors. All groups were involved. Good to Great was initiated by the Leadership Team and it has touched all groups and all departments.

Did you bring your contractors into it as well? Absolutely. They were not part of the original structure, but they themselves applied to

become part of it and have really been involved in the Six Sigma methodology. This was about improving the entire operations in Conoco Phillips, Norway. So we’ve had cross functional improvement teams in production, procurement, logistics, drilling and so on. Our whole focus is really cross functional.

The attitude of the Leadership Team is a major factor in the success or failure of a programme. How did that work for you? Without the support of the entire leadership team this would not be possible. You have to be passionate about continuous improvement and you have to generate this first win. Several of the originla leadership team that took the initiative to get better have moved on. My task now is to train as many people as possible within the organistion to make it stick, so that the legacy stays behind.

‘ When we started to think about repairing the roof there was no one who set the pace for us. So this became ours and that’s really important.’

That’s why we’ve always been so keen on training our own people. We have had external help for a period of time to ‘Train the Trainers’, but the idea was always for them to train us so we could be self sufficient. Today I have Master Black Belts, Certified Black Belts, we have a lot of Green Belts - and what’s new this year is that we now have trained permanent coaches offshore. This is to complement what’s been achieved so far.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Relationships Celerant clients, former clients & friends of the business share their expertise and experience.

We feel that now is the right time for us to deploy full time coaches. These are our own people. We can now train our own employees in full Black Belt certified training - we have that internal capability. We call it The Good To Great Academy.

How do you select the people who will drive the legacy? Some apply, but mostly we select them ourselves. We usually pick Line Managers. We choose some of our best people and take them out of offshore or onshore Leadership positions, then train them in the Six Sigma methodology or coach train them. They stay in the improvement arena for a year or so and after that we promote them to a bigger job. That’s the whole idea behind the legacy, to train as many of the offshore-onshore people as we can in the methodology, the way of thinking, the way of talking, the way of doing. If we can have all these people thinking about improvements they will start asking the right questions and that will keep driving Continuous Improvement. That’s how we’re going to drive the legacy into the future. It’s not about Brage Standsat or any particular individual. It is about critical mass, it’s about sufficient mass of trained Leaders and employees who will continue to ask those questions and make our culture of Continuous Improvement live by itself.

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Offshore platforms are tough environments. How did people there react? It was important that we didn’t talk about Six Sigma, we banned those words. We never talked about Black Belts or Green Belts either because people wouldn’t have had a clue what we were talking about. We called them Practitioners and Facilitators instead. We told people this was about Continuous Improvement and we showed them some of the programmes we had and some of them said ‘Oh yeah, we know all about this because we’ve already been trained on Team Productivity Maintenance. We’re already doing this, so it’s not a problem.’ Others didn’t think it was going to work, but if they had to do it, they would. People might think that a lot of offshore workers are single minded, tough guys, but these are well educated, knowledgeable people and some of them have been with us for many years. Some may think the oil industry can be a little bit rough, but when you come into the operating arena these are top people. They needed to be led, they needed to see the way forward and I think we struck the right balance because we had quick wins and the way that it was rolled out on the various platforms worked well. We have 4 big complexes with 24 platforms, so we implemented Good to Great in a cascade system. As we rolled the initiative out it got a

lot of attention within the company, so when we went to a platform and said you’re going to do it, we gave that platform and their operation so much attention that the other platforms started getting envious and asking us when we were going to come to them? So it was really a question of them pulling, rather than us pushing at the end. That’s what made it such a big success. They wanted it. As we implemented it on each platform we learnt a lot and took that learning onto the next platform. By the time we had done the entire round everything was being done very efficiently. Onshore we’d already done improvement projects across the various disciplines, so there it went a lot more smoothly than I had anticipated.

Were you prepared to take as long as it took to make this work? The time element was absolutely critical to our success. When we started to think about repairing the roof there was no one who set the pace for us. So this became ours and that’s really important. The way we articulate it is that we’re not doing a project, we’re not doing a programme, this is the way we work. This is how we think, this is how we’ll become. This is something that we live and breathe every day.

DNA

For over 20 years, Celerant Consulting has delivered successful, sustainable change for the world’s leading companies in the Energy, Chemicals, Manufacturing, Consumer Goods, Life Sciences and Aerospace & Defence industries. For

over 10 years, we have successfully helped

Utilities, Telecoms, Healthcare, Consumer Services, Financial Services, Private Equity and Public organisations. Our expertise covers the entire spectrum of the Operations

Management ecosystem, with a core focus on Performance Improvement & Behavioural Change Management. Every project is a strategic partnership where we get down on the ground to identify and analyse a Client’s most significant business challenges, then work with them to drive up results. With over 650 team members and offices in 14 countries, we help implement customised solutions that capitalise on existing systems, processes and people and

substantial benefits for Clients. We change business for good and over 90% of our Clients say they would work with us again.

deliver

CELERANTCONSULTING.COM

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

‘Our primary goal was to save more lives by increasing the supply of this vaccine. We’ve done that with Celerant Consulting.’ Managing Director.

+ 50% production runs per week

CLOSEWORK® GLOBAL REVIEW 2011

- 30% average changeover time

- 30% non-compliance incidents

Following the vaccineâ&#x20AC;&#x2122;s introduction, The US Centers for Disease Control reported a major drop in the targeted amount of disease in children under 2. An increased supply was therefore vital. Partnering with Celerant Consulting, this leading US vaccine manufacturer achieved its goals by transforming its operation and embedding a culture of Continuous Improvement.

- 17% in-process waste

- 12% average batch fill time

= $100m sales potential

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Driving Insights Success always demands a greater effort.

In the next 2 1/2 years, 50% of the world’s Top 10 bestselling drugs will lose patent protection in the US. Fewer patents mean lower profits, so M&A is absolutely key to pharma’s future, say the team at Celerant Consulting’s Private Equity Centre of Excellence. But the way companies come together must be geared to produce ultimate profitability.

Looking Beyond The Pipeline: New drivers, new approaches to M&A. hen the collapse of the financial industry in 2008 plunged the world into a global recession, the world of corporate transactions felt the impact in dramatic fashion. In the pharmaceutical industry, the sudden wariness around M&A could not have come at a worse time: the sector was on the brink of a new age. Globalisation and regulatory pressure were shifting the environment from one of a healthy cash flow ruled by big pharma to a more compliance heavy, cost conscious industry.

M&A is now returning with a vengeance - although the game has changed since the heady days of the early 2000s. Consolidation of pharma giants continues, but the targets have changed in large part due to patent expiry concerns. As the industry contracts, insuring that mergers create the intended value is of critical importance: there is less room on the margins and therefore greater focus on the process of bringing 2 entities together to achieve a new level of prosperity. The new industry paradigm is typified by the recent $20bn takeover of Genzyme by French

CLOSEWORK® GLOBAL REVIEW 2011

powerhouse Sanofi-Aventis. The traditional drivers remain as Genzyme will provide new product potential to a pharma with wide ranging access to markets across the globe. The key difference lies in the type of product: Genzyme’s prowess in biotech means that they will contribute new science and most likely hyper-targeted drugs not the next blockbuster. Indeed, Sanofi CEO Viehbacher noted the main reason for the merger was not about cost savings, but to tap into Genzyme’s genetic-disease drug niche. Pharma insiders and industry watchers have long known that companies were facing a torrent of patent expirations in the first half of this decade. And while expiring patents is nothing new, a lack of new drugs earning regulatory approval is. Companies are increasingly being forced to take a different approach to the pipeline in order to stay competitive and profitable. Pre-empting the patent plateau Researchers at UCLA have declared pharma to have 1 reached ‘the end of the blockbuster drug era .’ Fewer and fewer drugs will see $1 billion in sales, and if companies are to keep their profit margins up they must have more drugs in their portfolios.

