Closework Global Review - Issue 4 by Celerant Consulting

CLOSEWORK EDITION FOUR

CELERANT CONSULTING Down on the ground helping to drive results up. Global Review 2012

Bright Lights. Booming Future.

Full speed ahead in West Africa. An optimised Supply Chain doesn’t just align plans, it also aligns practice. Unlocking Creativity: Alternatives to traditional brainstorming.

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

2012 marks Celerant Consulting’s 25th year of changing people and business. For good.

CLOSEWORK® GLOBAL REVIEW 2012

‘I can see the difference. I can even feel the difference.’ European Manufacturing Client

CLOSEWORK® GLOBAL REVIEW 2012

Down on the ground helping to drive results up

Driving Change 34

Leaving My Mark On The World

Driving Results 6

Riding The Wind Of Change

Celerant’s Pamela Griffin leaves her mark in

Helping Siemens Wind Power expand from an

Ipalamwa, Tanzania with Global Volunteers.

ambitious entrepreneur to a genuine global player.

The Harbour Consultants: Bright Lights. Booming Future. Mad traffic, mosquitoes and a midnight break-in are all part of working life for Celerant Consultants Maxime B, Cyril F, Mickaël S and Antonio F on a major

Oil Service Centre project in West Africa. A New Beginning At The End Of The World Clients don’t usually ask Consultants to help them totally change people’s lives, but that’s exactly what Technoserve did in Mozambique.

Closework® Global Review is a magazine published by Celerant Publishing on behalf of Celerant Consulting Ltd. Edition Four: June 2012.

Global Project Snapshots Construction, Financial services, Manufacturing, Energy.

Publication Director Thibaut Bataille Chief Editor Lisa Smith

20 56

Celerant Consulting Supply Chain Global Experience

Mining For Knowledge Celerant sponsors the Prospectors & Developers Association of Canada (PDAC)

Editors US & EMEA Marketing Teams

Editorial conception and realisation Patrick Keating

Global Project Snapshots Manufacturing, Chemicals,

2012 International Convention in Toronto.

Turning Uncertainty into Global Results

Life Sciences, Government Services. After Working At Our Desks All Day We Decided To Stretch Our Legs

Leading The Field

Client and Consultant create a winning

Getting down on the ground in Europe to help

partnership at the Rome Marathon.

drive results up for Irish Dairy Board.

Design conception and realisation Andrew Barnes-Jones Contributors Celerant Consulting thanks all its Clients, Friends of the business and Celerant teams for sharing their exceptional experiences and knowledge with us.

The words, photos and images in this publication cannot be used without the express consent of Celerant Consulting Ltd. For more information on business solutions, sector expertise, service lines and insights mentioned in this magazine, please visit:

celerantconsulting.com

CLOSEWORK® GLOBAL REVIEW 2012

Creating Global Value Acceleration Celerant Consulting Operational Transformation Global Experience

C-Cube Opens More Doors

Global Project Snapshots

Celerant’s unique club for Masters of Change

FMCG, Energy, Manufacturing,

is now open in Paris, Doha and Dusseldorf.

Construction.

agenda Driving Insights 14

Compelling asset management to drive

The Formula For A Successful Change Program

shareholder value in the midst of a North

Drawing on his 30+ years career, Paul DeVivo,

An Optimised Supply Chain Doesn’t Just

American Chemical Renaissance.

CEO of Houghton shares ‘10 Learnings’ that serve

Align Plans, It Also Aligns Practice

The North American chemical sector is in the midst of

as a project implementation tutorial.

Translating a global SC strategy into consistent

an exciting renaissance, but Operational Excellence

global action means engaging people at every

is essential to build long term shareholder value.

Managing Growth In A High Growth Region – From Supply Chain Nightmare To Supply

level of your organisation.

Chain Wonderland

Unlocking Creativity

Many Latin American companies are now

Alternatives to traditional brainstorming.

regional or global players, but they need to balance their rapid growth with sustainable

THE GRANITE CITY: It’s been a home from

internal change.

home for almost 20 years. Celerant Consulting has established itself as a major partner for Oil & Gas companies in the North Sea, helping them improve performance and implement change. Our sector experts give their views on what now lies ahead.

Changing The Way Government Spends Taxpayer Dollars

The Bottom Line Is That Change

Looming budget challenges mean the

Improves The Bottom Line

relationship between the US Government

When we partner with Private Equity firms and

and the Contracting community must be

their portfolio companies we help management

fundamentally redefined. Performance Based

teams boldly change the way their business runs.

Cost Management is the way forward.

Driving Ideas

Entrepreneur Is A French Word, But Just How Entrepreneurial Are French Companies? Collaborative, cross-disciplinary organisations are still few and far between, says Françoise

Surviving The Storm Clouds

Berthier, Head of Change Support/Human

The French CEO Challenges 2012 Barometer.

Resources at Sanofi. Yet compared to traditional pyramid structures, they allow more room

for innovation.

Switching To A ‘Can Do’ Mindset. Niko dominates its home market in Belgium.

LEAN In Financial Services: Money Might

Now it wants to dominate internationally. CEO

Make The World Go Around, But People

Peter Watteeuw explains how the company

And Processes Make The Money Go Around

was galvanised into real Behavioural Change.

Research by the Lean Enterprise Research Centre shows that improvement potential is greater in a services environment than a manufacturing one. Our global financial

clients would agree.

Consulting – Quo Vadis? Greg Baranszky and JJ Sendelbach of Doublejay

Consulting LLC look at the unprecedented

Meet In The Middle What’s the best strategy for demand driven Supply Chains that don’t look like Dell’s?

changes sweeping the industry.

Nordic Productivity Celerant Consulting’s 2011 Survey details the facts, the fiction and the future.

Rediscovering Our Hunger: Working Harder And Smarter To Improve Nordic Productivity Hard work and ingenuity created our present. Now they must protect our future.

Printed by Corelio Printing

CLOSEWORK® GLOBAL REVIEW 2012

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

RIDING THE WIND OF CHANGE. When Siemens Wind Power wanted to expand from an ambitious entrepreneur to a genuine global player it appointed Celerant Consulting to help it resolve 3 spiky issues. ‘ This project fostered cross-continent collaboration which was essential to prepare our organisation for future growth.’ Ingrid Jaegering, CFO Siemens Wind Power, EMEA.

CLOSEWORK® GLOBAL REVIEW 2012

iemens Wind Power is one of the world’s largest providers of complete wind power solutions for offshore, onshore and service projects. Rapid global growth had created inefficiencies in its Corporate and Operational processes, so it decided to launch the LEAPFROG Project and chose Celerant Consulting to help it analyse and resolve 3 key issues: Inadequate alignment between Operational and Financial forecasting; insufficient transparency in Operational business performance; the lack of SOPS and tools in its Project Acquisition and Execution phases. Virtual collaboration. Real progress. 3 work streams were established at both the company’s Corporate and Americas Headquarters and collaborated virtually to design and pilot new ways of working to deliver: Integrated Planning: New set-up of the Load (S&OP) Plan. Planning & forecasting processes were aligned between Corporate Headquarters and the regions to ensure faster response times to Sales and less change requests to existing plans. New order forecast, sales planning and capacity demand processes & tools were installed to support more regionalised operations. A new Management System: A new MCRS® Management System with a KPI navigator was designed and implemented

for Corporate Management (Level 1-2) and Regional Management (Level 2-4) and fact based performance meetings with clear roles and responsibilities for operational improvements were established. Regional Interfaces: New tools and processes were designed and implemented for all Sales Acquisition and Project Execution phases. Continuous Improvement was guaranteed through root cause analysis and consistent processes and interfaces were installed right across the global organisation.

RAPID RESULTS RAPID BUY- IN • The company quickly moved to a fact based performance culture. • Operational performance and deviations to plan are now fully visible in the KPI navigator and used to deliver Continuous Improvement. • Changes to the Load Plan have been substantially reduced which enables better planning and forecasting. • The projects standardised, aligned tools and processes enabled the Americas Sales organisation to gain a perfect score in an internal audit.

CLOSEWORK® GLOBAL REVIEW 2012

The Harbour Consultants

Bright Lights. Booming Future. Mad traffic, mosquitoes and a midnight break-in are all part of working life for Celerant Consultants Maxime B, Cyril F, Mickaël S and Antonio F on a major Oil Service Centre project in West Africa.

CLOSEWORK® GLOBAL REVIEW 2012

CLOSEWORK® IN ACTION

est Africa is booming. It’s colourful, chaotic and full of energy. The region is undergoing high speed development thanks to its huge offshore oil fields and other natural resources. Everywhere you look there are skylines of cranes and new public works racing to create a modern infrastructure in record time. But right now, there are still more bumpy tracks than good roads and more traditional houses than shiny, new air conditioned homes. They say that if a company wants to do business in China, it’s too late. If it wants to do business in Brazil, it’s just about in time, but if it wants to get ahead of the future it must come to West Africa. Our client has been in the region since the mid 90s. It’s a Port Facilities company working with the Oil & Gas industries. Every minute of non-productive offshore time is a waste of thousands of dollars for these industries, so they use Oil Service Centres, dedicated ports with their own customs facilities and logistics to speed up the loading and unloading of their ships.

CLOSEWORK® GLOBAL REVIEW 2012

The Harbour Consultants

Around 15 vessels use this one every day, including giant ocean going ships, complex offshore pipe laying vessels, supply vessels and crew ships that travel back and forth to the platforms. The company is responsible for moving everything within the OSC and our role is to help them increase client satisfaction to the levels of other OSCs across the globe by installing Operational Excellence and coaching their workforce. We’re also working with Procurement, Finance and HR. The long and winding road By law every company that wants to do business here has to have a local partner, so this OSC is a joint venture with a local oil company. It was carved out of nothing, expanded incredibly fast and is now so vast that the only way to get around it is by car. We arrive on site at 7.00 am and work through till around 7.30 pm. It’s incredibly hot, 30oC every day, and very dusty. In fact, there’s so much dust that there’s actually a team of people who regularly sweep the roads.

‘ Everywhere you look there are skylines of cranes and new public works racing to create a modern infrastructure in record time.’

CLOSEWORK® GLOBAL REVIEW 2012

The site entrance is a long and bumpy, dirt road with a sign on the gate that says: ‘No Guns. No Alcohol.’ Container trucks rumble up it day and night and it’s so bumpy that once a truck flipped over. Our biggest problem in getting to and from work is the traffic. In the last 10 years, hundreds of thousands of people have poured into the cities from the countryside, but at the moment there simply isn’t the infrastructure to handle all these people. There’s very little public transport, so everyone gets around by car and they all drive really fast, which means that the only option is to take your life in your hands and force your way through. It’s crazy. Some days it takes us 2 hours to get from the base to our guesthouse – and that’s only 6km. Zinho, Pépé and Zézé There are 4 Celerant consultants on site, 3 from the French office and a Portuguese-South African colleague. There’s also a VP who comes out once a month to oversee the project. We completed our analysis in October 2011 and

began the project in November with the aim of introducing a totally new culture of performance. We began by putting in place a visual management system which allows Managers to see exactly what’s happening across the OSC at any given point. We also implemented a planning system that listed each worker’s full name and detailed all the tasks that needed to be done. At first though, the Manager in charge of planning each day’s activities was reluctant to put names against each task. We couldn’t understand why he didn’t know who was supposed to be doing what, until finally he told us. It was because nearly every member of the team has a nickname, just like Brazilian footballers. People only know you by your nickname, Zinho, Pépé, Zézé and so on, so it was almost impossible for him to put a face to their correct name. Missing parts and ever present mosquitoes Around 800 people work at the OSC, plus all the clients from the Oil & Gas companies.

CLOSEWORK® IN ACTION

Around 90% are West African, but there are also ex-pats from Europe, Eastern Europe, South Africa and India. Operations work 24/7 and dealing with this mixed work force throws up a lot of challenges. Most people have been here for a while and they’re reasonably set in their ways. This had created a culture where some of them didn’t really feel accountable for their actions, so we saw a few strange things when we first arrived. One of our prime tasks is to instil this culture of accountability. We’ve already completed this with the top management and now we’re working on it with the middle management. We’ve also made big improvements in the Maintenance Department. When we first arrived there were about 30 pieces of vital equipment waiting outside the workshop for new parts - and some of those parts hadn’t even been ordered because they didn’t really plan or measure workloads. Now we’ve imple-

mented a process that enables them to track a job to completion with the aim of dramatically improving equipment availability to 95%. We’ve also introduced a ‘Day In The Life Of’ where we track individual operators. During the analysis period we did night shift DILOs and even though we were following the operators by car, we still got bitten hundreds of times because there are millions of mosquitoes here at night. Some clients simply won’t work at night because of them and there is a risk of malaria - in fact someone at the site contracted it just last week. A region of contrasts West Africa is full of huge contrasts. You see really smart homes guarded by guys with Kalashnikovs and it can be very expensive to eat in some of the restaurants. But many of these homes also have an outside water tank and their own generator because there are power cuts almost every day. You also see people living by the side of the road in shacks,

just like the favelas in Rio. It can also be a bit ‘Wild West’ at times. One night an intruder burst into our guesthouse and raced down the corridor chased by the guards. Then a second robber tried to force his way in and another guard had to fire his pistol in the air to scare him off. It’s definitely an exciting region to work and in some ways it’s easier to effect change here than it is in Europe. Although some of the people we’re working with may lack certain skills, they’re often more curious about new and better ways of doing things. They listen to you and it can be easier to create a feeling of trust and collaboration. In Europe a lot of people tend to see Consultants as the ones who are just there to downsize an organisation. Here they don’t know anything about that. They work in a business that’s always growing and their jobs are well protected, so they’re always looking to the future. And what a future it will be.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Ideas Ideas move fast when their time has come.

Surviving The Storm Clouds The French CEO Challenges Barometer 2012.

conomists around the world are still hedging their bets on when and how the current economic crisis will end. Will there be a V shaped recovery? A slow U shaped recovery or a long L shaped recession? For the majority of French CEOs interviewed by Celerant Consulting and L’Expansion

Magazine, however, the answer is already clear. It’s a W - and they’re preparing for the worst.

The Barometer was conducted Nov-Dec 2011.

100 Senior Executives took part.

76% of respondents were C-level Executives, 24% in Senior Management.

Participants represented a wide range of industries.

Over 40% came from organisations with annual revenues greater than €20bn.

CEOs from CAC 40 and SBF 120 companies were also interviewed.

1. What are your investment forecasts for 2012?

3. How will your workforce grow in 2012?

Only 30% expect overall investment to increase in 2012. 30% say it will fall.

39% expect their workforce to decrease in Europe, but 53% expect it to grow in the BRIC countries.

Increase

Overall company In France In Europe In BRIC* countries Rest of the world

30% 21% 26% 41% 32%

Stable Decrease

35% 37% 26% 35% 26%

30% 32% 32% 12% 26%

N/A

5% 11% 16% 12% 16%

Overall company In France In Europe In BRIC* countries Rest of the world

Increase

35% 20% 17% 53% 42%

Stable Decrease

40% 35% 33% 18% 37%

2. What are your business forecasts for 2012?

4. What are your profitability forecasts for 2012?

Only 55% expect overall business to grow.

Only 55% expect overall profits to increase.

Increase

Overall company In France In Europe In BRIC* countries Rest of the world

55% 21% 22% 44% 47%

*BRIC - Brasil, Russia, India, China.

CLOSEWORK® GLOBAL REVIEW 2012

N/A

0% 5% 11% 12% 11%

Stable Decrease

25% 53% 44% 28% 32%

25% 40% 39% 18% 11%

20% 21% 22% 22% 16%

N/A

0% 5% 11% 6% 5%

Overall company In France In Europe In BRIC* countries Rest of the world

Increase

55% 26% 28% 47% 44%

Stable Decrease

30% 42% 39% 29% 28%

15% 21% 17% 6% 11%

N/A

0% 11% 17% 18% 17%

5. Among the following external factors, which ones are you most concerned about for 2012?

7. What are the main challenges facing your company in 2012?

The biggest concerns are the continuing economic slowdown and political instability.

The Top 3 Challenges are cost reduction, productivity and innovation.

The pursuit of the economic slowing down 42% The political instability within the Eurozone 42% Geopolitical crises 37% Bank failure in Europe 37% Competition from Asia 37% Failures from customers 32% Increase in interest rates 26% Euro/dollar exchange rate 26% French presidential elections Social and fiscal constraints in France 26%

68%

Cost reduction Productivity Innovation Conquer new markets Managing talent Organic growth

74% 63%

53% 42% 37% 32%

8. What are your priority actions for 2012?

The No.1 internal threat is resistance to change.

