In days of old before the great depopulation of business skills, an SME would identify any internal business issues through their own operational audit team. This team was, in effect, an in house consultant looking at the supply chain and logistics issues from end to end. Now, however, those audit teams are long gone, along with all of the expertise and skills needed to evaluate and update supply chain operations / processes.
However before I move forward let’s just define one or two things so we are all talking the same language. We need to define the true meaning of some key words which the industry uses without due care and attention.
Supply Chain
A supply chain is the system of organisations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.
A typical supply chain begins with ecological and biological regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of ever-decreasing size and ever more remote geographical locations, and finally reaching the consumer.
Many of the exchanges encountered in the supply chain will therefore be between different companies that will seek to maximise their revenue within their sphere of interest, but may have little or no knowledge or interest in the remaining players in the supply chain. More recently, the loosely coupled, self-organising network of businesses that cooperates to provide product and service offerings has been called the Extended Enterprise
Extended Enterprise
An Extended Enterprise is a loosely coupled, self-organising network of firms that combine their economic output to provide products and services offerings to the market. Firms in the extended enterprise may operate independently, for example, through market mechanisms, or cooperatively through agreements and contracts.
Alternatively referred to as a "supply chain" or a "value chain", the extended enterprise describes the community of participants involved with provisioning a set of service offerings. The extended enterprise associated with "McDonald's", for example, includes not only McDonald's Corporation, but also franchisees and joint venture partners of McDonald's Corporation, the 3PL's that provide food and materials to McDonald's restaurants, the advertising agencies that produce and distribute McDonald's advertising, the suppliers of McDonald's food ingredients, kitchen equipment, building services, utilities, and other goods and services, the designers of Happy Meal toys, and others.
Extended Enterprise is a more descriptive term than supply chain, in that it permits the notion of different types and degrees and permanence of connectivity. Connections may be by contract, as in partnerships or alliances or trade agreements, or by open market exchange or participation in public tariffs.
Logistics
Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organisations). Logistics involves the integration of information, transportation, inventory warehousing, material-handling, and packaging. Logistics is a channel of the supply chain which adds the value of time and place utility.
Consultant
A consultant is usually an expert or a professional in a specific field and has a wide knowledge of the subject matter. A consultant usually works for a consultancy firm or is self-employed, and engages with multiple and changing clients. Thus, clients have access to deeper levels of expertise than would be feasible for them to retain in-house, and to purchase only as much service from the outside consultant as desired. It is generally accepted good corporate governance to hire consultants as a check to the Principal-Agent problem
Interim Manager
Interim management is the temporary provision of management resources and skills. Interim management can be seen as the short-term assignment of a proven heavyweight interim executive manager to manage a period of transition, crisis or change within an organisation. In this situation, a permanent role may be unnecessary or impossible to find on short notice. Additionally, there may be nobody internally who is suitable for, or available to take up, the position in question. This could also be a short term Project Manager.
The Key Stages to be examined are as follows:-
Why does the business need a Consultant?
Define the issue as you see it
Define what you would expect from a Consultant
Find a Consultant
Set Consultancy Stages
Initial Meeting
Request a Quotation
Compare Consultants
Appoint the Consultant
Expectations from the Consultants Report
1. Why does the business need a Consultant?
The Supply Chain in its’ true sense has a very wide business aspect. In effect most business issues can be linked with the Supply Chain and these issues may not have the causes you expect.
Problems of poor warehouse efficiencies can be caused by too much stock (an issue of purchasing or sales). It can also be caused by poor material master maintenance in the business systems / IT area. Each of these examples would need to be tracked back to source.
The need for help is identified through issues / problems that you cannot solve internally or perhaps you need to update the processes used internally to improve overall efficiencies. In either case help is needed and the right Consultant will be able to provide solutions.
2. Define the issue as you see it
Clearly understand the issue by writing a project brief. This will help clearly define the issue for you, the business and the Consultant. Without a brief you will be wasting valuable time and hence money.