‘Having a proper integration structure will ensure that both sides are fully prepared to hit the ground running.’ The primary culprit for the death of the blockbuster is the emergence of low cost generic drugs that are eating up market share as patents for big market products expire. Within the next two years half of the top 10 bestselling drugs in the world will lose 2 their patent protection in the United States . When they do, store shelves will be filled with cheaper generic versions, and $36 billion in profits will plummet right off the well-publicized patent cliff3. By 2014, the sales revenues of drugs having patents that will expire are just shy of $90 billion4. The next five years will see drugs representing about $142 billion in current sales lose patent protection. This trend will only accelerate considering that the real growth areas for pharma in the coming years will be emerging markets. The necessary shift in strategy will yield a slew of new entrants from big pharma that are not aimed at the masses for common medical conditions such as high cholesterol, but are instead targeted towards specific maladies. This will move the focus away from competition with generics, while at the same time addressing a market (and human health) need that has remained largely unmet. New paradigm, new approach However, fewer patents mean smaller markets and thus lower profits. M&A will continue to be a lynchpin for both big pharma and the middle market, but the way in which companies come together must be geared to produce ultimate profitability. There is already momentum gathering that demonstrates the emphasis on strategic buys that fit the new paradigm. Before the SanofiGenzyme merger was announced, activity

was clearly on the upswing across the market; while still not back up to the pre-recession levels, M&A in the sector rose sharply in 2010 5 with 2011 poised to show even further growth . Amidst this activity, the shift in targets is clear. Last year saw 91 acquisitions of biotech firms with market capitalizations exceeding $100 million6. With an extended regulatory process, companies that are struggling today but who are in a position to grow with the economy may find suitors at the door. There is no doubt, then, that Big Pharma is looking to buy, but only if the price is right. Given the choice, companies will buy back stock before they overpay for a small acquisition. In that light, due diligence and pre-close planning have taken on magnified roles, and pharma must focus on extracting the most value possible out of each transaction. Beyond the pipeline, leaders should be examining opportunities to improve infrastructure, supply chain, compliance, and other critical areas in an effort to create a post-merger entity that achieves all of its stated goals. Transaction planning should be considered through a lens of five specific stages: • Target Identification and Planning Today acquirers must assess specific industries, identify opportunities, and evaluate the strategic viability and potential value of target companies. • Operational Due Diligence and Integration Requirements Conducting financial and comparative analyses, documenting and quantifying operational improvement oppor tunities, obtaining a firm grasp on a target’s value drivers, and developing a roadmap to a successful integration are the keys to game-changing improvements. • Pre-close Integration Planning Pre-close both sides must fully explore the integration requirements, including the development of Day 1 implementation plan, synergy validation and capture, and decision-making protocols. The time and resources expended before closing should be focused on making sure that both sides are prepared to hit the ground running.

• Day 1 Integration and Synergy Capture Newly merged entities must be up and running on Day 1, with a focus on critical items such as 100-Day Plan, post merger integration (PMI), synergy capture, key performance metrics, new organization implementation and change management. • Operational Excellence Every area of the organization - management teams, R&D, manufacturing, compliance, and marketing - are critical to building an operating model that is geared towards sustainable results and long-term competitive advantage. Leaders should avoid the common ‘top down’ approach, which relies on directives from the executive suite to facilitate change. On the contrary, it is crucial to establish clear lines of communications and bring the full enterprise together around clear lines of ownership and accountability. In the field, this approach has historically resulted in a near flawless Day 1, the capture of a minimum of 40% of synergies within the first 100 days, a 25-30% reduction in the integration period, the identifying and capturing of 1.5 - 2X typical synergies, and the retaining of critical talent, customers and revenue. With companies running inevitably towards the patent cliff, executives should be seeking strategies to ensure momentum stays on their side. Labs around the world are collaborating with external partners and using next generation sequencing technologies to speed up the road to approval, or to fail faster and cheaper. Even with outside help and new techniques, companies will not be in a position to bring new drugs to market fast enough to make up the profits that will be eaten by generics. Acquisitions will increasingly be the answer. Promising new areas uncovered by M&A may help buyers gain greater profitability, but if the integration is not planned and executed properly, the merger will likely fall short of its full potential.

1 Are we living in the end of the blockbuster drug era? Drug News & Perspectives, B. Debnath, L.Q. Al-Mawsawi, and N. Neamati, December 23, 2010. 2 Big Pharma Patent Expirations To Sock 2012 US Drug Sales, Dow Jones, Peter Loftus, February 15, 2011. 3 Big Pharma Is One Big Graveyard for Stocks (2/17/11), Seeking Alpha, Jim Cramer, February 17, 2011. 4 The Myth of the ‘Patent Cliff’, XConomy, Stewart Lyman, November 29, 2010. 5 Pharma M&A activity gains momentum, Bizmology, Anne Law, January 19th, 2011. 6 How Big Pharma Will Survive the Patent Cliff, Minyanville, Lisa LaMotta, April 21, 2010. CLOSEWORK® GLOBAL REVIEW 2011

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

DOWN ON THE GROUND HELPING TO DRIVE RESULTS UP.

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OMAN: Oil & Gas Sector BUSINESS CHALLENGE Increase production efficiency, the integrity of the operational environment and implement new tools and systems. RESULTS A +6% increase in production efficiency. $36m annualised benefits. 56 local managers trained.

Celerant Consulting has been working with some of the world’s largest companies in MEA for over 10 years. We now have offices in Abu Dhabi and Oman and our unique Closework® approach to skills transfer has gained us an outstanding reputation in a region where trust is everything.

ANGOLA: Energy Sector BUSINESS CHALLENGE Satisfy increased demand on logistics support across multiple on and offshore locations for this global energy leader. RESULTS $4m annualised savings in fleet fuel costs. Planning accuracy increased by over 50%.

QATAR: Utilities Sector BUSINESS CHALLENGE Achieve operational stability to deliver increased production. RESULTS Maximum Production Rate record broken 4 times in the second half of 2010.

EGYPT: Chemical Sector BUSINESS CHALLENGE Identify significant cost and time overruns in mega-projects and implement new project management standards. RESULTS Improved site cost management & control. Short interval controls implemented at the point of execution. Clear roles and responsibilities.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Relationships Celerant clients, former clients & friends of the business share their expertise and experience.

In 2009, in the middle of the worst economic crisis for 50 years, Jacques Aschenbroich was appointed CEO of Valeo. In 2 years he has completely transformed the automotive components supplier. ‘A Cultural Revolution’ according to some analysts. A record growth rate of 50% according to the facts.