The Top 3 Planned Actions are to improve productivity, develop innovative solutions and rationalise processes, systems and structures.

53% Resistance to change 42% Reliability of forecasting system 42% Growing number of simultaneous projects 42% Production costs too high Lack of Human resources on growing markets 37% 35% Loss of skills/competencies

Improve productivity Develop new products or services Rationalise processes, structures Reduce overheards Reduce purchasing costs Investments on the production tool

6. which are the main internal threats in your company?

78% 56% 50% 39% 33% 28%

The initiative was led by Celerant Consulting’s Paul Pinto, Senior Vice President, supported Sabrina Laborde, Marketing Manager. The full article appeared in

Capital investments will be saved at all costs. Unlike 2008, there is no question of sacrificing investment projects that involve future competitiveness. CEOs know that, once again, they will have to drive transformation initiatives to create deeper flexibility and adaptability within their organisations.

L’Expansion, January 2012. L’Expansion is one of France’s Top 3 Monthly Economic & Business magazines with a circulation of 800,000 and a web visibility of 1.8m unique visitors per month.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

Translating a global Supply Chain strategy into consistent reality means engaging people at every level of your organisation, says Adel Ouederni, European Supply Chain Service Line Leader at Celerant Consulting. You have to power your SC with efficient humanware and a clear, shared roadmap.

n many organisations today there’s a serious disconnect between the flow charts that show how their Supply Chain is supposed to work and what’s actually happening out in the field. Celerant Consulting’s global Supply Chain experience has uncovered two main reasons for this. The first is a significant disconnect between what many companies believe they have as processes and organisational models and what they really have in practice. The second is that supply chains tend to have hidden bricks, sort of ‘black boxes’, too complex for the organization to recognize, analyze and align. Working with companies across the globe in various sectors, we see how these ‘black boxes’ impact performance and derail overall supply chain alignment.

CLOSEWORK® GLOBAL REVIEW 2012

An optimised Supply Chain doesn’t just align plans, it also aligns practice.

Supply Chains’ disjointed organizational structures, combined with increasing complexity and cumbersome IT systems make these black boxes harder to identify and fix. For instance, some IT systems, with obsolete or unsuited rules, can become a problematic rigidifying factor. Our view is that to develop an efficient, agile Supply Chain you need to recognize these black boxes in order to realign the Supply Chain and have it fully under control. This can be achieved only by putting enabled ‘humanware’ back in the driving seat, which supposes revisiting the organisation, as well as the policies and levers it’s running with. This is why we put a strong focus on the organisational dimension (people, roles & responsibilities, skills and capabilities, change management, etc.) when analyzing,

then transforming supply chain performance. Also, the objective of any Supply Chain transformation should not to be to fix a new static model, but to redefine an adaptive, agile one. For this purpose, Supply Chain organisations have to question the way they operate on a regular basis to discover how their reality is changing and how they can optimize the way the business produces, procures and distributes. We see for example, that some companies use exactly the same logic in their production with 20 customers as they did 10 or 15 years ago with just few ones, leading to significant inefficiencies and a damaging disconnect. Their business, product mix, supply base, etc. has changed, so their Supply Chain must be revisited to adapt to the new reality.

In today’s dynamic, globalised markets complexity is increasing, visibility is decreasing and the paradigms that were adopted in the 90s and 20s are no longer enough to ensure performance. You have to satisfy the market, reduce costs, become more efficient and avoid permanent fire-fighting in dealing with new environments and constraints. The only way to achieve all this is to become adaptable, agile and permanently in control of your Supply Chain. This can only be achieved by aligning all Supply Chain dimensions (Organization & People, Processes, Systems and tools, Footprint and infrastructure), end-to-end, from strategy to daily practice. In Celerant, we have a unique capability to move from Operations Strategy down to day-to-day execution where individuals make a huge difference in putting together the full picture. We work alongside people at every level of the business, because whatever your plans are in theory, if people running them don’t have the means and capabilities to ensure that ideas successfully cascade from the CEO to the sharp end, your Supply Chain can fail. This also means being able to take into account local facets and cultures at every stage of Supply Chain transformation projects. Then, needless to say that in today’s complex environment, efficient humanware is the foremost differentiator in business adaptability. An efficient Supply Chain is the backbone of every successful business, but it has to be a flexible backbone, which means having robust, rather than rigid foundations. It must be able to regularly adapt to new trends and changes in the market, as well as internal and external network mutations. This supposes to constantly capture the influencing factors on the business. Supply Chain adaptability has to become an embedded gene within the business so that it can follow a continuous evolution, instead of having to undergo a perilous deep transformation every couple of years or just be reshaped and eroded by the environment. The Six Pillars Of Supply Chain Adaptability Excellence Celerant Consulting believe that Supply Chain adaptability excellence is built on: An Aligned and Integrated Organisation at All Levels: Not just internally, but also with key

suppliers and customers to ensure that all different parts in the value chain have the same targets, work together smoothly and can collaborate to adapt collectively to the changing environment. Supply Chain is primarily about Organisation and People. In broad numbers, it’s 60% about people and organisation, 30% about processes and how value chain components are operated, and 10% about information systems and other enabling tools. Organisation remains the key, but you cannot simply focus on one component: you have to focus on all three at the same time. An Adaptable Supply Chain Footprint: Regularly reviewing and adapting your Supply Chain footprint is essential to control costs and risks. It may currently make sense to buy components from China for example, but if this means reducing unit cost while significantly increasing lead times or quality issues, it will decrease your adaptability. So all key factors need to be in balance. Footprint review is also about how much capacity you want to have in-house (‘base’ capacity) and how much you need to be able to trigger to adapt to variations (‘surge’ capacity) for an optimal response to demand. Key Customer & Supplier Intelligence & Collaboration: In today’s fast moving environment, active customer and Supply Chain intelligence is vital to help a business detect trends and pick up any signals which might mean additional risks or opportunities. This means going far beyond transactional exchange, through EDI or other forms of data communication; it means working closely with your suppliers and customers to analyse the risks and opportunities and jointly come up with timely, effective plans. Integrated Visibility & Planning: The most effective Supply Chains have the best visibility, from strategic planning, to tactical planning, to

execution. A business must then be able to revisit these plans at any time and adapt to any changes in the environment based on a structured and optimal Supply Chain response mode. Integrated Visibility & Planning enables internal and external alignment and collaboration, so that a business can anticipate issues and seize opportunities, not in a fire fighting manner, but with informed decisions and robust rules. A Direct Link between Operational Excellence & Supply Chain Management: Businesses might talk about LEAN and Operational Excellence in general, but what is sometimes missing is the link between Operational Excellence and overall Supply Chain optimisation and agility. In our experience the two aren’t always hand in hand which is counter-productive. A business might have optimised sites or production lines, but that doesn’t necessarily mean its overall Supply Chain is synchronized and aligned. That’s why it’s vital to have a consistent link between the way the overall Supply Chain is being operated and the way the execution is happening at each individual node. A Back to Basics Overview: Many businesses have been reshaped by acquisitions or mergers, or extended into new geographies or new market segments, and these additional layers can often corrode the existing Supply Chain rules or make them irrelevant. Unfortunately, many rules are embedded and hidden in IT systems or other forms of what we call black boxes, areas that nobody controls or questions but which can mislead a business. So it’s key that in strategic, tactical and short term Supply Chain planning, existing policies are revisited to make sure that the business is being run according to optimised rules and current reality, not the rules that were set 10 or 15 years ago, or uncontrolled derivatives of those outdated rules.

‘ Supply Chain is primarily about Organisation and Change Management. In broad numbers, 60% of it is about people.’

CLOSEWORK® GLOBAL REVIEW 2012

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

Tough Targets For Tough Machines

The Best Medicine For Growth

BUSINESS CHALLENGE The client is a leading construction company in the Middle East and has the largest market share of the industry in Oman. It also has the region’s largest fleet with around 7,500 vehicles and pieces of equipment. The company built its reputation by delivering high quality projects to clients in tough conditions and often remote locations. However, after rapid growth in the last decade, increased pressure from new competitors meant that its competitive edge was beginning to erode, primarily because of an ever increasing operating cost base. The company was determined to retain its leading position in Oman, so Celerant Consulting was brought in to help drive a rapid, bottom up productivity improvement programme, with a specific focus on Plant equipment availability and operating costs.

BUSINESS CHALLENGE The client is one of the world’s largest insurance groups. Across Europe, the industry was consolidating. Customer expectations were rising, driven by the increasing availability of information and choice. This put great pressure on cost, delivery and margins. The company wanted to move into the industry’s upper quartile, so it set a challenging target reduce operational costs, double premium income and increase the customer base by 50%.

CELERANT SOLUTION The project focused on 4 key areas: Optimising Plant hiring spend and surplus fleet hiring out; Reducing vehicles and equipment off road and Mean Time To Repair (MTTR); Reducing the costs of spare parts by for example, leveraging the utilisation of OEM/ Replacement spare parts and tyre retreading whenever possible; Optimising the static plant overall cost of operations by increasing productivity and leveraging subcontracting opportunities. RESULTS Annual equipment hire costs reduced by 45%. •Off road equipment rates reduced at all main construction sites, directly impacting productivity throughput. •Better managed Equipment Operating costs. •Subcontracting and fleet hiring out increased by 25%, cutting the Plant Department’s overall operating cost. •MTTR reduced by 30%. •A Fleet Tracking tool installed to optimise the allocation, utilisation and productivity of every piece of equipment across the company. •A Maintenance MCRS® Management System fully installed in the Plant Department and a ‘can do attitude’ embedded in the team. ‘I can clearly see the change of attitude and behaviour in my people and the improvements in my department. This was an amazing journey.’ VP Plant Department.

Construction 16

CLOSEWORK® GLOBAL REVIEW 2012

CELERANT SOLUTION Following a 6 week analysis, Celerant proposed a plan that would save over €1m in the first 3 months and many millions in the first year. An inter-departmental client Task Force was established and supported by Celerant to help engage the whole company in finding new ways of working and demonstrate early successes. The approach centred on a new set of competencies, such as LEAN efficiency, which ensured optimised processes and measurable results. Celerant’s experts coached the client through the process, encouraging stretch targets and building skills and confidence. They had to understand the company’s strategic goals and the ‘Voice of the Customer’ to ensure that the process was focused on customer needs, rather than just internal demands. An MCRS® Management System was implemented to secure performance visibility, sustainable results and an effective monitor for the impact of change. One-to-One Management Coaching helped develop leadership skills in an environment where an end-to-end process perspective is essential and was complemented by a rigorous training plan that embedded quality customer service skills right across the business. RESULTS Over €1m in savings in the first 3 months. •Total benefits of € millions, 40% higher than target. •A cost-neutral project by the first milestone. •Claims handling efficiency improved by 40%. •Central Claims non-value added activity dropped 42%. •Ad-hoc sickness in the Customer Retention Team dropped 30%. •Call waiting time dropped 35%. ‘I can honestly say I don’t remember another project which achieved so much so quickly and within sound financial parameters. I wholeheartedly recommend Celerant.’ Transformation Director

Financial Services

The Sky’s The Limit

More Power More Participation

BUSINESS CHALLENGE The client is one of Europe’s leading solar module producers in Germany. 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 its unique Closework® approach to implementation and behavioural change.

BUSINESS CHALLENGE The client is a global leader in the Nuclear Power industry. Due to recent events the industry is facing tougher regulations, but performance objectives remain the same. Internal resources at its plants are finite because of hiring restrictions, an aging workforce and the time needed to train new people. The challenge for each plant was therefore to achieve its targets with roughly the same resources. Celerant Consulting was brought in to help make this happen because of the successful Organisational improvements it had achieved at other client plants.

CELERANT SOLUTION The programme’s aim was to significantly increase capacity 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 and 6 Sigma methods 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 were achieved within the first 3 months. •Full project tracking with standardised templates was implemented 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.

CELERANT SOLUTION The project’s objective was to identify areas to facilitate, simplify and improve employees’ way of working. Celerant did an extensive scoping with more than 10% of the workforce and narrowed their comments down to 60 focused areas. Top management were then engaged to weigh and eliminate irrelevant areas and data analysis, process critics, design workshops and focus interviews were used to further define the selected areas of improvement. The goal was to gain everyone’s participation and belief in the process and identified solutions, so they could carry out the required changes in the near future. RESULTS More than 800 improvement areas were identified. •From 60 selected areas, 18 were validated by top management as key to overall site performance - maintenance planning of secondary equipment, work authorisation permits process in controlled zones, spare parts management and delivery process to work stations etc. •Each selected area was structured as a typical Celerant project with a MCRS® Management System, Client project manager, team structure and agreed milestones. •Final deliverables were to: work with the 18 client project managers on detailed Steps to Milestones and ensure buy in as they would have to present it and deliver it to the plant director; provide the plant director with the tools and MCRS® to drive and manage those 18 individual projects.

‘Celerant gave us valuable drive and support from analysis all the way through to implementation.’ Head of Wafer Production

Manufacturing

Energy CLOSEWORK® GLOBAL REVIEW 2012 CELERANT GLOBAL REVIEW 2011 XX 17

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

2012 marks Celerant Consulting’s 25th year of helping clients turn complexity into opportunity.

CLOSEWORK® GLOBAL REVIEW 2012

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

Turning Uncertainty into Global Results Celerant Consulting Supply Chain Global Experience In today’s uncertain times, companies are looking for Supply Chain flexibility, efficiency and visibility. Celerant Consulting turns complexity into opportunities, helping clients to design their supply chain as a key driver for growth and value. We focus on your people for successfully transforming your supply chain operating model, globally and end-to-end, in all industries & services. Golden Rules Get results as a way-of-working, not as a one-off programme: • Make your Supply Chain a sustainable competitive advantage. • Engage leaders own and inspire supply chain excellence. • Implement a lean, safe and clean supply chain operating model. • Work 360°: top-down, bottom-up and end-to-end.

Net inventory and DSO significantly reduced (two-digit %) across 5 regional business units.

EXPERIENCE 1

OEE average increased

EXPERIENCE 2

Challenge: Generating truly effective Working Capital improvement

Challenge: A Pan-European Improvement plan to deliver the targeted savings

Location: Asia Pacific

Location: Europe (7 countries)

Sector: Manufacturing

Sector: FMCG

‘Celerant helped us reduce our Working Capital position significantly in a very short time span, and by engaging local process owners heavily in the project they learn a lot of methods and concepts.’

‘Celerant has a special capability that other consultants companies do not have – you’re really good at going into the details from shop floor to senior management level and you are able to truly solve the issues.’

Managing Director

Supply Chain Director

No.

expert benchmark level at managing external manufacturing partners in the least time possible.

EXPERIENCE 3 Challenge: Making External Manufacturing work for you Location: US, China, India Sector: Pharma

‘Success means an assured, flexible and partner based supply chain. We will build trust and grow benefits forward.’ Global Vice President

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Supplier delivery accuracy ‘On Time In Full’ risen from 50% to 95%

EXPERIENCE 5

inventory write offs reduced by $3m in 3 months

EXPERIENCE 6

Challenge: Creating a performance management culture to deliver global supply chain stability

Challenge: Delivering success from raw materials to finished goods through Total Cost of Ownership

Location: Europe & China

Location: Africa and Middle East

Sector: Telecom

Sector: Metals & Mining

‘With Celerant we have a coach, leader, project manager, expert and a consultant helping us think out of the box. Truly remarkable.’