3. Define what you would expect from a Consultant
· Expertise & Skills in the Supply Chain
· Reference to specific areas if possible such as Warehousing, Reverse Logistics, Returns
· Industry experience (Do not fixate on this however as cross industry experience could well add value to your operation)
· Define a timeframe (Start and End)
· Identify a daily rate that you consider is commensurate with the skills and experience you need.
· What you expect as an output from the consultancy work.
o What has been looked at
o What was found to be right and wrong in those areas
o How to correct the problems
o Implementation schedule and timeframe
4. Find a Consultant
Firstly you should understand there is a difference between a Consultancy Company and a Consultant. The Consultancy Company may have great marketing but only average Consultants. It will be the Consultant that does the work not the Consultancy Company.
You should therefore meet the Consultant who will undertake the work and look for the following:-
· The right skills and experience for the job – look at the CV and past assignments list
· Experience in your sector
· A member of a recognised Institute such as The Chartered Institute of Logistics & Transport or The Chartered Institute of Purchasing & Supply.
· Experience within the Supply Chain and as a Consultant. 25 years experience is worth more than a degree obtained two years ago.
· A degree in Supply Chain Management is advisable but do not concern yourself with degrees In other subjects. Experience over a good number of years in the Supply Chain is far better.
Look on the web at medium sized and small consultancy businesses. Examine the detail on the web site and call them. Speak with the actual consultant who will do the work.
Pick two or three and compare daily rates and expenses.
At the end of the day you will need to meet the consultant face to face to see if you can work with them. Once you have a successful business relationship with a Supply Chain Consultant it is worth retaining the contact and utilising them as a Mentor.
5. Set Consultancy Stages
In advance of meeting the Consultant define what you want from him.
Typically the work would be in the following stages:-
· Initial Investigation on site
· Review of Data and Processes
· Report Writing
· Presentation of Report
· Implementation
Agree with the Consultant what he is going to do, by when and how many days.
The last item of implementation can be discussed after the presentation of the report and a clear understanding of what is needed.
6. Initial Meeting
Prior to the first meeting with a Consultant provide them with a copy of the brief. Make sure you are meeting the person who is doing the job.
Set aside one and a half hours for the meeting. It should be structured as follows:-
· You give an overview of your business and of the issues you have
· The Consultant should describe his background, skills, experience and ability to manage this work.
· You should receive a copy of the Consultants CV
· Walk through the operation
· Sum up the expectations and discuss daily rates etc.
7. Request a Quotation
Stage 1 would be to request signature of a Non Disclosure Agreement (NDA)
Provide any additional requested data after signature of NDA.
Request a quotation / Proposal to include expected timeframe, dail cost and expenses, terms of payment and references
8. Compare Consultants
· Price is one key factor. Look for a fix period of an agreed number of days
· Qualifications and / or experience of the Consultant
· Your preference for the individual. You will have to work with them. There needs to be trust.
· Always call the references to see what the Consultants work is like.
· Look on the web and do a “name” search to see what comes up. Always worth the effort.
· Make sure you find a Consultant that lives locally or you could be in for some hefty travelling expenses.
9. Appoint the Consultant
Issue a letter of appointment confirming the details of the assignment and listing the deliverables / dates.
10. Expectations from the Consultants Report
You should expect the following as a bare minimum:-
· Details of what was looked at and the output from this.
· A detailed list of the good and the bad.
· Consolidated list of items that need addressing with a Why the issue in the first place / What needs doing / Potential Result.
· Order of Work and some estimate of timeframe.
· Summary of Benefits.
· Suggestions as to who can undertake the remedial actions.
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I hope this has been useful. If you need additional help please call Mike Forryan at MF Logistics & Associates on 07711 083227
About the Author:
Mike Forryan FCILT is the owner of MF Logistics & Associates and has worked within the Global supply chain arena for over 30 years. He has worked in both the Public and Private sectors across multiple markets in Europe and Globally. For the past 12 years Mike has managed his own Consultancy, operated as a Project Manager and an Interim Manager at board level.
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