What motivated your decision to launch a major Change Programme? The results that came out of an analysis of the strengths and weaknesses of our organisation. If our trump cards were stronger than forecast, our weaknesses were more serious than we had thought. We already knew our strengths. They were our brand, our solid reliability as a supplier, fully-engaged teams, a continuous capacity for innovation and a financial strength that had enabled us to navigate our way through the recession without having to resort to the market. In addition to this, all the efforts we’d put into quality over the last few years had really paid off, with a net reduction in non-compliance rates even in the very heart of the recession. Finally, and this is one of our major assets as a company, we are underpinned by a very balanced customer base distribution. Today, our French customers represent about 23% of our turnover, German customers 30%, American customers almost 20% and Far Eastern customers 21%.

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What weaknesses did these strengths conceal? First of all, our company had not registered any growth between 2000 and 2008. We also had very high overheads and half-mast profitability. The reality was that we were in a negative spiral, due in part to an internal organisation that was too complex and a strategic message which had become blurred and vague. We quickly realised that our fragmented organisation was a major problem. Primarily because it prevented the emergence of growth drivers, with each entity focused on its own closed universe, but also because this fragmentation generated extremely high overheads and huge over-investments.

How did you go about changing things? Our action concentrated on two major axes: To simplify the organisation and clarify our strategic message. At the organisational level, Valeo has moved from 11 sectors and 140 divisions to 4

areas and 15 product lines. It was a very targeted simplification, guided by an ambitious objective, namely to find the right balance between the functions with global responsibility and the local organisations which are always better established. For example, to grow in China you need to have a Chinese organisation which is totally oriented towards the local market. Our watchword was therefore: In France we are proud of being a French automotive components supplier, but we must become a Japanese automotive component supplier in Japan, a Chinese one in China etc. This delicate balance between global functions and local organisations is the cornerstone of our new organisation. As for our strategic message, it has been refocused around 2 main themes - the reduction of CO2 emissions and growth in emerging markets. We have been proposing major innovations to reduce CO2 emissions for several years and our research and development activities will be increasingly devoted to this field. The other message is our wish to grow in the emerging countries, in particular the Far East which today represents 50% of the market and 21% of our turnover.

Business Transformation

‘In France, we are proud of being a French automotive components supplier, but we must become a Japanese automotive component supplier in Japan, a Chinese one in China.’ Jacques Aschenbroich, a Knight of the Legion of Honour and an Officer of the National Order of Merit, has been CEO of Valeo since 2009. He has held several public administration positions, notably in the French Prime Minister’s Office from 1987-88. He then followed an industrial career with the Saint-Gobain group from 1988-2008, running subsidiaries in Brazil and Germany. Having become Deputy Director-General of Saint-Gobain in 2001, he ran the Glazing & High-Performance Materials areas from 2007, before running group operations in the USA.

What difficulties did you encounter during the reorganisation? With the benefit of a little distance, I only remember the nice surprises. What was most striking was the strong degree of buy-in we got from management at all levels. The employees were aware that the organisation that had been in place for more than 20 years had arrived at a dead-end. We were therefore able to take advantage of a strong and widespread degree of staff motivation. Furthermore, I also think that paradoxically, the financial recession made our task easier, because it is always much easier to justify a change when things are not going well.

Were there any other surprises? The realisation that this company has huge growth potential! I am absolutely delighted that last

year’s results were the best for 10 years. But my greatest satisfaction has been our 20% increase in orders. This growth potential translates into a huge capacity for value creation and has generated high levels of enthusiasm from everyone.

What do consider the most important measures for success in a Change Programme? The first measure remains the ability to grow and create value. But at the end of the day it’s also the buy-in of the entire organisation to the Change Programme. Financial success which is not the result of a buy-in by the parties concerned will not be sustained over the long term because it’s built on a lack of comprehension and coercion. Similarly, buy-in to a project that does not translate into growth or profitability also makes no sense.

What advice would you give managers launching a Change Programme? Each case is unique of course, but whenever a new challenge presents itself, you must start by observing attentively, by simplifying the message you wish to disseminate and by communicating intensively on the main direction of the project. In short: Observation, definition of the major axes and communication, communication, communication Finally, you must not lose sight of the customer, without whom we are nothing. You have to spend a lot of time with them to secure their buy-in to the project.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

ow do you align structure, incentives and behaviours to deploy your business strategy? How do you design and manage transformational change programmes? And how do you govern increasingly complex, multi-cultural, virtual organisations?

At Celerant Consulting, rather than offer up theoretical recommendations about what you could do, we take a pragmatic view and say ‘This is what you actually can do.’ We work with companies to help shape their thinking, deliver insights and get all the right puzzle pieces in place - and then we help them actually execute that thinking. It’s not just about theory and nice models and concepts, it’s about getting down on the ground to help drive results up. Smoothing the path between strategy and culture Celerant’s Organisation & People Service Line has two factors that make it stand out. The first is implementation. Celerant Consulting is one of the World’s Top 5 Best Positioned OM Consultancies in Change Management. So we’ll help you get the structure right for your business, understanding what the right behaviours are, what your HR processes should look like to reinforce these behaviours, and then we’ll actually help you put it all in place and deliver results. That’s number one.

And that makes their job more rewarding. The second benefit it delivers is to create transparency by aligning your Key Performance Indicators to your strategic goals and then clarifying roles and responsibilities. It really is the glue that links processes, systems, and people and becomes the mechanism to steer the business and drive performance. Creating a successful organisation across the globe A prime example of this was our work with InBev, the world’s largest brewer. It launched Voyager, a global strategic initiative to create top tier, cost efficient breweries and establish ‘The InBev Way Of Working’ for all of its operations in 5 continents. Celerant Consulting was selected to partner InBev in shaping the strategy for the Voyager Programme and then executing it by working closely with global and regional managers to develop its management, training and support structures. The objective was to increase EBIDTA by 25% over 3 years in a multicultural, grownby-acquisition company by reducing costs, sharing best practice and achieving global economies of scale.

The other stand out is our MCRS® Management System. That’s what really brings change to life, embeds it in an organisation and makes it sustainable. It democratises problem solving. It takes strategy from something that’s in the board room and creates alignment throughout the whole organisation so that the person on the floor, the person who is actually doing the work, can answer the question: ‘What am I supposed to be doing to execute this strategy? It all sounds great, it’s all nice words, but what am I actually going to do differently tomorrow?’

Pilot breweries were selected to test the programme’s approach ensuring rapid delivery of first results to support the global roll-out. Additional test breweries were then chosen to make final adjustments to ‘The InBev Way Of Working’ and prepare InBev personnel for the challenges of the global roll out. Celerant-InBev teams worked with managers and employees at each site where they conducted gap assessments, gauged improvement potential, developed and executed implementation plans and became an integral part of the site’s management team. Celerant’s unique Closework® approach fostered local buy-in, promoted in-depth knowledge transfer, demonstrated that ‘The InBev Way’ could span diverse cultures, and developed the skills and confidence among InBev’s people to independently roll-out the programme.