‘Celerant made us realise that we were buying the cheapest coils, but not necessarily the most profitable ones.’ CEO

Supply Chain Manager

10m

Savings in inventory right-sizing

Weeks to design and install a robust, scalable Demand & Supply Planning Process for the whole Northern European Supply Chain

EXPERIENCE 4

EXPERIENCE 7

Challenge: Putting the power back into a Supply Chain Organisation

Challenge: Creating Data Driven Numbers to optimise the allocation of scarce wood resources

Location: North America Sector: Chemicals

‘While the financial results are impressive, the ultimate goal of the project with Celerant was sustainable behavior change - changing the way people work.’ President, North America Operations

Location: Scandinavia Sector: Pulp & Paper

‘In our industry, aligning the processes between our businesses is very challenging. The practical tools, best practice project management and not least, constant pacing provided by Celerant Consulting, made all the difference in making this happen in such a short time.’ Demand & Supply Process Director

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

Unlocking Creativity

Alternatives to traditional brainstorming. Innovative problem solving can only occur when traditional, ineffective techniques are challenged, argues Greg Kinsey, SeniorVice President at Celerant Consulting. Sometimes you have to turn the established thinking upside down. 22

CLOSEWORK® GLOBAL REVIEW 2012

hen faced with a tough problem that requires an innovative solution, many companies automatically turn to traditional brainstorming techniques. A team comes together in a conference room, with everyone seated around a table staring at an empty flipchart. The team leader usually controls the flipchart, or appoints a ‘scribe’ to do the writing and after a short discussion and a bit of wordsmithing, everyone settles on a problem statement which is written across the top of the flipchart. Then the leader says ‘Right, let’s brainstorm some possible solutions.’ The process begins, as individuals volunteer ideas and the person at the flipchart writes them in a list. Soon the team becomes quite animated and the ideas flow so quickly the scribe can barely keep up. Eventually the ideas trickle to a stop. The chart has a long list of possible solutions, so the team then goes through the process of combining, pruning and consolidating the list into the equally traditional 3 to 5 potential solutions, before voting to select the best idea. The brainstorming session is now over. But how innovative were the ideas generated? Probably not very. How much creativity of the team was tapped? Probably very little. Truly new ideas rarely come out of such sessions, yet this type of brainstorming plays out every single day in conference rooms around the world. So why does it fail? And what are some better alternatives for unlocking creativity? Allow time for reflection The first weakness of this approach is that idea generation immediately follows the formulation of the problem statement. Research shows that people need a period of reflection, allowing the brain to focus on the problem for several days to really formulate creative ideas. This inward thinking process is often passive and can occur while driving, riding a bus, jogging or just standing under a warm shower. In fact, some of the very best creativity occurs while you sleep and your brain continues to work on the problem, hence the expression ‘Let me sleep on it.’ Consequently, it is recommended to separate the problem formulation from the ideation process, by a few days or a week. If the problem is already well defined, it can be simply sent in advance, asking the team to reflect on it before the ideation session. If the problem is not well defined, you should create two separate meetings with a week between them: one meeting to agree on the problem statement, another meeting to generate solution ideas.

The second problem with classical brainstorming sessions is that the idea generation is biased. It’s controlled by the social norms and political agendas within the group, which means that people tend to agree with the ideas of the most influential members and avoid proposing ideas that are controversial. Also the most extroverted or popular people tend to control the idea flow, so the group does not participate equally. Ideas from timid or unsure people may not even be spoken, let alone transferred to the flipchart. International groups can often be hampered by language inequality. Even worse, people are sometimes afraid to voice a thought which they fear is a stupid idea. A proven approach for overcoming these issues is a technique called brainwriting. With brainwriting, participants are given post-it notes and asked to generate as many ideas as possible within a defined timeframe, usually 5 or 10 minutes. A variation is called ‘Brainwriting 6-2-5’ in which 6 people each write down their 2 best ideas within 5 minutes. Regardless of the specific format, the act of privately writing ideas instead of having to say them in front of a group removes much of the bias and inequality from the process. To ensure anonymity, make sure that everyone uses the same color post-its and the same type of pen. Disrupt established patterns A third problem with traditional brainstorming is the lack of stimuli. A bleak white conference room in a familiar office building is simply not conducive to creativity. There is nothing to stimulate new thinking or prompt new ideas. In fact, the workplace setting actually reinforces the status quo and kills creativity. The workplace is the wrong place. It is far better to meet in a different physical location: an offsite hotel or conference center, a café in the train station, a quiet corner of the airport, someone’s house, a baseball game, ein Biergarten, a ski chalet, a dairy farm, the science museum, in your factory, at a customer site, on a walk in the woods or a city park. Regardless of where you decide to meet, the most important thing is to have external and random stimuli -- such as advertising, magazines, music, exhibits, different people, different landscape, different smells and different tastes. A random stimulus forces you to move your thoughts to new ideas and new associations. It serves to disrupt established thinking patterns. Another problem with traditional brainstorming is the absence of new insights. Teams tend to think within their current paradigm. They have often been in the company, and the industry, for many

years and have little insight as to how similar problems may have been solved elsewhere. There are a range of techniques to overcome this problem. Open Innovation is a method for engaging the user community or marketplace in contributing ideas. It is commonly used in the software industry. Ethnography is the study of how people really use your products and services, sometimes revealing surprising discoveries – such as when the bicycle industry saw how California teenagers were converting their products into mountain bikes, a product they’d never even imagined. Or Biomimicry, which is the adoption of solutions occurring in nature. When the glass industry was looking for ideas on how to engineer self-cleaning windows for example, they found the answer in the structure of the lotus leaf. Is the answer already out there? Another popular methodology is TRIZ, or Theory of Inventive Problem Solving, which is based on the notion that all problems have already been solved elsewhere. By defining a problem with specific parameters and characterizing the contradictions of those parameters, you can source ideas from the 40 inventive principals of the TRIZ framework, which were derived from over 2 million patented inventions. Cross-Industry Benchmarking or the borrowing of ideas from other industries, is another underused concept. It can bring a wealth of new ideas on how to solve tough problems. For example, a perfume company looking for ways to reduce counterfeiting may not find too many new ideas by benchmarking within their industry. However, they could probably learn something new by looking at how leading pharmaceutical or ink-jet cartridge businesses address the same problem. Cross-industry benchmarking can provide new ideas that no competitors in your sector have discovered. So if you really want to unlock the creative potential of your organization, stop the endless routines of uncreative brainstorming. Innovative problem solving will only occur when ineffective techniques are challenged and replaced. While there is no single silver bullet for innovation, there are a number of best practices which any organization can adopt – just a few of which have been touched upon in this article. Think about it… and sleep on it.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

Only a few times in our nation’s history has the need for profound change in the way Government spends taxpayer dollars been as apparent as it is today. Looming budget challenges mean that the relationship between Government and the Contracting community must be fundamentally redefined, argue James Biere Marceau, President and Matthew Jankowski, Vice President, Celerant Government Services. It’s the only way to drive greater performance from both sides.

he US Government faces a future where more or better work will have to be done for the same or less dollars. That means the risk - reward relationship between Government officials and the Contracting community will have to change. It sounds simple, but given the cultural and behavioural changes that will be required to break the current legacy processes that influence how taxpayer dollars are spent, it could prove difficult without the catalyst of a fresh perspective. With a 95% success rate in value-based consulting for commercial clients and a track record of successfully changing behaviours, Celerant Consulting can provide that perspective. We believe that not only can the current levels of performance be met within shrinking budget cycles, they can be dramatically improved. Think differently Act differently The process by which Government officials manage congressionally approved budgets is complex and often fraught with politics. They must remain vigilant on how taxpayer’s dollars are spent, but the Federal Acquisition Regulation procedures they have to follow to manage budgets, continuing-resolution budget delays and fiscal-year constraints create a

CLOSEWORK® GLOBAL REVIEW 2012

natural conflict between what they should do in order to be more efficient - and what they actually do to meet their expenditure and program objectives. With pronounced longterm budget challenges now facing our nation, Celerant Consulting believes that a much greater emphasis must be placed on significantly increasing the probability of success for Government contracting so that it can achieve greater efficiencies that are both understood and measurable. Current thoughts within the U.S. Federal space on acquisition and programmatic efficiencies already indicate some willingness to consider new ways of approaching contracting. For example, contracts that provide smaller incremental payouts to ensure that success is consistently demonstrable and measurable , or longer contract terms to minimize the workload on the contracting community, have begun to appear throughout the U.S. Federal and military space. Unfortunately, such changes fundamentally do nothing to ensure that the officials managing these billion dollar contracts will receive value for what they have acquired. Revamp the risk – reward model What’s needed is a way of changing collective thinking towards increasing the probability of

success of projects throughout the Contracting community. Celerant Consulting believes this new paradigm can only succeed if it is accompanied by a change in risk versus reward expectations across the Federal Government and its contracted support teams. This must start with a Federal community that is motivated to reduce costs and maximize efficiency. While the Government does not operate like a profit-driven entity, it is worthwhile asking why, unlike in the corporate world, there has been no historical quest for proactive measures to reduce costs in up, as well as down years. The simple truth is that the current budgetary process does not motivate U.S. Government organizations to create one. The current model is: Spend it, or lose it in next year’s budget request. This is not to imply that U.S. Government workers are complacent within the current environment. The opposite is true. Well intentioned, patriotic and hard working Government employees who are bogged down performing activities that add little value simply don’t have the luxury of trying something different, unless it’s driven top-down through the organization. What’s more, many Government agencies are extremely risk-averse, so it’s virtually impossible to implement a culture of taking risks with new processes or concepts in an effort to maximize efficiencies. In contrast, commercial sector industry partners would not accept, nor even prevail, if such conservative practices were the mainstay in their environments. Incentivize to change behaviours So how do you motivate people to spend less when they’re under no external pressure to do so? The challenge lies in first incentivizing the Contracting Officer community with rewards for giving money back or optimising budgetary spends. From there, this change in behaviour will permeate the Contractor base at large, whose members can quickly be expected to adopt a fresh perspective. In Contracting, as in any business, incentives motivate certain behaviours. Business executives as a group, motivated by promotions and bonuses, will strive for greater profits, usually achieved by driving down costs and increasing margins. Incentives do exist in the current Government contracting environment, but they’re

not aligned to drive the right behaviours in today’s budget and programmatic climate. Another, perhaps greater flaw in the current process is that it also fails to provide the Government with sufficient time to clearly articulate what is realistically needed, and to award contracts to companies that can realistically deliver. The use of incentives in the U.S. Federal market is not new. A form of Performance Based Contracting that has already been embraced by the U.S. Department of Defense (DoD) is PerformanceBased Logistics (PBL), which gave Acquisition Program Managers an opportunity to reduce costs without compromising operational system readiness. By getting the contractor to commit to a performance level, rather than contracting for goods and services, the Government effectively shifted its cost risk to the contractor, which in turn saw the opportunity for a greater profit. Based on the same core principle as PBC, PBL is now gaining wider popularity and attention within the DoD at large. As a further example, energy-conservation contracts propose fees based on a PBC model where compensation is tied to energy savings. When the annual savings in energy bills exceeds the amortized costs of the services, the customer has little need or desire to be concerned with contractor profits. With the promise of dramatically reduced utility bills, particularly for sizeable, aging Government buildings, these contracts represent a strong proof-of-concept for expanding the use of PBCs into other types of services and are currently in use within some U.S. Federal agencies. Celerant Consulting believes it is now time to examine how Performance Based Contracting can be applied within all Government organizations to create an ideal environment for: • Greater collaboration across the Government and the Contractor community. • Motivating the Government workforce to share in the agency’s overall efficiency objectives. • Motivating the Contractor to exceed expectations - as profit margins increase. • A greater sharing of the risks and rewards of achieving cost savings. • A tighter management and measurement of expectations within shorter intervals.

Reciprocal trust is paramount In our experience, the recurring theme that has driven successful PBCs is trust. With both the Government and the Contractor having skin in the game, trust is paramount to successful implementation. This in and of itself may be the greatest barrier to implementing what has been proposed because trust can’t be achieved overnight; it develops as a result of an expected and consistent set of outcomes that are tied to the human behaviours of both sides engaging the contract. American taxpayers are demanding that their government maintain and even increase levels of performance with decreasing budgets. It’s clear that this goal has quickly risen to top of mind for several leading acquisition officials. The time is right for Government organisations to increase accountability, enhance operations, drive cultural change and demand better results. At a grass roots level, the fundamental question which is driving fiscal change in both the public and private sectors is: ‘If the dollars the contracting community spent were coming directly from their personal wallets, would they spend the budgets the same way?’

‘ Historically, the only time government becomes innovative in cost cutting is when the budget is cut. There’s little motivation when budgets are expanding.’ Greg Rothwell, former Senior Acquisition Executive, DHS.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Ideas Ideas move fast when their time has come.

SWITCHING TO A ‘CAN DO’ MINDSET. For over 90 years Niko has dominated its home market in Belgium. Now it wants to dominate internationally. CEO Peter Watteeuw explains how the company was galvanised into real Behavioural Change with help from Celerant Consulting.

CLOSEWORK® GLOBAL REVIEW 2012

Continuous Improvement

nationally successful are also very different from those you need to be nationally successful. Being a market challenger is totally different to being a market leader and the whole DNA at Niko was that of a market leader, so we didn’t have the right attitude to grow our international business in the most successful way. This led us to the situation in 2010 where we decided that we wanted to double our international sales within 3 years and at the same time maintain our market leadership in Belgium. We wanted to take that cash flow and invest it in international growth. Now we quickly realised that to be successful it would not only be a matter of good sales and marketing efforts, in terms of understanding the needs of the different markets and providing solutions, knowing the right players in those markets and so on, it would also be a matter of improving our operations - and by that I mean our operations and Supply Chain. We needed to make a major shift because for a long time the company has been an extremely production oriented company. So we needed to shift to a more customer centric company.

What was the burning platform that made you start this programme? Niko has been hugely successful in Belgium for over 90 years, mainly with sockets and switches. We’re the dominant player in terms of turnover, margins and market share. But we came to realise that while this dominant position was a good thing, it was not so good that we couldn’t grow other products groups in this market. That was also our situation internationally. We were not as successful internationally as we were at home, mainly because the type of products we were offering were not as easy to differentiate from the competition. There was nobody outside of Belgium just waiting for Niko switches and sockets. The characteristics you need to become inter-

Also more specifically in Operations, it meant that where the focus was oriented in a ‘push order’ model, we now had to make sure that we could handle what I call ‘any kind of order.’ If we wanted to grow the business outside Belgium, certainly at the beginning, orders would come in at unexpected times and in the volumes that were not as high as we would have liked to make, or as we were used to making in our Belgian market. So we needed to create an Operations organisation that could react quickly and flexibly to all the different types of orders from the different markets. On the other hand it was absolutely imperative that our quality, costs and service levels remained the same.

Why did you decide on a LEAN programme? To be honest, we didn’t deliberately choose LEAN. We chose Celerant Consulting. The Operations Manager had a vision of LEAN and was articulating what it would mean in terms of

the programme, so it was a good fit and clearly what we implemented is covered under LEAN the need for change was there, we had to create an Operations organisation that could do everything I described earlier and to make that shift we quickly came up with the main priorities: We had to increase production efficiency, we had to maximise production flow to decrease waste and so on, and we had to look at our Supply Chain model. What we soon realised however, was that to be really successful this Change Programme would have to go much further than the technical aspects. We would have to shift the whole mentality of the factory. As I said, Niko has been very successful for a very long time, so most people here live pretty much in their comfort zone, including lower and middle management. We had to create a real sense of urgency for change and we wanted to use an outside party to help us do this. A partner that could not just help in terms of content, but also with the whole Behavioural Change process. And that’s basically why we chose Celerant. When we had our first contacts with them and after they conducted the analysis we felt that the way Celerant operates is by going deep into the change process, working on the mentality in the company and creating a sense of urgency for change.

Has your appreciation of LEAN changed? I had no experience of LEAN implementation until then and I basically saw it as a method to make an operational department more efficient. So the first and most important thing that I’ve learned about LEAN is that it’s a general business philosophy that helps you better define your whole vision and company strategy. It’s not just focused on Operations, it’s much wider and deeper than that. The whole concept of LEAN is to focus on the customer. You have to think how you can create extra value for your customer and what the impact will be. So LEAN helped me fine tune our vision and overall strategy. That’s the most important thing that changed throughout the programme.

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Driving Ideas Ideas move fast when their time has come.

‘ When we had our first contacts with Celerant we felt that the way they operate is by going deep into the change process, working on the mentality in the company and creating a sense of urgency for change.’

I also learned that LEAN is not a one-off project. Once you start you’ll never stop. It’s Continuous Improvement and this is what I now see happening on the shop floor. People are driven and they’re getting this extra motivation because they have an impact on the process. My main concern had been how would we keep this going after Celerant left us? Now I see that my own people are very motivated and it is going very well. The third thing that impressed me is what I would call the power of visualisation. We had no experience with a lot of the tools that Celerant brought us, so visualising all these things was so powerful and effective for this programme. It also taught us how to better visualise our other plans and bring them to the floor. We worked very closely with Celerant and whenever they asked for help or wanted us make a decision we immediately responded.

You said that many people were set in their ways. Was it difficult to change them? It was the major effort. Three things needed to happen for the programme to be successful: the first was convincing people there was an urgent need for change - and that wasn’t easy when the company has been doing so well and people believed there was a direct relationship between that success and how they did things. The second was transmitting our ambition and objectives to everyone. In the Operations Department it was clear that we wanted to change something, but the Operations Manager needed some help in defining and translating what exactly we wanted to achieve and how we were going to achieve it.