Our robust MCRS® Management System creates alignment from the boardroom all the way down to the lowest person on the floor - and back again. And that enables an organisation to create accountability at the lowest possible level, because there’s clarity about what the organisation is doing and why it's doing it. The more alignment you have the greater the autonomy you can give people. When the WHY is clear, you can give them more freedom on the HOW.

All of the pilot sites exceeded operational and financial improvements within 10 months and continued to demonstrate year on year improvements. Key operational improvements included a15% increase in throughput of the brewing process, a 15 -20% average OEE increase of packaging, a 40% reduction in change over time, an 8% energy reduction and a 10-20% improvement in labour efficiency in the warehousing and technical departments.

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André Weckx, InBev’s Chief Technical Officer summed up the impact made by Celerant’s Organisation & People Service Line: ‘VPO is how we out-execute the competition. Our work with Celerant proved we can give ourselves that edge everywhere we operate. Of the 9 consultancies we considered, only Celerant committed to delivery of benefits. They said, we’ll stay with you until those results are achieved.’ Organising your people for success You need a holistic approach to make an organisation successful and that means looking much further than organisational structure. Managers waste too much time obsessing about organisational structure when they should be making sure that the structure doesn’t get in the way of delivering the strategy. Eliminate complexity, ambiguity and bureaucracy and then you can focus on aligning people to your strategic goals. So from the top to the bottom of the organisation everyone is clear what they're supposed to be doing. Having a compelling and inspirational vision is also vital. People always want to be part of something bigger than them. They also want to be treated like adults, so creating the right motivational climate is really key. Governance is also important: having the right decision making processes in place so that you get effective communication and effective collaboration across departments and organisational silos. Organisations are becoming increasingly more complex, so having clarity and improving team work are critical to success. Changing your culture is the key to everything How do you create a performance based culture? One that is continually challenging people to learn, to grow, to improve performance, freeing up information, democratising problem solving and giving people the autonomy to be successful. One of Celerant Consulting’s core competencies is changing behaviour to change results. The Celerant 5 Box Model shows that to deliver sustainable change you have to change behaviour and what drives behaviour is simultaneously addressing processes, management systems and people and skills. Culture is sustained behaviour across the whole organisation. It’s about scaling up desired behaviours - and that’s where we have a proven track record in knowing what it really takes to make an organisation successful.

What does it really take to make your organisation successful? Great theories and elegant models will always come up short unless they capture the imagination of the people on the ground, says Mark Hughes, Vice President at Celerant Consulting BVBA. You need a holistic approach to successfully execute a strategy and implement transformational change. That’s why more and more companies are using Celerant’s Organisation & People Service Line.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Results All thoughts must be distilled into action and action that brings results.

Improving Every Asset

Winning The Blue Riband

BUSINESS CHALLENGE The client is a global, diversified, upstream oil and gas company, with a portfolio of international exploration opportunities. It had been running an Operational Excellence programme across some of its assets in Northern Europe for more than a year and now wanted to check the progress. Celerant Consulting was invited to conduct an analysis and put forward a proposal to embed processes through a period of sustained coaching, both onshore and offshore. It was recognised that without focusing on behaviours, the benefits available from process development work would not be realised. 5 Assets were identified as locations for offshore support, with an onshore team providing design and coaching support for several workstreams.

BUSINESS CHALLENGE The client is a commercial cooperative and a major exporter of internationally renowned dairy products to over 50 countries across the globe. To keep pace with its success, the company needed to improve OEE and Yield at 3 of its European cheese packaging sites and reduce direct and indirect FTE's through line balancing and control spans. It also wanted to create a culture of Continuous Improvement and ownership, so Celerant Consulting was appointed to help drive a major LEAN Programme.

CELERANT SOLUTION The project’s aim was to deliver a 3 - 5% improved operating efficiency across the 5 supported assets by creating a ‘Barrel Chasing’ mindset. Working closely with the client team, Celerant’s coaches quickly installed a number of Production Loss Elimination (PLE) processes, a Planning and Scheduling (P&S) process and used its unique Closework® approach to coach performance management (PM) meetings, drive compliance to the new PLE and P&S processes and driving for sustainability by adopting and encouraging a culture of positive reinforcement. RESULTS The position at the end of the project showed 4 out of the 5 assets operating 2 - 6% above target line. •1 asset operating above baseline. •PLE processes fully installed. •4 key performance management meetings installed to reinforce the new performance driven culture. •Planning and Scheduling process continuing to improve

CELERANT SOLUTION As part of a thorough analysis at each site, Celerant’s experts facilitated Sustainability Pyramid™ assessments with staff at different levels to identify areas for improvement. Using Celerant’s unique Closework® approach they then helped the Production Teams implement these new processes and behaviours, installed a Kaizen information board and suggestion box and introduced an Incentives Scheme to help drive forward ownership and commitment. They also trained 3 Continuous Improvement Champions in LEAN tools and principles who are responsible for sustaining the results at each site. At the end of the project, the team carried out shop floor 5S Audits and trained Production staff to carry out SIC Audits, all of which clearly identified that a dynamic process and behavioural step change had occurred at all 3 sites. RESULTS Millions of Euros in sustainable benefits. •Project goals and expectations delivered at all 3 sites. •OEE and Yield targets achieved. •Increased Production and planning capacities. •Overall management control established and maintained via a MCRS® Management System. •All site meetings and reports at SIS 4. •Increased critical equipment availability due to planned maintenance routines. •Headcount reductions implemented. ‘When we started this project, I didn’t think we would get to the savings. 30 weeks on we have hit our targets, we have the right structure in place, a skilled CI Team and the mentality of our staff on site to sustain and drive Continuous Improvement.’ Plant Manager

Energy

CLOSEWORK® GLOBAL REVIEW 2011

FMCG

Gearing Up For Global Growth

Seeing The Wood From The Trees

BUSINESS CHALLENGE The client is a world leader in Speciality Chemicals that had successfully cut costs to deal with the global economic crisis. With the market recovering in 2010 and strong growth projected it now asked itself how it could best manage this growth, serve customer needs and still keep the organisation LEAN. How could it spend its money more wisely and at the same time improve asset reliability? And what was the best way to increase performance by sharing best practice at its global manufacturing sites? Celerant Consulting was appointed to help answer these questions.

BUSINESS CHALLENGE Changing dynamics in the wood market were forcing the client, one of Europe’s leading companies in the pulp and paper sector, to rethink its purchasing - and therefore which production units and areas to supply. Limited wood availability at competitive prices and a 6-8 week forecasting cycle were causing shortages at the operating level, leading to elevated demand forecasts and inventories well above Working Capital targets. At the same time, individual business units were resisting centralised wood allocation decisions based on a company wide profit optimisation.

CELERANT SOLUTION After reviewing the client’s global manufacturing set-up, the Celerant Team selected the 3 most important sites in North America, Europe and Japan for a Maintenance Excellence Assessment which showed existing best practices, areas for improvement and the clear need to establish a common language with global KPIs. A global implementation project was then designed to cover 7 Workstreams: Improved Maintenance Work Order Processes with Planning & Scheduling of internal craftsmen and contractors to improve Efficiency. Risk Assessments to identify critical equipment and Reliability Centred Maintenance strategies to improve Effectiveness and availability Critical Spares. CAPEX Project Prioritisation & Project Management focused on cost drivers and performance killers. Improved Contractor Performance Management for OPEX and CAPEX spend. OEE to reduce loss and cycle time and increase the output of constrained products. A Comprehensive MCRS® Management System with global KPIs, SICs and Continuous Improvement to build the ‘glue for all activities’ on the way to Maintenance Excellence.

CELERANT SOLUTION In the programme’s first phase, Celerant Consulting conducted interviews and workshops with the main Demand & Supply players to examine current challenges and create a shared vision for future processes and decision making. A joint Celerant - Client team was then tasked with designing and installing a robust, scaleable Demand & Supply Planning Process for the entire Northern European Supply Chain - in just 10 weeks. It covered all areas and was linked by a Governance system to support fact based resource allocation. This Planning Process included technical forecasting and tracking tools, the definition and creation of relevant meetings and a clear division of roles and responsibilities between all decision making bodies, from Operational to Executive Management level. It also included an important time dimension to secure forecasting cycle completion at fixed intervals across the business, which was then aligned with the company's main event calendar to create a clear link to the overall strategy.

RESULTS $ multimillion benefits through increased output and revenue. •Maintenance now recognised as a cross functional task with clear roles and responsibilities in production, procurement and maintenance workshops. •Plant and Reliability Engineers now drive maintenance and investment strategy to improve asset reliability and production output. •Weekly conference calls share best practices between sites. •Global KPIs provide performance transparency and Continuous Improvement.

Chemicals

RESULTS Timely, aligned, Demand & Supply data created from a 2 week forecasting window. •Wood resource allocation now based on factual sourcing data. •A lower Total Cost of Ownership due to optimised purchasing. •Lower inventory levels due to increased clarity on operational capacity plans and confidence in wood availability. ‘Celerant Consulting paced us to achieve our targets despite a very challenging timescale.’ Change Management Director

Manufacturing

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

There’s a major difference between planning for growth and actually making it happen. We may be in a growth cycle, argues Rudi Bogaert, Senior Vice President & Head of Analysis, Celerant Consulting Europe, but unless organisations have a clear plan for implementing sustainable change, real growth will elude them. alking with Senior Executives across the globe, it’s clear that although companies remain cost conscious, they’re now putting much greater emphasis on growth and preparing for the future. Drawing on the lessons of the financial crisis, they’re looking to build more resilient and scalable operations and organisations and that means rethinking their organisational structure, industrial footprint and supply chain configuration.

The blunt truth though, is that they will only succeed if they can dramatically improve their ability to drive top-line growth through better and faster innovation, stronger customer relationships and concrete plans for environmental sustainability that turn strategic taglines into far reaching action. Overall, most companies are well geared towards

CLOSEWORK® GLOBAL REVIEW 2011

planning for change, but getting the most out of major transformation programmes requires going beyond the basics of leadership commitment, good planning and communication. It requires the seamless integration of workforce engagement and mobilisation, internal capability build and measurable action plans that will lead to real results. Transforming the whole value chain During the financial crisis companies worked hard to slash costs and become more efficient in the middle elements of production and supply chain. The downturn heightened awareness that considerable sums are spent and generated in operations and it’s not just about what goes in and what comes out. It’s the working capital, the labour costs and the increasing volatility of the price and availability of raw materials. So CFOs

in particular became even more focussed on how operations could avoid waste and achieve maximum yield in a sustainable manner. Now companies are increasingly focusing on the ends of the value chain - R&D and innovation at one end, customer service and satisfaction at the other - and as they get back on the path of recovery Celerant Consulting is helping them develop holistic, end to end solutions for growth in the face of increasing globalisation. Implementation: The difference between success and failure CEOs and CFOs now take a much greater interest in the execution of their strategic plans. That’s why Celerant has expanded its client base so rapidly over the last few years. We provide the parallel track of operational strategy and operational implementation, so we’re better placed than anyone to help deliver this new C-Level agenda. We’re ranked among the World’s Top 5 Best Positioned OM consulting firms in Change Management* and have designed and implemented hugely successful transformation programmes for world leading companies such as DSM, Cargill, Shell Mining, Kellogg’s, T-Systems and Technip. We transformed 6 global commercial zones in 15 months for Sidel Sidel is a world leader in liquid foods packaging solutions and has installed 20,000 machines in over 150 countries, but recent installation costs and lead time overruns meant it was struggling to match client satisfaction levels. The customer is King, so Celerant Consulting was appointed to drive a global Change Programme in Europe, Africa, Latin America, North America, Great China and South East Asia Pacific that would enhance customer satisfaction and reduce installation cost by 23% by: Decreasing installation lead time; Improving installation quality before leaving manufacturing facilities; Sharing best practices and developing management and technical skills at all levels; Creating a culture of Continuous Improvement. An international Celerant - Sidel team quickly developed common working practices to avoid extra costs linked to quality issues and provide more reliable solutions for Sidel’s clients.

The big challenge was to implement these solutions globally in 6 different commercial zones, each managed autonomously and involving 500 people from Field Technicians to Vice Presidents. Behavioural Change Management was therefore a critical aspect of the project so that everyone got involved with the new ways of working. Celerant’s experts drove this at every level with our unique Closework® approach, gaining people’s trust and commitment. They also implemented a comprehensive MCRS® Management System that played a critical role in developing the new cross-functional way of working. It was designed to systematically manage the performance of the key installation processes to both anticipate issues and provide the most effective corrective action should they occur. In the space of just a couple of months, shared reporting tools, effective process measurements and efficient decision making that linked every level from bottom to top were designed and installed across the globe and a culture of Continuous Improvement was embedded into the organisation. Keep it simple We don’t start by saying ‘This is where your industry’s going, these are the best practices and this is what you must do.’ We begin by understanding our client’s ambition, but we also want to understand the current reality of their organisation. So our recommendations start from a specific client context because that’s the only way you can address the right issues and the right levers. We say ‘This is what you can achieve’ and then help them achieve it with ‘keep it simple’ initiatives. It’s obviously beneficial to use industry better practice or look at what’s going on in general, but each organisation has a unique DNA. Keep it results focused Celerant Consulting are change experts and from the very beginning we have been committed to delivering results, not just advice. Our return on investment approach has always delivered solid, sustainable results that generate clear returns, so we are where the market is turning. For years, organisations have craved implementation skills from their consultants, yet most are unable to deliver. They analyse, produce a report and put forward recommendations, but how do you make it stick in an organisation?