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The third success factor was changing the culture and the mentality, and here I’m specifically talking about changing the management mentality. We had to become more action driven, more disciplined and we also had to learn a lot more about fact based decision making. We were working a lot, doing a lot, but it didn’t always correspond to the three things I’ve just described. My main concern and my impact on this project has been creating the sense of urgency. Creating the awareness that there is a need for change and changing the operational clock speed, not only in the beginning to motivate people to get started, but also in how we continue that by doing things in a more effective way with a higher sense of urgency.

How easy was it to bring the Voice of the Customer deeper into the organisation? To be honest, there are areas where we are still struggling with that. The things we’ve changed on the Supply Chain, they’ve worked well, but the Voice of the Customer has to come through our commercial people and that’s one of the areas where I feel we most have room for improvement. The whole programme worked well in the Operations Department, but with Niko being the company that it is, we were pretty much organised in silos. It was top down communication in most departments, with some bottom up communication in other departments, but there was very little communication between departments and that was something we had to break through. I think we only partly succeeded in doing that last year with the project. There’s more work to be done.

Continuous Improvement

How are you continuing your change journey? The programme has succeeded in Operations and Supply Chain. Now we need to keep up the sense of urgency and take it to the other departments which weren’t so much of a priority in the beginning.

Was it difficult to make people understand this wasn’t a one-off, it’s now the way we work? Not in Operations, Supply Chain or the technical departments like engineering. That’s one of the great things I discovered walking around the organisation. People are now self motivated, they’re proud that they can contribute and they want to continuously improve. I would like to add one more thing. When Celerant left us just before Christmas 2011 it was clear to me that our biggest challenge would be keeping this process of change going without them. I had a fear that we would fall back into the old habits, but what happened was the complete opposite. From January our Belgian market has been extremely strong and this demand continued throughout February. We had sales that exceeded by 25 – 30% our budget and all forecasts by 25 – 30% which meant we quickly reached our capacity levels, had backlogs and our service levels were dropping. People in the Belgian market know that they can order and we will always supply within 24 hours, but this unexpectedly strong demand built up a very serious backlog, so reaction in the market was pretty strong and it was impacting our reputation.

I asked for a crisis meeting to figure out how we were going to handle this. I wanted us to be back at historical levels of backlogs within three weeks. The people in Operations took that challenge on and within three weeks we ended up at a level that was lower than the lowest day in 2011! This was a tremendous success and several people here have said that they’re convinced that it would have never been possible before this Change Programme. And it’s not just because of the tools and tricks they leaned from Celerant, it’s because of the total shift in mentality that Celerant had helped us create. Everybody took it very seriously, they created a system whereby every morning at 10 am representatives of all the departments got together to go over the plans, see what problems there were, then follow up on that and monitor everything - that was also something we’d learned from Celerant. There was also a very clear command structure which was one of the things we lacked previously in this kind of situation. These meetings were run very efficiently because they were fact based and action driven, there was no discussions around things, people just got straight to the facts. I attended some of those meetings and they were very impressive.

‘ People are driven and they’re getting this extra motivation because they have an impact on the process.

Anything you’d have done differently? I wish we had done this earlier.

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Driving Ideas Ideas move fast when their time has come.

NORDIC PRODUCTIVITY: The facts, the fiction and the future. Last year Celerant Consulting carried out a major online survey of 175 Nordic Business Leaders to establish the bottom line on Nordic productivity.

‘In Nordic society, the incentive to work is diminishing and the urge to put in extra effort is disappearing. This is in sharp contrast to foreign competition.’

Profile: 30% Top Executives, 70% Senior Executives. 12 sectors with 50% from Manufacturing & FMCG. 15 functions with 36% from Operations & Production, 28% from General Management.

CEO Global Transportation.

1 The Nordic Perspective I

35%

Productivity levels in Nordic countries are all below the OECD average.

39%

26%

Probably

CEO Consumer Goods & Services.

2 The Global Reality I

Do you believe productivity levels in the country where you work are comparable with other countries?

‘People are creative and full of ideas. If you have the right staff, you get good input and good productivity.’

Slovakia 120

South Korea 118

USA 106

Ireland 106

OECD Avg 103

Finland 101

Sweden 99

Denmark 97

Norway 95

YES AVERAGE LABOUR PRODUCTIVITY 2009 INDEX: 2005 = 10. SOURCE OECD

3 The Global Reality II

4 The Nordic Perspective II

Productivity increases are significantly lower in Denmark and Norway – a worrying trend. Slovakia 5.1%

South Korea 4.3%

Ireland 2.5%

USA 2%

Finland 1.9%

Sweden 1.8%

How much has productivity increased in your business unit/department in the last year? 5-10% 0-5%

Don’t Know

OECD Avg 1.7%

Norway 1.2%

Denmark 0.3%

AVERAGE ANNUAL PRODUCTIVITY INCREASE 2000-2008 (%). SOURCE OECD

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20%+

23%

25%

34%

11%

Nordic Productivity Survey

5 Productivity Levers

6 Improving Value Chain Productivity

What do you think are the most important levers for productivity? 90%

Where do you see the biggest productivity increases coming from in your value chain?

84% 69%

69%

75%

67%

58%

54%

48% 34% OTHER (SUPPLY CHAIN)

SALES & MKG

R&D

manufacturing

TECHNOLOGY/ INVESTMENT

WORKFORCE

TRAINING

COMMUNICATION

BETTER PROCESSES/ SYSTEMS

MANAGEMENT

7 The Power Of Productivity

How do you classify productivity gains? CONTINUOUS IMPROVEMENT

PREREQUISITE TO SURVIVAL

48%

33%

Competitive advantage

OTHER

16%

8 2011-12 Nordic Productivity Targets

What is your target for improving productivity in your business unit/department this year?

8% 0-5%

22% 5%

51% 5-10%

10% 20%+

3% DON’T KNOW

6% NON REQUIRED

9 Measuring Personal Productivity

How do you measure your own productivity?

48% FINANCIAL VALUE I CREATE

25%

13%

11%

I DON’T MEASURE IT

TASKS I COMPLETE PER DAY

OTHER

3% SPEED OF TASKS I COMPLETE PER DAY

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Driving Insights Success always demands a greater effort.

REDISCOVERING OUR HUNGER. Working harder and smarter to raise Nordic Productivity. Productivity figures for all Nordic countries are consistently below OECD average. Business leaders know this must change, says Hans Lindeman, Head of Celerant Consulting Nordic and with the right leadership and the right vision it can.

hat did we learn from our Nordic Productivity Survey detailed on the two previous pages? When asked the question: Do you think productivity levels in the country where you work are comparable to other countries? only 39% of respondents agreed and even they were wrong. Nordic productivity generally lags behind many 1st world countries.* In addition, the Nordic workforce generally works less than many other developed countries, productivity is rising more slowly and the gap to countries that we typically compete with is growing.

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Business leaders know this must change and 51% have a target of improving productivity by 5-10% in their business unit or department this year. They also believe that change will take time and this is underlined by the fact that for some, ‘The Nordic Model’ is seen as a block or a challenge to improving productivity. The bottom line is that all Nordic countries are going to have to work harder, smarter and add more value to everything they do in order to stay competitive on the global stage. The positive results of the survey however, suggest that our

Nordic Productivity Survey

respondents believe that we have many of the traits that are necessary to improve such as high education, political stability, creativity and global experience. Increasing Value Added work So how do you create a performance based business culture? One that is continually challenging people to learn, to grow, to improve productivity, freeing up information, democratising problem solving and giving people the autonomy to be successful? A critical lever is to work smarter. And the quickest way to work smarter to improve productivity is to get everyone in the organisation to increase their Value Added work - and stop doing things that don’t Add Value. The Celerant Consulting Workforce Impactability Study 2011 demonstrated the dramatic impact this can have. It tracked the daily activities of 200 middle managers from 6 different industries in the US and after assessing more than 11,000 work hours, demonstrated 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 improve the value add they generate. This also 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. Celerant Consulting’s Operational Transformation Service Line has a track record of improving productivity by changing behaviours - and what changes behaviours is simultaneously addressing management systems, processes, people and skills. Our robust MCRS® Management System creates alignment from the boardroom all the way down to the lowest person on the floor and back again. This enables an organisation to create accountability at the lowest possible level. Creating this holistic perspective and process allows Managers to make the right decisions,

improve communication and reduce the negative effects of errors from one department or function to the next. In addition, a team that understands its contributions and feels connected to the entire programme is more motivated to improve performance. Doing more with less All Nordic countries are well placed to improve. They have high levels of education, stable political models and their citizens are not yet exposed to the type of extreme short-term measures that the Greeks are. Over the last decade Sweden has demonstrated its ability to change and improve its competitiveness and financial strength, and along with Finland is reasonably placed in terms of productivity and hours worked compared to the rest of the world’s high-productivity countries. However both countries must continue their focus on improving productivity growth and building on past strengths, especially Finland which is facing increased national fiscal challenges in 2012. Norway is in a special category due to its reliance and income from fossil fuels. However, considering that its workforce work fewer hours than any other country in Europe, it should invest and focus on productivity to provide a back-up plan to its reliance on oil and gas and take a leadership position in sustainable development. Clearly at the back of the pack is Denmark, which is facing a very bleak future if it does not do something drastic soon. It has very low levels of productivity growth coupled with a workforce that works comparatively few hours. In addition, it carries the burdens of a very cost intensive welfare system and a growing budget deficit. Faced with increasing corporate taxes a growing number of corporations are considering moving the workforce out of Denmark. If this imbalance is not changed very quickly, the long term effects

could be devastating. It is a negative spiral that could take many years to get out of. Back to the future Developing a culture of working harder and smarter is the biggest challenge facing Nordic business leaders today and our survey shows that they believe that the Top 6 drivers to achieving this are management, better processes and systems, better communication and training, an engaged and motivated workforce and investment and the overall economy. At Celerant Consulting, we believe that more management won’t help, but better management will – and when it’s combined with better systems and processes it will actually have a profound effect. There is also no doubt that in the medium to long term, communication and education will have a very positive and lasting effect. Many people in the Nordic region appear to have become complacent about competition, believing that somehow because our companies and corporations have been world leaders in innovative practices, technological advances and value creation we’re immune to the challenges of global competition. Such complacency has been seen before. Take for example, the Japanese economy. From the 60s to the 80s the Japanese led the world in innovation, technology and improving productivity. Today, that advantage has all but disappeared as the country has stagnated. The Nordic region is definitely not immune to global competition and we’re going to have to rediscover our ambition and drive. We’re going to have to work much harder and much smarter to keep all the benefits that we enjoy in our societies. Involving, motivating, leading and above all rekindling the hunger in our employees has never been more important.

‘ Hard work and ingenuity created our present. Now they must protect our future.’

* AVERAGE LABOUR PRODUCTIVITY 2009 INDEX: 2005 = 10. SOURCE OECD CLOSEWORK® GLOBAL REVIEW 2012

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

Celerant Consulting changes business for good. Celerant employees can also change lives for good. Just like Pamela Griffin in Tanzania.

Leaving my mark on I’

ve been asked many times by many people why I keep going back to Ipalamwa, Tanzania with Global Volunteers? My answer is that these pictures speak a thousand words. My answer is also in the words of Antoine De Saint-Exupery: ‘A rock pile ceases to be a rock pile the moment a single man contemplates it, bearing within him the image of a cathedral.’ I see more than a broken down school and a village with none of the basic infrastructure that we take for granted. I see potential in every child, student, teacher and villager. They know education will help provide them with a better future and I want to be there side by side helping them to

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build their cathedral, just as I work side by side with my clients.

beans, organizing donated books into a usable library and so on.

My personal motto is ‘Everyone Reach the Moon and Stars.’ It’s about dreams and making them a reality, similar to Global Volunteers motto ‘Leave your mark on the world.’ I love that everyone I meet in Tanzania cherishes the moment we volunteers arrive and are there teaching them English, Math and Geography in the classroom, as well as providing our personal expertise. I use my business planning skills to help the local Global Volunteer staff with their many projects: building a clean water system, reconstructing the school dormitories, building a new out-house, cultivating the land to plant next year’s crops of maize and

Besides the structured time, I cherish just walking through the village talking to the students, sharing our beliefs, dreams, and fears. It’s amazing what you can learn sitting outside a little shop, drinking a warm coca and talking with your rafiki (friends). So far, I have chosen Tanzania as my home away from home, but Global Volunteers has programs all over the world. If you are interested, please visit them at globalvolunteers.org or contact me direct: pamela.griffin@CelerantConsulting.com

globalvolunteers.org

the world. Global Volunteers’ unique philosophy of service requires volunteers to work at the invitation and under the direction of local community partners and one-on-one with local people. Somewhere in the world a child needs your help. As a Global Volunteer you’ll put your personal skills to work nurturing, teaching, feeding, planting, building, shaping - and often, saving children.

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

Feeding A Demand For Mexican

Safety First. Safety Last.

BUSINESS CHALLENGE The client is a major North American food company. Demand for its Mexican frozen food was booming, so it needed to maximize plant production to guarantee customer satisfaction. The facility presented a number of challenges, including an inexperienced group of operators and mechanics, a lack of structured processes and a divided management team with poor management practices. Equipment was showing signs of deterioration because of poor reliability and maintenance and there was limited visibility into where and why bottlenecks were forming and the best way to correct them. To further complicate things, the existing tortilla bakery section was to be decoupled from the rest of the production line and a new one built in an adjacent building. Product quality and food safety were an absolute priority, so Celerant Consulting was appointed to help the company transform the site.

BUSINESS CHALLENGE The client, a leading North American chemicals company, first appointed Celerant Consulting for a major project at one of its biggest plants that focused on waste water excursions, overall equipment effectiveness and operating budget improvement. With success in all areas, including a reduction in waste water excursions to zero, Senior Management now wanted to use the momentum from that project to improve personal safety at the facility.

CELERANT SOLUTION To ‘regain control’ of the production process the Celerant Team installed a cross-functional problem solving system to fix the root causes of recurring issues and used Closework® to teach improved methods on the line, facilitate clear communication and create a cohesive working environment. They also trained people for the separate baking facility and integrated them into the new processes. Then when a sister production site was fire damaged and its production transferred over, Celerant supported the conversion of one line to include eggrolls, an entirely different process from anything existed. At senior management level, Celerant also coached selected managers to promote fact based decision making and a real results focus. RESULTS The plant made a profit made for the first time in 3 years. •Overall OEE improved significantly and labor costs and material waste were reduced. •Emergency maintenance was halved and schedule compliance dramatically increased. •Preventive maintenance procedures, reliability SOPs and a new MCRS® Management System to drive Continuous Improvement were installed.

CELERANT SOLUTION Celerant conducted a safety assessment and as a result partnered with the site leadership team to execute a safety improvement project to raise safety awareness and develop a culture and approach that would drive sustainable safety performance improvement. To execute the project, the joint Taskforce focused its efforts on: Safety Strategy including integration of site goals to corporate initiatives; Safety Initiative Management with a focus on effectively managing execution of selected improvement initiatives; The Management Control and Reporting System incorporating leading safety performance indicators in site safety performance review; Plant Safety Communications to raise awareness on the job as well as awareness of new safety initiatives; Environmental Health & Safety Employee Councils to increase workforce engagement in safety improvement; Incident Investigation Process Improvement that included the consistent utilization of structured problem solving to identify and address root cause. The execution team was supported by an overall steering team that helped expedite decision making and issue resolution. RESULTS The entire organization was successfully engaged throughout the project. •All project deliverables were completed. •The new systems, processes and behaviors that were implemented for a sustainable safety culture meant that the organization could drive continuous safety improvement once the project was complete. ‘I actually feel that we’re making a big contribution to the long term success of the plant. I’ve never before worked on a project where I felt I was having that kind of impact.’ Client Co-Project Lead

Manufacturing 36

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Chemicals

The Prescription For Success

Enabling Core Growth

BUSINESS CHALLENGE The client, a major pharma company, was presented with an opportunity to gain a significant edge with one of its specialized drugs. Setbacks among its competitors had created an open field for a dominant prescription which was the clear favorite. A contract manufacturer ran the primary production facility and was expected to meet the incoming spike in demand, however, the company’s 2 facilities in the Caribbean were not up to the challenge. One had been earmarked for closure, calling for consolidation of all production to the remaining plant. Inadequate equipment and the short time frame made this impossible, so the plant previously earmarked for closure had to be brought back to life to lead the way for production. Celerant Consulting was brought in to help make it happen.