‘From the very beginning we’ve been committed to delivering results. Not just advice.’ Mobilise and empower your people It is madness to expect that a strategy can simply be written and communicated and then it will work. Organisations need to be mandated or incentivised for change. Implementation is the key to everything and we believe that we are better at it than any other company in our field. That’s why, in a world where 75% of Change Initiatives fail, Celerant’s unique Closework® approach means that 95% of our programmes succeed.* We use EQ as much as IQ, because it’s not just about the numbers, it’s about preparing everyone for the change to come. Our analyses are genuine partnerships with the client and their employees, so we engage, create awareness and mobilise people for the change to come and the results to be delivered. At the end of the analysis period, client employees help us present the way forward, so Senior Management can immediately see that change is already taking place. They can that their people are already very enthusiastic about the future and how they can implement change for the better. To support the implementation of large transformational programmes the Celerant Institute was founded earlier this year as a ‘Knowledge & Innovation Engine’ to deliver outstanding results for our clients by ensuring a precise match between their needs, market trends and our expertise. Working with the entire value chain, it’s a centre of excellence that builds on our expertise, develops intellectual capital and innovates our service offerings for Analysis, Supply Chain, Revenue Growth, Organisation & People, Operational Transformation and Sustainability. It’s already helping to transform the future for some of the world’s biggest companies.

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Driving Insights Success always demands a greater effort.

Opportunity Amidst Recovery: The Value to Profit Model. Executive Summary 3 Swinging Right To Left In the high growth bubble years preceeding the financial collapse, the US economy was on the right of the curve. When the economy plummeted, the position swung well past the peak to the left. This overreaction compounded the downturn and cost more than 10% of American workers their job.

5 The Good Years. The Bad Years. 2007 With more than 50% of the time employees spent not adding value to the end product, each wasted minute seemed an opportunity. Impactability spiked during particularly challenging periods such as year-end 2009 as executives looked for improvements everywhere. 2008-9 With careers and mortgage payments on the line, every manager, supervisor, and

VALUE CREATION

OUTPUT

VALUE

1 More Value = More Output Employers who drive up the amount of value created by employees will see their output rise in almost equal measure.

100%

14%

11%

54%

58%

54%

33%

32%

35%

NVA

NVAR

80%

EMPLOYEE LEVEL

60%

48%

40% 20%

2 The Value Curve Over-employment can be as destructive to value as running a skeleton crew. Too few employees are unable to produce the most profitable level of output. Too many employees weigh down an operation with additional costs and unnecessary complexity.

front line employee looked for opportunities to cut costs and prove their value.

VALUE CREATION

2010 The economy gains upward momentum and the pressure on business leaders begins to abate. Field data shows a corresponding downturn in the amount of impactable NVA time they see in their employees.

EMPLOYEE LEVEL

4 Destroying Your Own Potential Healthy companies that remain resistant to hiring despite being on the left hand side of the curve are destroying their own potential for value creation.

44%

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2011 CELERANT CONSULTING IMPACTABILITY STUDY

he 2011 Celerant Consulting Impactability Study examined the value created within organisations, which areas are prone to lag in productivity and which can be impacted

to improve output. Breaking workforce time into Value Adding (VA), Non-Value Adding (NVA), and Non-Value Adding, but Required (NVAR) activities, the Study also drew firm correlations between ideal employment levels and company output. Leaders who strike the right balance will be more effective at turning value into profit.

6 Value Assessment By Major Industry

ENERGY HEALTHCARE & LIFE SCIENCES

17% 27%

57% 56%

2% 17%

CHEMICALS

44%

52%

CONSUMER STAPLES

50%

47%

0% 20% 40% 60% 80% 100%

NVA

NVAR

7 Putting Your Most Valuable Resource To Work Business leaders say that their employees are their most valuable resource, but the truth is that almost 50% of their time could be better spent. Few would believe that either they or their employees contribute as little as they do.

8 Unleashing the power Although the study demonstrates that NVA activity is extremely high, much of the waste is Impactable. Time spent correcting human error, attending unnecessary or poorly organised meetings, travelling and awaiting developments or approvals before taking next steps can be condensed or eliminated with the right processes in place. There are 3 main areas that lend themselves to improvement: Extracting far more value from supervisors. •Getting it right first time. •Promoting greater end-to-end understanding.

10 The Data Covering the years from 2007 to 2010, the Celerant Consulting Annual Impactability Report looks at internal and government data collected during one of the most tumultuous times in American economic history. The data consists of over 21,000 individual log entries totalling more than 2,500 hours of direct observation of employees across 22 firms in the United States and Canada. In 2010 alone, data for the equivalent of more than 80 workdays was collected.

9 Impacting The Future Winning the hearts and minds of the entire organisation is crucial to developing a sustainable business strategy that creates short-term financial results, while propelling the organisation to long-term success. To promote buy-in, foster positive change and create a sense of unity companies must: Articulate a vision, •Share ownership and establish financial Key Performance Indicators. •Monitor and communicate progress.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Relationships Celerant clients, former clients & friends of the business share their expertise and experience.

STRIVING FOR SELF IMPROVEMENT. Patrik Andersson, CEO of Rieber & Søn, recently spoke to FoodChain magazine about the company’s successful ‘Our Future’ programme - and how Celerant Consulting was a vital ingredient.

perating predominantly within the Nordic region, Rieber & Søn manufactures and supplies a variety of own brand food products to the retail market. Founded in 1839 the company is today responsible for more than 20 different brands, produced and marketed from 17 factories and sales departments, spread across 12 countries.

Towards the end of 2008, Rieber & Søn began a large, complex programme called ‘Our Future’.

CLOSEWORK® GLOBAL REVIEW 2011

‘It was specifically designed to examine various aspects of the company, from its different business units and product portfolio, to the production side of things and its various purchasing methods, all of which have since been consolidated into one location, here in Bergen. The whole purpose of ‘Our Future’ is to increase the overall efficiency of the company, both from an administrative point of view and in regards to Rieber & Søn’s factory operations, and the results have already begun to be seen with 2009 and

FOODCHAIN MAGAZINE

‘Honestly, without the support of Celerant, the goals the company has achieved to date would have been hard to realise indeed.’

Celerant Consulting was selected as the strategy implementation partner to work alongside Rieber & Søn in their ‘Future Production’ programme. What started as a 2 site improvement project quickly developed into a multi-site programme involving all of Rieber & Søn’s production facilities. The programme’s primary focus concerns the Production, Maintenance and Planning processes and management systems. As well as challenging operational and financial project targets, the programme also has a strong Continuous Improvement focus to ensure that the changes are sustainable. Celerant Celerant achieves by using it unique Closework® approach to get down on the ground and work alongside Rieber & Søn’s people to coach, develop and empower them as individuals.

2010 being particularly good years for the company, driven by a dramatic increase in profits.’ A strong Partnership By the end of 2011, the company will have completed a full factory audit in relation to the ‘Our Future’ programme: ‘The goal of this phase is primarily to establish new, more efficient ways of working, while also reducing overall operating costs. In undertaking this work the company has received excellent support from Celerant Consulting. The relationship between

Patrik Andersson, CEO, Rieber & Søn.

the two companies has been a co-operative partnership, with Celerant taking a very hands-on approach, actually going into the factories and working with Rieber & Søn employees to achieve the best possible results. Honestly, without the support of Celerant, the goals the company has achieved to date would have been hard to realise indeed.’

starting to look at future opportunities: ‘Rieber & Søn has spent a lot of time working to consolidate and streamline the company, but now is also the time to start looking at how the company can grow in the markets it is already established in, through both organic growth and acquisitions.’

A strong Future With the ‘Our Future’ programme heading towards its conclusion, the company is now

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

Danish Production: It’s time to wake up from our coma. Danish companies must kick-start a productivity revolution to compete in today’s globalised economy says Thomas Kock, Vice President & Lead Analyst at Celerant Consulting Nordic. It means we have to work smarter. And harder. ‘The Danes are becoming poorer and it will not be possible to continue to pay for a strong welfare anish productivity was recently described as having ‘gone into a coma’1 and judging by the chart opposite that’s a fair description. When you consider the chart next to it though, is anyone surprised? It can’t be a coincidence that South Korea achieved the second highest productivity increase and its workers work nearly 13 hours more per week than the Danes. The blunt truth is that productivity = output input.

But what does this actually mean for Danish companies on a day to day basis? We’ve heard for years about the need for a productivity increase, so we’ve either not been listening or we haven't understood the urgency. That has to change. Everyone must do more tomorrow than they did yesterday Productivity is a measure of output from a production process per unit of input. To achieve a productivity increase you either have to achieve greater output with the same input, or the same output with less input. Now that won’t get a round of applause from the shop floor, but as Heino Fassbender pointed out in Europe’s Productivity Challenge: ‘Improving productivity in Europe is a matter of urgency, not just to keep it in the top league of the global economy, but also because of looming demographic change. Without drastic intervention, Europe will get poorer as it

CLOSEWORK® GLOBAL REVIEW 2011

ages. Only productivity growth can prevent the unenviable trade-off between falling incomes for pensioners and higher taxes for workers.’2 Europe is Denmark writ large, so if labour hours remain constant, Danish companies will have to generate more output by producing more in the hours available. That means working smarter and harder, not necessarily in a time sense, but by adding value. The majority of people might find that idea an unattractive proposition, particularly as it’s unlikely to be accompanied by an increase in remuneration, but it’s inescapable and we’re going to have to get used to it. How do you generate more productivity with the same input? The simple answer is that you either buy new technology to help you do more, or you yourself do more. Many Japanese companies are models of what can be achieved. Faced with a lack of funds, but with an abundance of ingenuity and ‘let’s just do it’ spirit, they have created some remarkable results in terms of producing more with less. Thinking differently also led them to break quite a few manufacturing paradigms, disproving for example that ‘an increase in quality only comes as the result of increasing manufacturing costs.’ Most Consultants say the first way to improve productivity is work smarter. That may be true in some organisations, but in others the quickest

way to improve productivity is for everyone to increase their Value Added work and stop doing things that don’t Add Value. Celerant Consulting’s 2010 Workforce Impactability Study demonstrated the dramatic impact this can have. Covering the period from 2007 to 2009, one of the most critical business cycles in recent history, the Study analysed the direct activities of 208 supervisors and operators in the Energy, Healthcare & Life Sciences, Chemicals and Consumer Staples industries on a day to day basis. After assessing more than 11,000 work hours, common themes emerged by comparing time spent on activities that add no value (NVA) to a company’s products or services, with those that do add value (VA). The Study showed that operators generate a stunning 50% more value than supervisors. It also showed that 43.5% of a supervisor’s daily work load can be effectively impacted, so to really drive productivity companies must review supervisor activities in detail and determine which portions of their day can be altered to make more effective use of their time. This means examining specific roles to ensure that the right employees are performing the right tasks. Loosely defined roles and ineffective practices create a frustrating daily work experience, with a great deal of lost time. Implementing a simple architecture with clear roles and responsibilities is the first step in breaking this cycle and improving productivity.

Labour productivity growth OECD

Source OECD, Turkey is the only country which hasn’t provided data

Average hours worked per person, per week 2009

Pr country OECD Avg

1536

1714

1577

1681

2232

Average annual productivity increase 2000-2008 (%)

2 1

DENMARK

EUROPEAN UNION

USA

JAPAN

SOUTH KOREA

ITALY

MEXICO

DENMARK

BELGIUM

PORTUGAL

NETHERLANDS

SPAIN

CANADA

NORWAY

SWITZERLAND

LUXEMBOURG

NEW ZEALAND

FRANCE

GERMANY

AUSTRIA

AUSTRALIA

JAPAN

SWEDEN

UNITED KINGDOM

USA

FINLAND

GREECE

IRELAND

POLAND

HUNGARY

ICELAND

CZECH REPUBLIC

SLOVAKIA

SOUTH KOREA

system if we cannot manage to increase growth in our society.’ Nils Smedegaard Andersen, CEO, A.P. Møller - Mærsk. Another strategic element to consider before commencing any major productivity enhancing effort is to understand whether the traditional productivity enhancement alternative would work. Outsourcing production has increasingly functioned as an easy option for quick productivity improvements, not by growing outputs, but by decreasing inputs, while expecting at least the same outputs. This methodology shouldn’t be forgotten in the quest for improving overall productivity. Not least because it will sometimes be the only viable alternative for some company processes and departments which have outlived their stay in our part of the world. Hard work and ingenuity got us where we are - and will keep us there Because Denmark has been in the World’s Top GDP bracket for at least the last 50 years 3, many industries have become complacent about competition, believing that somehow because our companies have been world leaders in innovative practices, technological advances and value creation, we’re immune to the challenges of global competition. We’re not immune and we’re going to have to work much harder to keep all the benefits of our society. Our current living standards, for example, are such that we need to be 10 -50 times more productive than workers

in other parts of the world just keep pace 4. The reason being that Danish workers earn that much more than most people in other places. We can’t spend our way out of trouble, so the only answer is to increase our individual productivity. This means working smarter and ensuring that our organisational structures, management systems, people, processes, roles and responsibilities operate better but it also means working harder. Developing a manufacturing culture of working smarter and harder is one of the biggest challenges facing Danish Management today. New research from the London School of Economics shows that the management quality of a country’s manufacturing firms is directly linked to the productivity of its workers, because: ‘Given the same equipment, the typical Tanzanian worker produces in a month what the typical American worker produces in a day.’5 So motivating, leading and above all involving your employees is the key to success. Take this test. Your company’s future depends on it. If you’re managing a company or a department of any size, you should be able to answer these questions:

• What is the productivity of your company/department? • What are the main drivers of your company’s/department's productivity? • Do you know how much a % increase in productivity is worth? • Do you have processes and actions in place to relentlessly chase Non Value Added work and improve everyone’s productivity? • What is your own personal productivity and how do you measure it? These questions are important because if you don’t know what your productivity is then you’re not in control of it. And if you’re not in control of it, it probably isn't increasing, despite what you might tell yourself every day. Denmark is known for being innovative in new products, new applications, new packaging and new services. What's required now is new productivity. Everyone is going to have to work harder and smarter in the future. Danish companies can undoubtedly compete with the world’s best, but to ensure long term success they must urgently heed the words of Mogens Granborg, former Executive Vice President of Danisico A/S and ‘foster people who burn for productivity, burn for efficiency and think about it around the clock.’

1 Søren Kudahl, Kommunernes Landsforening. 16.02.2011. 2 Heino Fassbender, Europe’s Productivity Challenge, 2007. 3 World Bank GDP/capita: Denmark 1950 #8 $6.683, 1980 #11 $13.611, 2006 #7 $50.702. 4 World Bank GDP/capita 2009: For the first time in 50 years Denmark is now beyond #15 at $36.762. 5 John van Reenen, Director, Centre for Economic Policy. LSE.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Insights Success always demands a greater effort.