BUSINESS CHALLENGE Following Celerant Government Service’s success with a sister organization, a U.S. Army Program Office asked us to conduct an in-depth analysis of its operations following a Base Realignment and Closure (BRAC) move. A resource drain due to the move, service level drops, funding concerns and other related issues showed that improvements were urgently needed. Objectives for the analysis included: review management’s strategy and imperatives, understand the current organization and capabilities, assess the BRAC status and implications and lay out an objective course of action for improvement.

CELERANT SOLUTION The Celerant Team implemented a 24 week crossfacility plan, focusing on rapid design and installation at the first plant, followed by replication at the second. The assessment pointed to subpar equipment effectiveness and non-conforming behaviors that slowed the process. The Team looked at 2 areas of concern: manufacturing and quality. In manufacturing, they focused on improving throughput by identifying major bottlenecks and establishing short interval control to monitor and correct the flow. The quality workstream focused on the critical path of record review and disposition to level load the month and shorten the lead time to shipment. They also focused on dynamic scheduling and short interval control to reduce lab errors and cycle time. In addition, the team recorded the process, implementing visual management and active feedback loops for operators to help reduce documentation errors. RESULTS Over 120 batches consistently produced. •Overall asset utilization was significantly improved. •Active supervision was doubled. •QC lab cycle time, overall record review and disposition cycle time and QA record review cycle time were all improved. •Client record review cycle time was also improved by one third.

Life Sciences

CELERANT SOLUTION The Celerant team launched an analysis to understand the current state and capability of the client’s organization. It examined the root cause and drivers of the current level of organizational performance that are process, system and structure driven; the organization’s performance potential; quick win improvement opportunities and an integrated implementation plan to identify any support required to achieve a sustainable state. As a result of this analysis, Celerant was awarded a follow-on contract to: develop key focus areas and contact points to provide real-time data and information to facilitate required work product output; conduct a post BRAC organizational workshop; complete a Fiscal Year 12 staff tax forecast and develop a logistics cost breakdown and program management reporting structure; develop detailed schedules and cost breakdown estimates for PBL; develop future state organizational design and master documentation to include concept plans for military, core, matrix and contractor personnel; establish battle rhythms (MCRS®) that will include a management system, meeting structure in calendar format and a key report structure; develop and negotiate Functional Support Agreements with all supporting organizations. RESULTS A new, proactively oriented organizational structure, well suited to the demands of the current operating environment is now in place. •Functional support groups with clearly identified requirements and expectations have also been installed. •The client is now prepared to enter the Performance Based Logistics (PBL) arena fully confident in their ability to be successful.

Government Services

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Driving Ideas Ideas move fast when their time has come.

THE FORMULA FOR A SUCCESSFUL CHANGE PROGRAM. To increase the likelihood for success, all major organizational initiatives must have complete buy-in and support from the organization’s leadership throughout the initiative. Buy-in must start with the senior leader.

Build relationships with senior leaders to ensure their engagement, commitment and contribution to the project.

Ownership for results must be clear and in most assignments a leader should be assigned from the client’s team.

The client must own every action and decision.

Do not allow the project scope to have unreasonable changes. Limit scope creep! Agree on deliverables from the beginning and communicate progress frequently.

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Understand the vision or long term expectation then build plans to achieve progress on near term milestones that are developed for the long term vision.

Develop short term targets, but build long-term platforms. Establish and adhere to clearly defined deliverables.

Two way communication is essential throughout any project. Ask questions to fully understand an opposing point of view and clearly explain the reasons for your point of view. Through inquiry and advocacy you should reach an agreement on how to proceed with any initiative.

6 Understand the client’s view point through inquiry and build your advocacy for support or for an alternative path.

oughton Chemical CEO, Paul DeVivo, recently spoke to Celerant Consulting Americas about his experience implementing Change Programs. Drawing on real-world examples from his 30+ year career with organizations like Unitor, Valspar, Ashland and Houghton, he shared his ‘10 Learnings’ that serve as a project implementation tutorial for Clients and Consultants alike. These Learnings have helped Paul and his Management Teams execute a great number of successful programs over the years.

Houghton is one of the world’s largest and longest established suppliers of specialist industrial metalworking fluids and fluid management services.

Rewards and recognition of results may take time to be realized and appreciated. Be patient.

Be patient for the pay-off on your efforts.

In all significant projects metrics should be developed for measuring the success of the project. ‘Before measurements’ compared with ‘After measurements’ should clearly indicate the project’s success or failure. Choose and agree on the right metrics. Take frequent ‘During Measurements’ to ensure that you are tracking toward targets and to determine if adjustments need to be made while you still have time. Waiting until the end of a project time line is too late to make adjustments.

Take measurements before, during and after all projects.

Every project should add to your skills if you are open to process improvements along the way. Sometimes the improvement ideas can come from the least expected source. Stay open for learning.

Enjoy the challenges, celebrate even the smallest victories, share praise, stay positive, smile often and engage the entire team to enjoy the effort. If this seems too much like hard work -look for another career.

Have fun along the way.

This is worth repeating. Many projects are carve-outs from a much bigger project vision. It is too easy to expand the current defined project scope with elements that belong in future projects. Limit scope creep.

Recognize that Continuous Process Improvement builds skills for future engagements.

Limit project scope creep. Stay focused on the project at hand.

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

‘ In only 30 weeks we have exceeded our targets. We have the right structure in place, a skilled team and the full engagement of our staff on site to sustain and drive Continuous Improvement.’ Sean McHugh, Group CI Manager.

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LEADING THE FIELD. When Irish Dairy Board wanted to create a culture of Continuous Improvement at 3 plants in Europe, it asked Celerant Consulting to get down on the ground and help drive results up.

rish Dairy Board was looking to improve operational efficiency in anticipation of the increase in dairy output forecast from the removal of milk quotas in 2015. The Executive Management Team therefore decided to launch a LEAN Initiative to align operations and introduce a culture of Continuous Improvement into the business, starting with three key locations in Europe. After a competitive bid process, they identified Celerant Consulting as the ideal partner to make this happen by introducing the new behaviours that would be needed to create this culture of Continuous Improvement. Rising to the top The project started with the deployment of an Operations Excellence initiative across the three European sites to develop new ways of working

based on LEAN Principles and internal best practice. Celerant focused on standardising Operating Procedures and installed Short Interval Controls to improve process stability. Kaizen events were performed with Operators and Team Leaders which focused on standardising operating procedures and improving product flow. Celerant also introduced a comprehensive MCRS® Management System that enabled the three sites to standardise their performance measures and implemented a Root Cause Analysis and escalation process to eliminate production issues. LEAN training and behaviour coaching at all levels of the organisation, from Plant Managers to Operators, helped to embed these new changes and create the culture of Continuous Improvement that was evident by the improved OEE and Yield KPI’s.

SUSTAINABLE RESULTS • The project was completed in 30 weeks and rolled out across all three sites. • 5S audit scores measuring workplace efficiency and effectiveness improvements rose from 60%- 85%. • System Implementation Status audits achieved a level of 80% at all sites, which means that real behavioural change has taken place and a culture of Continuous Improvement has been created. • By project end more than 40 Production Team Leaders were trained and certified in LEAN, led by Continuous Improvement champions at each site, with ownership for sustaining these results.

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

Creating Global Value Acceleration Celerant Consulting Operational Transformation Global Experience In today’s fast changing environment, companies faced with unprecedented and unpredictable change, may choose to seek shelter and ride out the storm. However, times of market turmoil also create significant opportunities to create sustainable competitive advantage. At Celerant Consulting our aim is to partner with clients on their LEAN journey, helping them to create more effective, nimble and flexible organizations and take advantage of these opportunities. Celerant Consulting focuses on all critical elements for successfully transforming clients business operating model, globally and end-to-end, in all industries & services. Golden Rules Get results as a way-of-working, not as a one-off programme: • Emphasize LEAN thinking, not lean tools. • Make leaders own and inspire lean thinking. • Work top-down, bottom-up and end-to-end. • Think big, start small. • Focus on reducing waste and invest in growth.

EXPERIENCE 1

Challenge: A Pan-European Improvement plan to deliver the targeted savings

Challenge: A comprehensive change programme to ramp up operational efficiency

Location: Nordic and Eastern European countries

Location: Canada & Europe

countries where the programme was implemented.

Sector: FMCG

‘I have seen many projects but this is definitively one of the best ones. The rigour in multi-site project management is clearly one of the key success factors.’ CEO

EXPERIENCE 2

Sector: Chemicals

‘The good thing about Celerant was that they delivered on their commitment.’ Managing Director

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call wait time reduction

EXPERIENCE 3

Challenge: Developing a lean efficiency organisation and a strong platform for growth Location: Europe Sector: Financial Services

‘All the evidence shows that we’re now achieving best practice in healthcare insurance. I can honestly say I don’t remember another project which achieved so much so quickly and within sound financial parameters. I wholeheartedly recommend Celerant.’ Director

higher financial benefits than targeted

EXPERIENCE 4

Challenge: Improving the level of performance to meet the new business opportunities

Challenge: Putting Customers at the heart of the business

Location: North Sea

Location: New Zealand

Sector: Energy

Sector: Telecoms

‘Getting to top quartile production efficiency had always been one of the goals. But actually getting number one in the last month of the project gave a real sense of satisfaction.’

‘Celerant supported us to build the framework, driving the delivery and increase our capability to continue improving the customer experience’

400m

solid programme management office built

total annualized value

Senior Project Manager

EXPERIENCE 5

CEO

EXPERIENCE 6

Challenge: A global programme to deliver Operational Excellence

Challenge: A multi-cultural Change Programme to keep global brands rolling off the line

Location: Worldwide

Location: Africa, Americas, Asia & Europe

Sector: Life Sciences & Healthcare

Sector: Manufacturing

‘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 that was a great experience.’

‘Our top client scored us as the best performer on installation among its different worldwide suppliers.’

270m

sustainable cost savings

continents where the programme was implemented.

EXPERIENCE 7

Vice President

President

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Driving Ideas Ideas move fast when their time has come.

MANAGING GROWTH IN A HIGH GROWTH REGION: From Supply Chain Nightmare to Supply Chain Wonderland.

atin America has a jaguar by the tail. Led by Brazil, Colombia, Chile and Peru, the region is experiencing tremendous growth fuelled by huge natural resources, lower than historic inflation, a strong manufacturing base, rising exports, increased foreign investment and middle class populations that are growing wealthier each year. But success doesn’t just breed success, it can also breed opportunities and many Latin American companies are now at a crossroads in their development.

that demand depends on an optimized Supply Chain and managing that Supply Chain has become a complex challenge for many Latin American companies.

There are exciting national, regional and international opportunities for growth. As a result, productivity, efficiency and capital allocation are critical. There are also big challenges in maximizing these opportunities with new assets, new equipment, new people or newly trained people, because it all takes time. They need to get the most out of what they already have. People, structures, machinery, logistics, every aspect of the business must be put under the microscope to create an optimized, adaptable, growth grabbing organization.

To do this they first need to make sure they’re absolutely customer centric, so they can always have the right products, in the right quantities, in the right places, at the right time. That means asking questions about every step of the process, from sourcing raw materials to designing the product all the way through the manufacturing environment and putting it before the end consumer. How well are we really managing and collaborating with our customers and our suppliers? How do we decide when to switch from ‘We do it ourselves’ to ‘Let’s source some readymade product and customize it in country.’ How do we build our talent factor? What new management systems and new processes do we need? And what’s our most effective organizational structure to create long term, sustainable growth? It all goes back to what the operational strategy is because for many companies rapid growth has totally changed the business model.

We like to describe it as having a certain sized shirt when you were 5 years old and now you’re 15 and you’re breaking out of it at the seams. Many Latin American companies have simply outgrown their old business model and need to design and implement a new one that better fits their new size. Everything depends on your Supply Chain In the older global economies, with little or no growth, supply is much higher than demand, so the challenge is to do the same with less, or less with much less. In Latin America, particularly Brazil, the exact opposite is true. Demand far outreaches supply, but satisfying

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These companies need to adjust their operational strategy to develop a Supply Chain model that is flexible enough to cope with even the smallest changes in supply or demand and at the same time optimizes their working capital, costs, cash flow and service levels. This requires Operational Excellence in Supply Chain.

Making working capital work harder Another Supply Chain challenge that needs to be overcome is the issue of working capital. In such rapidly expanding markets a lot of organizations haven’t been disciplined enough as they’ve grown. They have simply said ‘Right,

let’s do it, we need to grow at all costs,’ and then have realized that they have a significant demand on working capital and that the cost of growth is too much. They need to really focus on their working capital, optimize their inventories, cash flows and solve this problem. There are also the challenges brought on by new or different sales channels. A number of companies in Brazil, for example, have started selling through the internet, which is quite a new thing. Others have decided that they’re going to go direct to their end customers, rather than just sell through distributors. Some are even thinking of opening their own retail stores. Their Supply Chains need to be totally flexible because it’s very different to ship bulk product to Walmart than it is to ship product to perhaps 2,000 of your own retail stores. An added complexity is that not every segment of your customer base has the same needs or wants from your product. So what assortment flexibility are you going to carry in your product portfolio? Latin American businesses used to believe that they could bring about all these changes themselves. There’s a much greater sense of urgency because they know they don’t have time to develop internally. Rapid growth has fuelled a huge demand on talent within the business, so they simply don’t have the capacity to assign teams to work on internal Change Programs. Moving from a Supply Chain nightmare to a Supply Chain Wonderland requires vision, tenacity and a group of committed partners. Celerant Consulting together with Tantum Group/Symnetics understand the challenges and has a global track record of helping companies overcome them and reach that promised land.

Many Latin American companies are now regional or global players, say Gustavo Rojas, Managing Director at Celerant Consulting, Latin America and Mathias Mangels, Managing Director at partner company Tantum Group / Symnetics. But they need to balance their rapid growth with sustainable internal change.

‘ Success doesn’t just breed success, it also breeds opportunities and many companies are now at a crossroads in their development.’

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Driving Ideas Ideas move fast when their time has come.

Entrepreneur is a French word, but just how entrepreneurial are French companies?

n France, collaborative, cross-disciplinary organisations are still few and far between, says Françoise Berthier, Head of Change Support /Human Resources at Sanofi. Yet compared to traditional pyramid structures, they allow far more room for interconnection and innovation.

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Organisational Structure

What do you believe powers innovation? Creativity, efficiency and rapid decision making. Creativity enables a person, a team or an organisation to produce new ideas, concepts and solutions. Rapid decision making is there to guide creativity and point it in the right direction – the direction of real innovation. By connecting people who have complementary ideas, information or skills, cross-disciplinary organisations stimulate creativity as much as they supervise it. Compared to traditional pyramid structures, they allow more room for interconnection and freedom of expression, so ideas multiply, concerted decisions are made swiftly and this fosters the emergence of innovation.

Why are ‘virtual collaborative platforms’ so conducive to innovation? I think it’s because they provide a unique space, a virtual space, where people who might not meet in their everyday jobs can share ideas,

identify possibilities and generally gain from one another. Within this space, communities can form across the entire organisation on the basis of ideas, experience or common interests.

Is a cross-disciplinary approach the only way forward? Many organizations are recognising that it is. We have reached the limits of overly vertical systems where decision making processes are slow and individuals don’t cooperate or share their ideas enough. All collaborative horizontal systems, whether virtual or otherwise, offer a new way of working. They make our employees more accountable, optimise the development of ideas and effectively leverage the innovation process.

Is this a turning point in French corporate culture? I believe that it is. For many companies however, this change will be a real challenge in itself. In a vertical system, some managers have become

used to closely supervising their teams, which can prove counter-productive when pushed to extremes. Horizontal structures change a manager’s role: he or she becomes an advisor, even a coach for the other team members. They in turn become more responsible as the manager steers their work and their thinking around to openness and cooperation. Identifying how to cooperate or how to get others to cooperate to strengthen projects and results is absolutely key to innovation.

How easy will it be to implement? It all depends on the existing corporate culture. No change can be made ex-nihilo or be totally radical. A company which doesn’t already place the emphasis on cross-disciplinary cooperation will have difficulty introducing such information systems. On the other hand, if there is a real ambition, they can contribute to the change and encourage staff to share their ideas and innovate. The primary condition is that Management conveys a strong message around the collaboration project. A message that collaboration equals innovation.