Doug Newman, Senior Vice President Consumer Products, at Celerant Consulting Americas recently appeared on the businessweek.com homepage with his article ‘How To Prevent Food Recalls.’ The site gets over 1 million unique visitors a day.

The Christmas Present Nobody Wanted. ast Christmas, as children around the world bedded down for longawaited presents, Whole Foods Market was pulling gingerbread houses from its shelves in 22 states, due to a recall of baked goods from Illinois supplier Rolf’s Patisserie. The treats were flagged as one of several items possibly contaminated by Staphylococcus Aureus, a bacterium that can cause food poisoning. Whole Foods is known for its commitment to high quality product and despite several degrees of separation, some of the packaging carried the Whole Foods label. So the company acted fast and fortunately, the only consequence was a matter of giving some refunds.

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measures. Food sellers can only safeguard against recalls and react appropriately when concrete policies and precautions are in place: The best offence is a good defence. The food industry goes to great lengths to monitor its operations, but a chain is only as strong as its weakest link. So food sellers must have strong supplier quality management systems in place that spell out required product specifications, expectations about delivery procedure and schedules, and tracking measures that ensure auditability from one end of the chain to the other.

Risks always lurk in your supply chain This is never truer than in an environment as global and complex as the food industry. The farther the chain stretches, the greater the likelihood that a problem or disruption will arise. So how food sellers prepare for potential problems and mitigate the fallout once they happen can spell the difference between continued brand loyalty and a shuttered business.

For example, food industry packages are clearly labelled with batch and lot numbers which are recorded on an automated shipping notice and entered in the Warehouse Management System (WMS). This allows companies to track product locations and trace shipments. Greater precision is coming down though, in the form of RFID (Radio -Frequency Identification) tags. These tags have so far proven cost-prohibitive in the food industry, but their adoption will eventually mean that tracking can be carried right down to the location and storage requirements of a single package.

The internal moves necessary to ensure food safety or react to a recall demand a fine understanding of a sometimes overwhelming global machine. To set the stage for a quick, effective mobilisation companies must focus on preventative

Guidelines come from a combination of existing protocols and specific company mandates: Wal-Mart relies on its Safe Quality Food 2000 guidelines, Kroger and Safeway devised specific regulations and the U.S. government has its

BUSINESSWEEK.COM

own perspective. The USDA provides inspectors and sets quality standards for many food processors, including meat and dairy, while the FDA provides good management practices (GMP) guidelines and governs food labelling requirements. Putting the right technology in place to follow the chain and metrics that help paint the ongoing picture helps keep everyone on track. Within each testing component reside a set of ‘leading indicators’ - red flags that will immediately spotlight a problem and help prevent a full-blown recall. Suppliers may, for example, be required to test product quality by the shipment or the week, depending on the risk profile of the item. A deviation from the testing schedule or an unexpected quality control result would be leading indicators that should trigger a correction, thereby stopping a recall before it starts.

lay out who is responsible for what, where, and when. A common approach is employing a RACI chart - responsibility, accountability, consulted and informed. RACI spells out exactly who on each shift is responsible for performing an action, who is held accountable for the process as a whole, who should be consulted before making a decision, and who must be informed after a decision or action is made. RACIs can be simple tools, but they’re extremely effective in providing a quick, clear view of the situation. With this environment in place, a hiccup such as a missed quality test should send up an immediate red flag and enable the Chief Executive to follow the path easily to the cause - down to the individual tester, if necessary. When the pain point is identified, the organisation should hold the responsible employee accountable in a manner that improves

tainted gingerbread requires a vastly different response from a situation that involves reported deaths associated with unknown ingredients in a product. The former is a matter of shipment stoppages and customer communication, the latter a potentially devastating situation that calls for a comprehensive investigation into each ingredient and wide scale corporate involvement. Every recall could turn into a mission-critical event and needs to be addressed with the same vigour as any major, company altering programme. Most important, a general response plan must be laid out ahead of time, prioritising communication that will remove product from the supply chain as quickly as possible. When a recall hits, time is of the essence; executives, the company as a whole, and suppliers should already be aware of first steps and ready to execute them immediately. A response plan captures several elements: communications strategy, which will vary depending on company size, supply chain and merchandise; reliable systems and metrics that help track and explain the problem and the solution; and once again, roles and responsibilities. Accountability is the all important equaliser. Regardless of an employee’s role in the process, owning it and adhering to the stated guidelines means he or she can help minimise damage to customer health, company brand, and the bottom line.

Account for accountability Just as eliminating confusion around guidelines goes a long way towards creating a more reliable supply chain, so does clear communication about roles and responsibilities. Whether handling suppliers or the internal organisation, delivering a roles and responsibilities. Whether handling suppliers or the internal organisation, delivering a clear understanding of accountability ensures that each participant takes ownership of specific activities. Organisations should develop tools that

future work, tightens the process and further secures the company’s trust in its system.

Fortunately for all concerned, there were no reported sicknesses from the gingerbread houses sold at Whole Foods this past Christmas season. Whole Foods handled the situation in a timely and aggressive manner by issuing a public response within 24 hours of the FDA’s announcement about Rolf’s recall. The grocer provided contact information for concerned customers through its website and the media, and posted signage in stores explaining the problem.

Mobilise for the moment If a recall is necessary, the processes and culture will prove more crucial than ever. Food sellers need to respond immediately, but they also need to make certain they are reacting to the right situation. Context and the extent of the risk at hand will dictate much of the response. For example, a pre-emptive recall of potentially

Whole Foods safeguarded its reputation and no lawsuits or health claims were filed in relation to the recall. After recalling all desserts made from Nov. 1 to Dec. 24, 2010, and cooperating with the Illinois Department of Public Health, Rolf’s Patisserie is still open for business. As for the experience gained through the process, that’s the icing on the cake.

CLOSEWORK® GLOBAL REVIEW 2011

Driving Change Change is the constant, the signal for rebirth, the egg of the phoenix.

New York. 1 May:

HANDS (AND FEET) ACROSS THE WATER Every year, people from Celerant Consulting give their time and energy to support good causes in the community. A Celerant Capital team completes the 42 mile, 5 Boros Bike Tour through Manhattan, The Bronx, Queens, Brooklyn and Staten Island. 32,000 riders take part in the event which is staged by ‘Bike New York,’ a non-profit organisation promoting bike safety.

CLOSEWORK® GLOBAL REVIEW 2011

Paris to Rotterdam. 11-13 June:

London. 6 July:

A Celerant Consulting team takes part in Roparun, the world’s largest non-stop relay run to raise money for cancer patients in the final stages of life. Aided by 6 bikers and 10 support staff, the team completes the 513km in 45hrs.30m. 2,200 runners take part.

A Celerant Consulting team completes the 5.6 km JP Morgan Corporate Challenge run around Battersea Park to raise money for Barnardo’s, the UK’s leading children’s charity. 13,000 runners from 332 companies take part in the event.

CLOSEWORK® GLOBAL REVIEW 2011

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