‘ By connecting people who have complementary ideas, information or skills, cross-disciplinary organisations stimulate creativity.’

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

lmost three billion people live on less than $2 a day across the world’s developing countries. Poverty is a vicious cycle that deprives one generation to the next, leading to inadequate schooling for children, low levels of employment, major health issues, and increased crime, stress and hunger – all of which further exacerbate the situation. Between October and December of 2011, I was fortunate to have been selected by TechnoServe to join its Volunteer Consultant program in Mozambique. TechnoServe is a DC based economic development NGO with a mission to eradicate poverty by empowering rural poor people to build businesses. My project was to develop a business plan and financial model for the first commercial soya production and processing venture in Niassa,

a province of Mozambique. Described by the locals in Portuguese as ‘Fim do Mundo’ or ‘The End of The World’, Niassa is one of the world’s poorest communities. The premise for the soya-based venture is to create an Agro-Forestry Village, which is an integrated approach to rural development that combines forestry development with commercial and out grower agriculture. The goal is to uplift poverty by creating additional cash incomes for small-holder subsistence farmers. These incomes can then be used to pay for food, education, healthcare and so on. You get back as much as you give Over the course of the three months that I was there, I worked closely with the management team of my client, local technical experts and industry advisors. The difficulty of working in a country like Mozambique cannot be overstated.

‘ What’s most rewarding is the opportunity to take part in an innovative venture that will ultimately create hundreds of jobs and benefit thousands of locals.’

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The complexity of addressing the needs of multiple stakeholders and empowering the poor to endure short-term risks are further hindered by the tough business and cultural environment: a lack of high quality managers, poor infrastructure, high financing rates, a limited working culture and the prevalence of corruption and employee theft are just some of the issues that local businesses face daily. The experience in Mozambique has allowed me to gain a completely new perspective on the world from both a social and a business point of view. I have also thoroughly enjoyed exploring the local culture – food, music, arts and language, as well as making a number of new friends. But perhaps what’s most rewarding is having the opportunity to take part in an innovative venture that will ultimately create hundreds of jobs and benefit thousands of local people.

Clients don’t usually ask Consultants to help them totally change people’s lives, but that’s exactly what Technoserve asked Celerant Consulting’s Howard Sun to do in Mozambique.

A NEW BEGINNING AT THE END OF THE WORLD.

If you’re interested to learn more about TechnoServe or about my experience, please visit: technoserve.org or contact me directly howard.sun@celerantconsulting.com

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

Research by the Lean Enterprise Research Centre shows that improvement potential is greater in a services environment than a manufacturing one, says Ruth Morton, Manager at Celerant Consulting UK. 1

ccording to recent researches, 50% of customers across Europe have lost trust in their banks. They’re also more likely to change banks now than they were 10 years ago. Some of the reasons for this are obvious. The global footprint of multinational banks has changed beyond recognition and the customer is often now far removed from their operation. So the challenge for all Financial Service companies is how to make their organisation seamlessly and sustainably customer centric? Financial Services were the first to adopt inhouse developed ERP systems back in the 80s, but because of its risk policy, the banking sector could not rely on third parties to develop its in-house systems. The result was that ‘batch thinking’ was almost invented in the financial services industry. As processes became more and more technology dependent, banks became too big and too slow to adapt to the

ever changing environment. Any change, no matter how small, became a major challenge in terms of risk and implementation cost. More importantly, the mindset of many people within Financial Services became change-averse. Today, the biggest need within the banking sector, but also the biggest challenge, is to implement LEAN thinking – total customer focus, empowerment for change, results ownership, out-of-the-box thinking and a culture of Continuous Improvement. These are the new ingredients for successful banking. Transform your business Celerant Consulting are change experts. We understand what makes LEAN work and have delivered hugely successful transformation programmes across the Financial Services industry. The global programmes we design do much more than reduce costs, they create sustainable value.

LEAN IN FINANCIAL SERVICES: Money might make the world go around, but people and processes make the money go around.

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A key sector learning has been that most financial institutions have grown complex because of their size and/or multinational footprint. As a consequence, little end-to-end process knowledge, let alone result responsibility for it, exists. In addition, we have found that financial institutions have defined less incentives on operational excellence (leading) but more on financial results which are measures that are lagging current reality. Finally, in most cases the responsibility for these financial results is a group responsibility, leaving it unclear who is responsible for the day-to-day operational results, and therefore continuous improvement. Instead of challenging the current reality, most organisations are set to a ‘Command and Control’ model where activity and people are closely managed, so they’re quite opposite to a transparent LEAN based company - in other words: the product is too detached from the operation; process ownership often sits outside day-to-day operations, resulting in high variations of process application.

The goal of LEAN is to open up the work process and streamline hierarchies. LEAN programmes must therefore be applied vertically as well as horizontally to mobilise everyone – and leadership has a key role in making this happen. Horizontally or end-to-end: Without having the full process view, you risk to sub-optimise pieces of the process that in the end, will not have a significant impact on the customer. Vertically or top-down as well as bottom-up: Our research has shown that most LEAN programmes either focus too much on tools and training and not enough on results, or the exact opposite. We believe 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. • Ensure clear targets are set and understood by the workforce. • Combine operational with tactical results. Value Acceleration Value acceleration represents the vertical and horizontal integrated approach applied when designing and deploying Lean programs. It’s about getting it ‘Right First Time’ whether that’s solving an issue or ensuring the right conversation takes place. 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. Value acceleration is based on 3 fundamentals which are explained further: • Defining lean in the company’s operational strategic context as opposed to a shopfloorrelated project • Focus on pro-active thinking by implementing a management system that allows the company to pro-actively manage operational results so that tactical and strategic results are reached on time and in full • Introduce Lean leadership and therefore actively involve those levels that are necessary to take fundamental decisions during the program. Corrective Thinking to Pro-active Thinking In our experience, Financial Services companies tend to be solution focused and uncomfortable with taking time or using data to get to root causes. The upshot is that the only problems that get discussed are the ones with proposed

solutions. When that solution doesn’t work because it didn’t solve the problem - a new solution is automatically proposed, rather than anyone looking into the root causes of the problem. The situation is often made worse by the lack of first class operational KPIs – there might be lots data, but very little information that links the operation to the operational strategy. This reinforces the silo mentality, but more importantly, prevents managers from spending time on the floor where value is added. We have known situations where managers didn’t even know where their team were situated and were fearful of going on to the floor. Our MCRS® Management System is designed to create alignment and support translation of the business strategy into measurable performance at all levels of the organisation. It creates an integrated information flow from executive level to the cutting edge – and back again. It helps managers prioritise and focus on key issues. It also closes the loop on performance by using agreed KPIs and fact based decision making and reinforcing accountability for identified action to support Continuous Improvement. MCRS® drives the move from Corrective thinking to Preventative thinking. Maximise LEAN Leadership People are absolutely key to successful Financial Services organisations and they cannot be controlled in the same way as machinery. Staff often work in an island, with poor process visibility and a lack of data to drive effective decision making. Industry culture also means that generally people are incentivised to follow processes unquestioningly, rarely using their initiative to solve problems or improve their work. This is reinforced by a hierarchical structure that prevents a clear line of sight across the value stream, and the fact that while there’s a high turnover at the top of organisations, further down into middle management there’s little fresh thinking, creating stagnant processes and little push for change. In this environment, behavioural change is vital for success. You are not asking someone to change a machine setting, but to change the way they behave. In the set up to any LEAN programme, Leadership’s most important task is to create the climate for successful change

1 Going lean: Published by: LEAN Enterprise Research Centre, Cardiff Business School, Peter Hines & David Taylor, 2000.

‘ The global programmes we design do much more than reduce costs, they create sustainable value.’ 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. With our unique Closework® approach, we work side by side with all layers of the organisation to fully implement a LEAN transformation. We combine all the process, system and people elements with real behavioural change, resulting in sustainabile operational and financial results. As one of our recent clients said ‘This is the first programme we’ve had that actually implemented something.’ We also 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. Changing your culture is the key to everything According to research commissioned by Harvard Business Review, the most effective aspect of LEAN thinking in Financial Services is the ability to speed up ‘mistake making’ - but achieving this requires real behavioural and cultural change, So 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? Transforming a business through LEAN thinking is a never ending journey and one of Celerant’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.

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Driving Insights Success always demands a greater effort.

MEET IN THE MIDDLE

What is the best strategy for Demand-Driven Supply Chains that don’t look like Dell’s? asks Gregg Macaluso, Director of the Supply Chain Service Line at Celerant Consulting, Americas.

CLOSEWORK® GLOBAL REVIEW 2012

e’re all familiar with popular examples of optimized Supply Chains: 5 minute, configured-on line, assembled-to-order computers; vessel loads of base-model Toyota Camry’s arriving in Long Beach to be later fit-to-suit regional or individual customer needs; even container loads of New York Jets home jerseys finished with Tim Tebow’s name and number between Sunday’s late-game heroics and Monday’s store opening.

The scenarios where pure Pull or Push strategies apply, even where there is postponement or Push-Pull boundaries are now better understood. Boxes A and B however, pose far greater challenges.

The advantages of late stage differentiation and Push-Pull boundary-setting are well documented and acknowledged.

A Specialty Chemicals supplier, aligned with wholesale and retail building repair/improvement providers, manufactures and distributes a finite, but industry-complete mix of commonly consumed specialty coatings and additives. In this Continuous Replenishment model, the supplier is given historical consumption data from the end-partner in the supply chain. It then takes point-of-sale or other near-real-time consumptive information, typically through shared technologies, and prepares supply to previously-agreed intervals to maintain specific levels of inventory downstream closer to the customer.

That’s great for all those companies whose product portfolio is suited to the established and most-often discussed consumer or discrete model. Demand plans get aggregated at family levels where they’ll be more accurate, scaled production is outsourced to a low-cost location, then provide for a manageable number of late-defined customer alternatives to be assembled close to customers with little or no waste. Sounds pretty good. But how can I guarantee success if my company makes specialty or bulk chemicals, provisions spare parts in a network, or makes products like highly regulated consumables like those used in segments of Life Science? What if the supply chain I manage doesn’t “have an app for that”? Is our only alternative to go back to a ‘Forecast & Sell at a Discount’ strategy?’ Maximize your position on the board (from Simchi-Levi, et. al)1 Demand Uncertainty

The Continuous Replenishment Model In situations where demand uncertainty is low but expected supply lead time short, the model used by grocery and wholesale food distribution might provide a hint to an alternative demand-driven supply chain model.

Overall inventory is owned by either party in these alliances, depending on their need and capability to hold it, but it’s amicably pooled and continually managed and refined by all partners to continually improve mutual investment in working capital and improve customer service levels. So much so that one of Celerant Consulting’s Chemical Industry clients recently adopted this rapid-replenishment strategy to reduce lead time between production, distribution and end consumption from 6 weeks to 3-5 days reducing the need for a working-capital intense network of supply.

B Pull

Continuous Replenishment L

Inventory Positioning

Push

A Short

Long

The Inventory Positioning Model In this model, the lead time is somewhat longer, usually a few days to a week instead of hours, but demand volatility (volume and SKU) is also less certain. So the role of inventory changes from having a limited number of products continuously available to having a wide variety and volume of products strategically placed so that once again investment and service levels can be optimized.

Celerant Consulting has recently been working with a Telecommunication Industry client to maximize its Inventory Positioning. The company has a mix of over 5000 network-service components that range in value from $50 to $10,000 each. It serves a range of clients that are guaranteed a level of service up-time/repair within a range of times, depending on the service and configuration of network involved. Historically, the company had forward-placed a large percentage of the mix close to the customer across a 13 state region. This translated to a wide range of material being placed in various quantities in literally thousands of locations no more than 100-200 miles apart over the regional service area. Upon analysis, we discovered that only 13% of the company’s customers required service within a 4 hour timeframe. This allowed us to consider a tiered inventory structure, where the most frequently used and generally less expensive spare parts are placed close to customers and the more exotic and less frequently used parts are pooled and located regionally. Reallocating the company’s inventory like this resulted in a 9 figure reduction in a 10 figure spare parts working-capital pool. Streamlining logistics-delivery to point-of-use also made technician inventory control less cumbersome and far more reliable. Supply Chains that are not typically noted or accustomed to nimble thinking about being demand-centric now have flexible alternatives. Today’s challenging economy demands innovation over ‘Forecast and Hope.’ Considering these alternatives may be a new way to profitably meet in the middle between Push and Pull. Gregg Macaluso is also Instructor of Supply Chain at the Leeds School of Business, University of Colorado-Boulder. 1 Designing and Managing the Supply Chain: concepts, strategies and case studies. David Simchi-Levi, Philip Kaminsky, Edith Simchi-Levi. 3rd edition.

Lead Time (to Plan, Source. Make, Move)

CLOSEWORK® GLOBAL REVIEW 2012

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

Defusing A Supply Chain Crisis

A ‘Barrel Chasing’ Mindset

BUSINESS CHALLENGE The client, a world leader in packaging solutions, decided to centralise its numerous spare part distribution platforms into a single hub, with the support of one of the world’s leaders in distribution and logistics. Within a few weeks however, it was obvious that this new platform simply wasn’t performing as efficiently as expected, leading to huge delays in delivery time. The situation drew critical internal and external customer complaints, a state of ‘crisis’ was declared by Top Management and Celerant Consulting was brought in to lead the response and resolve the crisis as rapidly as possible.

BUSINESS CHALLENGE The client is a global, diversified, upstream oil and gas company with a portfolio of producing assets. It had been running an Operational Excellence programme across some of these assets in Northern Europe for more than a year and wanted an independent review on progress. Celerant Consulting was invited to conduct an analysis of the programme and feed back its findings. Opportunities for strengthening the approach were identified, which resulted in a proposal for coaching the organisation to leverage behavioural change and accelerate benefits from the existing processes and systems. 5 assets were identified as locations for offshore support, with an onshore team providing design and implementation support across 3 workstreams, with a big emphasis on coaching.

CELERANT SOLUTION The priority was to recover delays and implement the agreed contractual services by the distribution partner in a sustainable way. A crisis governance structure, including a ‘Crisis Taskforce,’ was implemented to tackle non performance. Crisis meetings were convened twice a day to ensure short interval control of key crisis indicators, define recovery actions and ensure that they were followed up until full completion. Within a few short weeks, the collaborative relationship between the client and its logistic partner was re-established, thanks to the results achieved by the taskforce. 3 months after this turbulent situation, the crisis was declared officially over by the Top Management. RESULTS All key crises were addressed within 3 months: •Daily shipment delays were reduced by up to 95%. •The number of spare parts references waiting for reception on a daily basis was reduced by 90%. •The number of non conformities waiting for treatment on a daily basis was reduced by 85%. •The number of virtual gaps between IT systems was reduced by 95%. •The platform workforce are now managing themselves, platform performance and driving Continuous Improvement.

CELERANT SOLUTION The project’s aim was to deliver improved operating efficiency across the 5 supported assets by creating a ‘Barrel Chasing’ mindset. Working closely with the client team, Celerant’s experts quickly installed a number of Production Loss prevention processes, a Planning and Scheduling process and used its unique Closework® approach to coach Performance Management meetings in order to ensure compliance. RESULTS All assets are now operating above forecast target line. •PLE processes now fully installed and embedded. •4 key Performance Management meetings installed to reinforce the new performance focused culture. •An improved Planning and Scheduling process has also been installed.

‘Celerant provided us the appropriate methodology to solve the crisis in the most efficient way.’ Director of Life Cycle Management Worldwide.

FMCG 54

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Energy

Innovating On All Fronts

Building A Better Supply Chain

BUSINESS CHALLENGE The client is a new entity in the lighting industry created from different businesses and acquisitions, each with a different DNA and approach to Product Development. It was operating in rapidly changing landscape because of the introduction of Solid State Lighting and intelligent Controls (Systems and Solutions), so it needed to rethink the way it innovated to introduce new products and solutions quickly into the market. A 4 week analysis revealed an average slip of the active product portfolio of 45% and predicted a significant shortfall in its strategic growth ambitions by 2013.

BUSINESS CHALLENGE The client is one of the world’s largest producers of bricks, pavers and clay roof tiles and had grown rapidly through a series of acquisitions. The financial crisis of 2008 marked a turning point in the pattern of economic development for the global construction industry, so the company asked Celerant Consulting help it maximise cash flows by analysing areas for improvement and designing an integrated Supply Chain planning model that could be rolled out across the organisation. The key goals were to improve EBITDA performance, reduce working capital and provide first class customer service.

CELERANT SOLUTION The company decided to initiate a major Change Programme, beginning with their activities in Europe and then rolling out globally and asked Celerant Consulting to support the first 12 weeks of the Design & Training phase. The aim was to improve 4 key aspects of performance: reduce average Time To Market by 50%; reduce nonvalue added time on development projects by 50%; install a new MCRS® Management System with aligned KPIs; align the roles and responsibilities within R&D and Marketing. To make this breakthrough, Celerant established 3 work streams: Financial & Operational to align the project portfolio to long-term financial targets, with real-time transparency of existing and future projects; Business Creation to create a more manageable process that would reduce Time to Market and maximise bang for buck; Project Execution to reduce process inefficiency to acceptable levels and optimise resource allocation conform strategy. The Celerant team also extensively trained key client people to ensure a seamless handover after the Design & Training phase.

CELERANT SOLUTION Celerant conducted an in depth analysis and based on these results, began to design all the relevant elements for the future supply chain. Working closely with the client team, Celerant’s experts defined a new ‘One Way of Working’ across the value chain and organisation with a standardised MCRS® Management System, KPIs and tools. They also developed a new organisational structure with clear roles, responsibilities and IT system requirements. The supply chain function was closely aligned with Sales through a clearly defined S&OP process that was embedded in the European region with a clear RACI. Celerant also developed common processes for product lifecycle management, inventory & order management and production planning and established an inventory planning model to cut inventory levels.

RESULTS Three product development types were identified which have realised significant reductions in Time To Market (TTM). •Type A, new products - TTM reduced from 16-12 months. •Type B, products derived from existing platforms - TTM reduced from 14-6 months. •Type C, improved or cost down existing products - TTM reduced from 9-3 months.

RESULTS A standard organisational design at all sites with a proactive MCRS® Management System, an optimised S&OP process and new processes for Forecasting and Demand Planning. •An efficient Order Management process focused on reliability of Order Book data so that this information could be used in the planning cycle. •A new inventory management process and modelling tool. •Redesigned production wheels and tools for Capacity and Supply Planning. •Product lifecycle management processes and tools to accurately determine change-over costs, cost prices and ABC classifications ‘This was by far the best project I have seen in a long time.’ Managing Director

Manufacturing

Construction

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XX 55

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

From salt to iron ore, from opencast to underground, Celerant’s experience spans 25 years.

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Celerant Consulting has been a partner to global Metals & Mining companies for 25 years, so it was with great pleasure that we recently sponsored the Prospectors & Developers Association of Canada (PDAC) 2012 International Convention in Toronto.

he annual four-day PDAC Convention has grown in size, stature and influence since it began in 1932 and is now the event of choice for the world’s mineral industry. With over 1,000 exhibitors and 30,369 attendees from 125 countries, it allows business leaders the opportunity to get a global perspective on the challenges facing the mining industry. As repeated Gold Plus sponsors of the event, Celerant Consulting hopes to both contribute to the ongoing development of the industry and learn from practitioners and industry leaders.

“There’s no better place to network with world class industry practitioners in mining and more importantly to teach what we know and learn what we don’t.” said Boyce Jacob, a Metals and Mining Executive at Celerant Consulting. “Celerant plans to continue to support PDAC and similar industry events for years to come. Contributing to thought leadership in the industry and being active members of the community is crucial to guiding and delivering operational strategy and implementation for our clients.”

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Driving Insights Success always demands a greater effort.

The North American chemical sector is in the midst of an exciting renaissance, says Joseph Coote, Chemical Practice Leader at Celerant Consulting, Americas, but Operational Excellence is essential to build long term shareholder value.

Compelling asset management to drive shareholder value in the midst of a North American Chemical Renaissance. Starting now.

uelled by a wave of capital investment, North American commodity, diversified and specialty chemical companies are investing to take advantage of the region’s energy and feedstock positioning and favorable investment climate. Attractive low-cost natural gas is expected to create a broader industrial resurgence and enhanced demand in the long term, with the result that global chemical companies are also revising their geographic portfolio weightings and looking to invest more in the Americas with more than $100bn (€76bn) of new capital expected to be targeted in the Americas over the next decade.

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Company strategy is critical to defining business strategy, geographic positioning and investment portfolio, but how well companies execute and manage their investments will significantly influence their financial performance and shareholder value creation. The long haul winners will be companies that have generated above normalized levels of capital returns through disciplined process management. Building Shareholder Value A variety of drivers contribute to building shareholder value for chemical companies. One of the most distinguishing metrics is Return on Capital Employed (ROCE). Shareholder value is tightly linked to asset efficiency and ROCE.

Chemical Sector Peer Group Analysis: Relationship Between Return on Capital Employed and Valuation ROCE % 30 25

R2 = 0.72

20 15 10 5 0 0.0

1.0

2.0

3.0

4.0

5.0

TEV/CE Speciality Chemical Commodity Chemical Diversified Chemical

This scatter chart shows a relatively strong relationship between the average five-year trailing ROCE and total enterprise value over capital employed for a portfolio of commodity, diversified and specialty chemical companies. There are some interesting observations to make regarding the strength of the relationship and how it varies by type of participant. In general, commodity companies must generate a higher ROCE to achieve the same valuation (proxy for valuation being TEV/CE). Whereas, within the specialty and diversified sectors there is more even distribution reflecting many factors including portfolio quality, scale, cyclicality and overall liquidity. Generally, companies below the curve benefit from positive portfolio dynamics and liquidity effects, achieving higher valuations per unit of capital employed. Those above the curve generally suffer from a discount due to the cyclical nature of their portfolios, scale or momentum issues and therefore require higher ROCE performance to achieve similar shareholder value. While ROCE is influenced by the quality of industry structure and competitive positioning, creating a culture of Operational Excellence allows a company to address these dimensions of shareholder value proactively. Companies tend to be more focused on operational improvement and cost management in the downward portion of the cycle. But the winners have focused on creating a culture of Operational Excellence with clear management frameworks and continuous goal-setting to achieve continuing performance gains. The focus of programmatic efforts may change throughout the investment cycle, but the level of effort is continuous. In the capital investment wave, it will be important to

emphasize good investment decisions, as well as effective implementation. Optimizing the industrial footprint, capital portfolio management and capital project management are all important at this phase of the industry investment cycle. There is significant opportunity for improvement. In a recent survey of 2,800 CEOs and business unit managers in the US, only 19% were satisfied that their LEAN programs (those focusing on efficient use of resources for profit generation) had delivered what was intended. We believe that the difference is adopting a culture of Operational Excellence. Increasing throughput from existing assets We see significant transformation opportunities that will drive shareholder value, particularly among the mid-sized companies in the sector. Leading companies that are focused on enhancing returns on invested capital are focused on continuous and programmatic improvement addressing the key levers impacting both the numerator and the denominator. There are three thematic improvement areas for holistic programmatic management: cost management; revenue enhancement; and capital and asset management. While the balance of focus reflects the current state of the company, its specific opportunity areas and competitive positioning, it also reflects positioning in the business and investment cycle. As the economy improves, we expect cyclical recovery in housing and modest additional recovery in the automotive sector to produce a significant rebound in chemical demand. With the chemical sector operating near 80% overall utilization and many companies behind the capital investment curve, the focus will remain on increasing throughput from existing assets and also bringing on new capital investments in a timely manner. The use of Overall Equipment Effectiveness and Capital Project Management are in vogue as companies prepare for recovery. Companies employing leading capital project management techniques routinely achieve 1.5-2% higher ROCE performance. Examining investment options consistently requires a capital portfolio management process with a sophisticated risk management approach. Companies employing integrated portfolio management approaches consistently make better

investment decisions. The area is a growing best practice that is embedded in management frameworks across most of the larger, more sophisticated chemical companies, and mid-cap companies are employing this approach as well. Minimizing price inflation Maximizing innovation As the economy recovers, there is a disproportionate risk of commodity price inflation. To deal with potential input price volatility similar to the 2008 time period, many companies are shifting to purchasing and supplier management programs focusing on novel contracting mechanisms and supplier management approaches. Sales analytics, pricing optimization and sales effectiveness are critical to the creation of mechanisms and communication to passing input pricing through to customers in a timely manner to reduce the profit cyclicality across the value chain. Longer-term innovation is also critical to support enhanced margins and growth. For businesses, innovation is not an end in itself. Their prime task is to identify the right innovation, and it sometimes requires tough decisions to be made between development projects. Having the right process to manage innovation in a portfolio and ensuring that the company is taking enough and the right balance of risks with its new product development investment is key. This requires the right level of process structure and discipline with the right risk/benefit ratio and systematic control of timelines and costs. Adopting a holistic approach In summary, we believe that the winning companies in our industry have increasingly created a culture of Operational and Process Excellence that embodies commercial excellence, capital and asset management, and cost management. This holistic approach leads to strong shareholder value performance with best practice companies consistently outperforming their peers. Shifting the focus and activity level of a holistic management approach is prudent throughout the business and investment cycle, and an important management skill to optimize return on capital, growth and shareholder value. A version of this article first appeared on ICIS. com – the breaking online news service for the global chemical industry.

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Driving Ideas Ideas move fast when their time has come.

Consulting, Quo Vadis?

he global Consulting industry is in the midst of unprecedented change, say Greg Baranszky and JJ Sendelbach of Doublejay Consulting LLC, and it’s creating three categories of Consultancy. Leaders, Followers and Sleepers. What big trends are shaping the Consulting market? Greg: The global Consulting market is still slowly recovering from the downturn, but it’s far from business as usual – and it may never be that way again. Several major trends are combining to create a more challenging environment for Consulting firms of all types. Competition is much, much tougher, with firms trying to eat each other’s lunch; pressure on fees continues, except at the very top of the very top tier; clients are doing far more in-house; Return on Consulting is more minutely dissected; Procurement Departments are ascendant, and non-traditional competitors are muscling into Consulting, often riding strong client relationships and hot topics such as Sustainability. In our view these trends are not flavors of the month, or even flavors of the year. They represent a fundamental evolution in the Consulting marketplace and every firm will have to adapt to this new normal.

What types of projects are companies engaging Consulting firms with? Greg: This tends to vary by region and by consulting service line. In the Operations Management space, our current research shows that: • Many clients are moving away from their focus on cost-cutting and towards more strategic,

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growth-oriented operations projects. • Strategic supply chain management is hot, particularly in faster-growing emerging markets like Brazil where the gap between clients’ strategic plans and their existing production/ supply chains is widest. • Sustainability, in all its guises, from broad corporate responsibility projects to highly targeted sustainable supply chain work, is driving more and more consulting revenue. JJ: Clients in all markets are pushing for more complex and integrated solutions that render the hand-off between strategy and operations almost imperceptible. ‘S&O’ - Strategy & Operations Consulting - is becoming the new buzzword. As this amalgamation happens it will be easier for the strategy people to say “I can do implementation” than for the “get your hands dirty” Operations people to argue that all of a sudden they can do strategy.

From a client’s POV, the Consulting market appears more crowded than ever. Greg: That’s true. As we’ve already noted, firms are trying more aggressively than ever to eat each other’s lunch by broadening their current services lines and extending into new service lines. This results in greater overlap in the service mix of existing firms and a greater number of providers in each service line. The Operations Management space is the best

Consulting 2020

example of this phenomenon. Strategy firms are pushing ‘downward’ into OM; IT firms are pushing ‘upward’ into OM, and non-traditional suppliers, such as large engineering based firms, are pushing ‘inward’ into OM.

How do you stand out in such a crowded space? Greg: Truly differentiating is becoming more difficult every day and is a key concern for many of the firms we engage with on a regular basis. Clients are using words like ‘clones’ or ‘the swarm’ to describe their consulting providers – not words that any Consulting firm would like to hear applied to itself. In a market where so many firms are so good, or at least competent, at so many different functions, we see the real point of differentiation as the way that Consulting firms deliver their services - not necessarily the quality level of the services themselves, because the quality is so similar. Our analysis shows that ‘Customer Experience’ is composed of very specific elements that firms must get right to stand out from their competitors. These include knowledge transfer, joint clientconsulting teams, success-based fee structures, thought leadership that is more than marketing collateral for the firm, and true partner-level involvement in all phases of project delivery. All of these raise not only traditional measures of client satisfaction but also what Doublejay calls client involvement with a Consulting brand. Firms which score highly on client experience-based involvement measures are the ones which become the go-to option in a client’s mind and truly stand out from their competitors. Some firms understand this intuitively, but we have seen very few that have systematized this approach. The ones which have are reaping the benefits. JJ: I was discussing this subject with a very sophisticated user of Management Consulting services at a Fortune 10 company and he said ‘The best thing I can say is that when I send an email to my Consulting partner on a Sunday

‘ The real point of differentiation is the way that Consulting What’s next in Consulting? firms deliver their What should companies and services.’

afternoon asking a question, I get an email back answering that question by Sunday evening. And he’s not charging me for that. So I will always go back to that firm because that’s what I’m looking for. Any firm can do the actual project. I’m looking for something else.’

firms alike be thinking about?

JJ: Based on over 50 projects and market research we have developed what we call ‘Consulting Quo Vadis?’. In this scenario analysis, Consulting as we know it today, will disappear and will be replaced by two business models. The first one is best described in today’s terminology as ‘high end staff augmentation’. It will entail everything that a company needs to set up, socialize, organize and run large scale and complex projects. Consultants in this category come through the door with three major ingredients: 1. Tools, how to organize and run large projects, 2. Experience, based on cases worked on before, 3. And an unbiased outside-in viewpoint. The second category we have started to name ‘evidence based consulting. These are Consultancies who are absolute subject - and vertical - experts. No matter whether the project is, a strategy, efficiency, finance, IT or HR project, the Consultancy again brings three significant ingredients along: 1. Hard fact evidence based on ‘big data’ (historic and predictive business intelligence) 2. True partnership with the client (long-standing relationship with all levels and LOBs of the firm) 3. A business model that lends itself to share in the risk and the rewards of the project with the client.

work with and how are often made within the old boys club and with an eye towards board room assurance, tomorrow’s decisions will be based on who has the most evidence in our vertical and horizontal and who do we trust is our best partner in this regard today and for the foreseeable future?

Is there a game-changing business model coming our way that will make Consulting as we know it today a thing of the past? We believe absolutely yes! And it is not going to be one or the other Consulting model of the future, it’s going to be both! There is need and a place for both. The good news for consumers of Consulting though will be that there will be significantly more choices than today. Where today’s decisions who to

JJ Sendelbach is Managing Director at Doublejay Consulting LLC and Greg Baranszky is a Director. Doublejay Consulting, founded in 2003, is a strategic advisor to the professional services industry.

Do you think Consulting firms recognize the speed of change? JJ: There are three categories of Consultancy out there: Leaders, Followers and Sleepers. That’s my answer. Greg: There are fewer Leaders than Followers and fewer Followers than Sleepers. Our view is that these are fundamental changes that will alter the way Consulting is done. If they don’t adapt, many firms won’t be in existence in 5 or 10 years.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

THE GRANITE CITY: It’s been a home from home for almost 20 years.

elerant Consulting has established itself as a major partner for Oil & Gas companies in the North Sea, helping them improve performance and implement change. UK Vice Presidents, David Delvin (Sales), David Vaughan (Analysis), Mark Turek (Operations) and Dereck Clow, Head of Country, give their views on what now lies ahead.

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Is this a key sector for the UK economy? DC: Without a doubt. Just to put things in some kind of context, this year saw the largest investment in the North Sea Oil & Gas industry for 10 years. It was over $10 billion. The industry employs 380,000 people in the UK and accounts for nearly 20% of all Corporation Tax received by the Exchequer. So we’re talking about a massive industry with massive resources. DD: It’s also a key sector for Celerant UK. We’ve already worked with nine of the Top 10 Oil & Gas companies in the world and our best sector experts and consultants are working in this area. The first North Sea project we did was 18 years ago and Mark and I were both on it, but we’ve now eclipsed our 1996 peak. In terms of both revenue and people involved, we’re way beyond it.

TAQA started up recently and is still ramping-up, NEXEN is an established project in late-stage of maturity and then we have a couple of smaller follow-on projects at Talisman which both sprang out of the main ‘Operational Excellence’ project which we completed last year. From a service-line perspective, we’re seeing a strong focus on Operations Management. This isn’t surprising given the asset intensive environment, much of which is being operated beyond its original design life, so Engineering and Maintenance feature strongly in our approach. The operating life-cycle also means that our clients are asking themselves constantly whether they are configured to respond to new challenges resulting from changes in their operating environment. This means that Organisational Effectiveness has a big role to play in helping our clients achieve their goals. The industry is constantly on the move in terms of both ownership and operating environment, which means that we will continue to utilise and adapt our broad range of offerings in service of meeting our client’s needs.

Why has Celerant got so much traction in Aberdeen What key challenges are and what type of projects are you currently delivering? these companies facing? DD: We have an exceptional track record in this sector, but it’s the way that we help companies make improvements in their business performance that is the big difference. Our style of Consulting, in terms of supporting implementation challenges, is really what they’re looking for now because the nature and structure of the industry has changed quite dramatically over the past 5 years or so. The major players have divested their assets and they’ve been acquired by smaller, independent companies that don’t have the massive infrastructure in place that say, Shell or BP do. So they’re looking for partners that can effectively offset some of those gaps and help with the improvements they’re trying to make. We fit that bill very well. The other thing is that we’ve built a degree of momentum and success breeds success, so we’ve been able to secure a number of programmes simply because there’s a confidence shown by others that we’re a good partner to work with. Success builds an interest in what we can do for others. MT: There are a number of projects running in Aberdeen, all at different stages of maturity:

DV: There’s been almost an inbuilt inefficiency in the North Sea because it’s a very difficult place to work and in many ways the working practices have evolved over time, rather than been designed. So the priority for all companies is to increase efficiency to enable them to reinvest their operating expenditure into the areas they need to focus on going forward. You may have different levels of efficiency on different ages of platforms, but everyone is looking to increase their overall efficiency and that’s our area of expertise. DD: A lot of emerging companies that acquired older assets from larger companies now have to deal with the legacy issues that have been in place. They’re trying to stamp their own methodology, their own way of doing things on their newly acquired assets. The obvious difficulty they’ve got is that in some cases, these operations have been running for 25 years or more. They’ve been operating with a single owner for that time and suddenly this new company is trying to change the game. So there’s a huge degree of change associated with trying to get that right.

‘ We’ve worked with nine of the Top 10 Oil & Gas companies in the world.’ MT: I agree with David’s comment about emerging companies wanting to stamp their own mark, but I think that in some cases the companies themselves aren’t exactly sure what that mark is. So in some ways they’re working from scratch to define their culture. In doing so they are often looking to us, to our experience and insights, to see what the best attributes and building blocks we can offer them in terms of establishing their way of working. DD: Another problem is that they usually want to make these changes very quickly. It’s just the nature of what they want to do - and obviously if you start with a blank sheet of paper, it takes a hell of a lot longer than it does when you can bring a number of options and ideas and examples of how it’s done elsewhere. DV: I think one of the biggest challenges is probably being driven by the high price of oil itself. It’s a resource rich sector and therefore what tends to happen is that there’s a massive level of activity, whether it’s projects, initiatives or improvements. And sometimes the sheer volume of projects that organisations undertake can almost start to grind them down because you can’t see the wood for the trees in terms of coordinating all these activities. Consequently there’s a lack of focus, a lack of clear governance around selection and prioritisation and a lack of clarity around resource delivery. There’s a lack of vision and leadership in really steering a lot of these activities - and part of that is driven by the sheer volume of activity in the industry. Another challenge is that a lot of assets are now running beyond their original design life. So there’s the question of how can we extend the life much further? The original intention was for maybe 20 - 30 years and now with some of these assets the plan has been revised

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to extend it out to 40 - 50 years. They’re also bringing in additional sub surface assets, so there’s a whole challenge there about how you selectively invest in your assets to set them up for the next 10 -20 years of operation.

What about the people who work in this industry? DV: Companies are now actively competing for experienced individuals, so you’ve got workforce stability issues and potential gaps that are difficult to fill. DD: A massive demographic time bomb is about to hit the industry. If you look at the current workforce structure, the number of 50 year old, experienced engineers who will retire fairly soon is not being replaced by graduates coming in. So there’s a major worry about this knowledge leaking out of the organisation. This lack of replacements came about because Oil & Gas wasn’t seen as a sexy industry for a while. It’s a tough industry, there’s a lot of travel. Some people like that and some don’t. The number of petrochemical engineers graduating these days is nothing like it was in the 80s. So companies are pinching people from each other. In the past for example, a Shell employee would stay with the company for 30 years, but now people switch company quite regularly. MT: Also a lot of the guys who were in charge of Operations in the past have either retired or moved up the ladder to other senior jobs in the company and are no longer around to advise their successors.

What are the ‘ownership’ challenges for an industry with such a high dependency on 3rd parties? MT: The context of the high dependency on third parties is really how I read this question. I think it talks a lot to what was said earlier, in terms of the mobility and migration of key resources from company to company. Whereas historically someone would join an operator from University and rise through the ranks and

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be very much the company man, that aspect has changed significantly. It’s rarer now to come across the company man, simply because people move around as they see better opportunities for career development. That’s become very much the culture in Aberdeen. In terms of people having the same level of ownership, I don’t think it’s quite how we would have envisaged it 10-15 years ago. The whole ownership landscape has changed quite significantly. DV: With a lot of third party contractors, it’s ultimately a fairly transactional relationship and that builds on this idea of not necessarily being a company or career man. You’re there to do a job for a defined period. Also with the shift to shift rota, you’re living with the problem for two weeks, but you aren’t necessarily living with it week in and week out. It’s someone else’s problem when it comes to picking up the activity for the next two weeks. So I think there’s a whole range of ownership problems: the staff turnover that Mark talked about, the shift set up and the fact that 3rd parties are largely driven by the transactional nature of the task and being remunerated, rather than a long term interest and pride in the asset. This is always going to be a potential issue in an outsourced environment.

Based on your experience, what are the key requirements for delivering a successful Oil & Gas project - in particular the challenges of delivering sustainable change projects offshore? MT: I’m not convinced there are any unique requirements for Oil & Gas that are different from any other project in a different industry. The ingredients of a successful project are pretty generic. What’s totally different about Oil & Gas, particularly where there’s an offshore component, is that we’re dealing with a workforce that is only there for two weeks out of every five. So in terms of success, it’s about how you structure the project to take that into consideration, because clearly not only

do you not have the same degree of face time as you would on a conventional land based project, but obviously people disappear for several weeks. Going into every project with that understanding and having Consultants who understand that environment and are tuned into that challenge is clearly one of our strengths. DV: Part of it is structural. It’s related to the existing shift patterns of two on and three off. People are rotating off the platform and spending significant amounts of time away from the working environment and this presents a real challenge in terms of driving new ways of working and getting them hardwired into the organisation. Another observation for me is that quite a number of Operators seem to have allowed the evolution of quite a lot of variation in performance from shift to shift. It feels as though there’s almost an acceptance that shift to shift it’s the people out there that set the tone in terms of how certain things are done - as opposed to getting to a clear view of standardised best practice that is consistently applied consistently. MT: The challenge that I see is that traditionally, there has always been an onshore organisation that developed and set high standards and then there’s the offshore organisation where these things are implemented and from my experience there’s a bit of a disconnect between the two. By that I mean that the flow of leadership from onshore to offshore is perhaps not as effective as it could be. So whilst expectations are set high onshore, I would question whether that’s communicated and reinforced as much as it could be and whether roles and responsibilities are clarified as much as they should be. I think the industry recognises that this is a continuing challenge. And that’s an area where we clearly put a lot of our focus.

How do you ensure you leave a sustainable legacy? MT: As we come to the latter stages of our engagement, sustainability is a conversation that we start and continually reinforce with our clients. You can’t underestimate the importance of leadership in this whole sustainability debate.

‘ Closework® is the fundamental difference in our approach. We work alongside people at the point where the solution has to happen.’ Once we leave it really is down to Leadership to ensure that the processes, practices and systems that we’ve put in place are sustainable. So part of our job is to make Leaders understand what their role is in this. It’s a conversation that starts almost immediately, but becomes more and more relevant as we got towards the latter stages. They have to be clear where they fit into those things and what they have to continue doing to ensure these things live on. DV: The other point to remember is that these things aren’t a quick fix. There‘s an investment of resource in terms of activity and duration to ensure that the new ways of working are embedded into the organisation. There’s a Change vehicle that has to be put in place with both client resource and external support and expertise. You’ve got to have the right critical mass to properly drive and install the new practices. That all comes back to the quality of people we put on these projects. It’s also about your tenacity and rigour throughout the project and not getting distracted. One of the lessons that we point to in programmes that fail with clients is that when things get tough, they then take away the structures and lose their focus and things dissipate. You’ve got to hold the structure throughout the transformational change.

How do you cross the Rubicon? DC: Energy is a key sector for Celerant. It’s changing and moving and so are we. We have already opened offices in Brazil, Africa and the Middle East where we’re involved in many major projects, including Liquefied Gas. The companies we deal with have a global footprint, so we’ve got to take our massive learnings and start utilising them right across the globe.

CLOSEWORK® GLOBAL REVIEW 2012

Driving Insights Success always demands a greater effort.

When we partner with Private Equity firms and their portfolio companies our role is simple, says Celerant Consulting’s Andy Rodgers. We help management teams boldly change the way their business runs.

uilding value in a portfolio company, preparing the platform for growth and developing attractive exit strategies comes down to three basic principles: planning, flawless execution and communication. These principals must be applied relentlessly from due diligence throughout the portfolio company ownership cycle. Acquiring firms that do not focus on Continuous Improvement are simply fighting themselves. Status quo performance is sub-optimal because pre-existing inefficiencies will become roadblocks for growth. Optimizing total value from an acquisition or merger can only be achieved however, if the company’s new strategy is understood by all parties. Acquisitions undertaken without clear direction create a rudderless work environment that can derail the best plans and set the stage for a merger stunted by cultural clashes. As Robert F. Bruner, Dean of the Darden Graduate School of Business, University of Virginia notes in Chief Executive Magazine: ‘CEOs tend to think that integration merely consists of connecting the IT pipelines, getting the cash to flow in the right direction and consolidating the accounting systems, but that is just the start. Integration is about building a joint vision and strategy of the combined company, and creating a set of norms about how decisions will be reached.’ We believe that optimized integration is built on four basic tenets for change. 1 Change begins before the close Value creation starts with a detailed understanding of the organization’s structure, personnel, and areas of strength and improvement. The vision

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must be clear, and the action plan fully developed before control is sealed by the Private Equity team. If aggressive preparations are not made, value can be lost from Day 1. Buyers must approach this planning process by going beyond the typical CIM review and financial due diligence to get an inside look at future operations. They should visit company sites and base conclusions on carefully gathered external data. This will prepare them for the tough decisions ahead, while laying the foundations for detailed operational assessments and action plans in the first 100 days of ownership. With this process complete, teams can confidently send out a Day One communication that enrolls staff in the vision and ignites positive momentum. Everyone must feel supported by the full weight of the organization as they undertake change, whether that’s a minor alteration to a department’s IT system or a major overhaul of a production facility. This thorough setting of the stage needs to be in play prior to the close, and acquirers, management teams, and external advisors must collaborate continuously to ensure they’re moving in lockstep. 2 Accelerate Value Creation The first 100 Days are the window for new owners to exert authority and make changes that demonstrate confidence, enthusiasm, and alignment with the vision. The planning and pronouncement process offers important guidance, but without immediate, decisive action it will be almost impossible to enroll the organization. These 100 Days are the critical timeframe in which assumed synergies must be proven, while redundancies and operational inefficiencies are identified, evaluated and

eliminated. Too often, new portfolio ownership takes hold of an organization gradually, and as a result employees hold fast to their heritage, routines and behaviors. Hitting the accelerator on Day1avoids this pitfall. When it comes to mergers, establishing an immediate united front is crucial, otherwise resistance to change can spell disaster. The industry is rife with examples. Take, for example, the purchasing of AOL by Time Warner. This $360bn merger was positioned to change the landscape of communications, yet after 10 brief years it collapsed as direct result of the companies failing to truly integrate their cultures and services. 3 Change must be designed to last Flawless execution is a daunting term, but it is a necessity as a new organization undertakes a transformation initiative. Execution must be preciseand progress confirmed repeatedly with open communication, management controls and monitoring that keeps tabs on the many balls in play. This pursuit of flawless execution is not geared toward ‘not getting it wrong.’ It’s an approach that allows teams to make quick corrections when things go awry. Organizations are built around the most unreliable of resources – people – and plans will inevitably be scrambled as they unfold. Missteps need to be anticipated and teams should be empowered to assess the situation and take action. Even when the organization is moving in the right direction with the right processes in place, the work is not done. Implementation teams have an obligation to make their work endure; they must not leave employees with new roles and responsibilities and no idea how to sustain momentum. Managers should be taught how to use the reporting and monitoring tools, how to analyze progress and be accountable for their and their teams’ actions. With a personal stake and the enthusiasm that comes with truly owning their new roles, these key ambassadors will adopt the tools as part of the new culture and operations of an improved enterprise. Robust management systems and motivated people are the foundations of a performance culture, with Continuous Improvement built into the DNA of the new learning organization.

4 Don’t just follow the leaders – create a strong team Comprehensive planning, keen communications, and expert implementation will have little impact without the right leadership team. The personalities of the CEO and their team in particular have to be carefully considered; it is crucial to have these roles filled by people who can paint visions, communicate and plan accordingly. In less cautious times, a premium was placed on high profile individuals to headline large acquisitions, regardless of their personal fit with the company.

Today, organizational targets are refined and more strategic. Specialty funds seek out acquisitions that fit a specific profile for geography, size and the nature of business which has spawned a better awareness of industries, company-specific needs and the tools necessary to get the job done. In his book ‘Good to Great’, Jim Collins defines the criteria for successful company leadership. ‘Level 5 Leaders are not the charismatic and erratic Lee Iacocca’s of this world, and not the driven, but risk taking managers such as Jeffrey Skilling at Enron. True leaders of change that deliver sustained value and consistent performance

develop commitment to a shared vision for success and talent throughout an organization.’ The greatest Level 5 Leaders of our time are largely low profile. Darwin E Smith at Kimberley Clark, Bill Allen at Boeing and William McKnight at 3M each managed the transformation of companies that have not only become leading global corporations, but also delivered sustained value over decades. Private Equity firms must focus on the appointment of executives who will manage change, lead teams and make the strategic plan come to life. The refined organizations they create will then stand as a foundation for further acquisitions, with a team that has been through significant change and knows how to create value. This battle-tested structure is the real victory.

‘ We help improve the business, drive cash and EBITDA to the bottom line and enable it to fund new opportunities and innovations.’

The bottom line is that change improves the bottom line.

CLOSEWORK® GLOBAL REVIEW 2012

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

‘ After working at our desks all day we decided to stretch our legs.’ At Celerant Consulting we believe that strong relationships make all the difference, that’s why we consider every project a long term partnership.

CLOSEWORK® GLOBAL REVIEW 2012

17,000 runners took part in The 2012 Rome Marathon

‘A Marathon requires great physical and mental preparation if you want to be successful. The Celerant project gave me the chance to meet Nicholas and find a passion in common.We then decided to take this challenge.’ Jean-François, GRTgaz 20th Marathon. Time 4:15

‘After 3 months of tough training, encouraging one another whenever we had to run at night or at -10°C, Jean-François and I finally shared the pleasure of crossing the finishing line with a big smile!’ Nicolas, Celerant Consulting France 1st Marathon. Time: 3:25

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

C-Cube The Celerant Change Club brings together professionals in Change Management to share their experiences, ideas and ambition. PARIS: Nov 2008: C-Cube launches in France and completes its 13th workshop in March 2012 C-Cube is the perfect forum for Change Managers from multinational corporations and medium sized companies to share their problems and opportunities with each other and Senior Consultants from Celerant’s Operations teams.

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Masters Of Change

Opens New Doors

DOHA:

DUSSELDORF:

Dec 2011: C-Cube MEA holds its first network meeting.

Jan 2012: C-Cube Germany holds its first interactive workshop.

Club Members meet at quarterly roundtables where topics include Change & M&A, Change & Management and Change & Multi Site-Multi Culture. They also work together at interactive workshops to pool experiences and best practice.

C-Cube promotes a culture of ‘step back’ in an arena where constant adaptation is vital. It offers a unique opportunity for Change Managers to develop personal awareness and cement their credibility as internal leaders of change.

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Belgium • Brazil • Canada • Denmark • Finland • France • Germany Netherlands • Norway • Oman • Sweden • United Arab Emirates United Kingdom • United States of America

celerantconsulting.com Celerant Consulting Holdings Limited. Registered Office: Avalon House, 72 Lower Mortlake Road, Richmond, Surrey TW9 2JY, United Kingdom.