JP Farrell And Associates


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Introduction to JP Farrell & Associates, Inc., a consultancy specializing in helping organizations master their positions in the value chain.

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JP Farrell And Associates

  1. 1. Confidential Material Introducing JP Farrell & Associates, Inc. Promoting Innovation Throughout the Extended Enterprise © JP Farrell & Associates, Inc. 2008. All rights reserved.
  2. 2. Introducing JP Farrell & Associates, Inc. Who We Are and How We Work Capabilities Our Role Is Determined by the Clients Needs Our Clients Representative Engagements For More Information Our Website Contact Information 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 2
  3. 3. Who We Are and How We Work Clients work directly with the principal ― a hands-on, executive consultant 20 years of professional consulting experience Officer-level positions with AT Kearney, Cleveland Consulting Associates and other consulting firms Designed and led engagements in operations and strategy with more than 40 clients in a variety of industries Doctoral training in economics and econometrics at the University of Michigan Prior experience in strategy and development in both industry and government Schneider National, Inc. – Business development and corporate strategy IU International, Inc. – Transportation industry strategy U.S. Dept. of Transportation – Economist, author of several studies that enabled truck deregulation (cited in Preamble to Motor Carrier Act of 1980) How we Charge Initial discussions are free and without obligation We generally charge on a time elapsed or by project phase basis to ensure clients have a clear understanding of a project's progress. Fixed fees can be agreed for tightly defined projects. The firm has the flexibility to bring in additional consulting resources as required The firm has the flexibility to bring in additional consulting resources as required through relationships with other firms, developers and independent consultants through relationships with other firms, developers and independent consultants 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 3
  4. 4. The Consultant’s Role is Defined by the Project Needs Typical Roles Typical Roles Engagement Manager Analyst and Subject Matter Expert Project design and management Strategy Detailed planning and reporting Innovation Program integration Extended Enterprise Management Supply chain structure Operations Process Facilitator Best practices in logistics and Workgroup facilitation transportation Issues documentation Capability assessment Process design Process design Process mapping Functional requirements Performance evaluation Organization of resources and Gap analysis infrastructure Pilot demonstration Information Technology Information mapping and gap analysis Coaching Business intelligence Capabilities of vendors and applications 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 4
  5. 5. Insight drawn from experience in many industries Food & Beverage Companies Other Manufacturing, Retail Health Care American Home Products and Printing Bristol-Myers Squibb Anheuser-Busch Allison Engine BlueCross/BlueShield unit Applebee’s Caterpillar Eli Lilly Basic American Foods Ciba-Geigy Rapidly growing HMO Barilla Colgate-Palmolive Wyeth Coca-Cola Elmer’s Products E&J Gallo ExxonMobil Transportation, Fulfillment Harris-Moran Seed Co and Utilities Kellogg La-Z-Boy Banta McDonald’s Pactiv Bell Canada Naya Party City Federal Express Parmalat Sears IU International, Inc. Pepsi General Bottlers Softsoap Schneider National, Inc. Pillsbury Quaker Oats SuperValu Target Consulting and Other Services Southern Wine & Spirits WMS Gaming AT Kearney/EDS Starbucks Zenith Bank of America YUM Brands! Capgemini/Kanbay/ Government and Education Adjoined Consulting US Dept. of Transportation Cleveland Consulting/CSC Eastern Michigan University TSC Concordia College 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 5
  6. 6. Representative Engagements Developed and Managed by JP Farrell Client Issue Consultant’s Role Results Rapidly growing Health Unacceptable rate of claims Designed and facilitated COO made adoption of the Insurer processing errors operations assessment and implementation plan the top priority improvement plan Multi-national Food The client needed to boost plant Facilitated design and rapid Company showed immediate profit Manufacturer asset utilization implementation of integrated improvement as management practiced tactical planning collaboration Global Air Freight Excess inventory of aircraft parts; Facilitated development of Reduced total inventory and improved Carrier high cost of maintenance strategy for improving aircraft service by changing inventory, availability maintenance, flight routes and purchasing policies Top Beverage Brand Cost of shipping to distributors Evaluated transport operations Confirmed opportunities to reduce spend by $70 mm annually Literature Management Wanted to offer turnkey print and Assessed supply chain Positioned client as the preferred Division of Print fulfillment services operations of client’s target provider for important customers. Company customers Increased revenue by $15 mm annually Rapidly Growing Coffee High cost of shipping materials to Designed inbound shipping Reduced inbound transport costs by Retailer stores; poor inbound controls operation $72 mm annually Defined materials management Built business case for order requirements management system National Liquor Operational data was not reported Used rapid visualization to Management approved a common set of Distributor consistently or quickly create operations dashboards metrics and dashboards Major Grocery Declining market share due to Facilitated adoption of new Introduced customer-specific service Manufacturer inflexible customer service customer service strategy approaches and regained category leadership Consumer Products Opportunity to rationalize Evaluated cost and service Developed plan to reduce distribution Manufacturer distribution networks following implications of alternative cost by 15% while improving service to 10/5/2008 merger of © JP companies CPG Farrell & Associates, Inc. 2008. All rights reserved. distribution network plans W. Coast 6
  7. 7. Client Success Story Achieving Processing Accuracy for Medical Claims A fast-growing, multi-state healthcare management organization wanted a new approach Situation Approach Key Accomplishments •A third party audit had • Established teams of experts to assess • Identified inconsistencies in data shown that errors in claims operations at each stage of the claims structures and systemic processing were lifecycle duplication of records in master unacceptably high • Conducted workshops to document tables that caused and •Concern about regulatory process flow at high level and identify compounded errors compliance issues, bottlenecks and inconsistencies • Developed processes for •Evidence of overpayment • Categorized and prioritized issues using automating rate table updates of claims cross-functional teams • Streamlined processes for •Delays in processing were • Moved from assessment to diagnostic and reviewing claims, emphasizing damaging relations with planning, again using cross-functional checks on high-value claims and in participating providers teams areas prone to error and regulatory agencies • Organization and Training • Recommended redirection of •The client attributed high • Metrics and Compliance resources, naming “data masters” errors to administrative • Root Cause with responsibility for reviewing, incompetence, focusing • Developed a detailed plan for improving cleaning and updating master data attention on insufficient performance files training and documentation • Recommended phased update of •The client set an aggressive claims processing systems, purging goal for achieving financial obsolete rate tables in the process COO made accuracy on claims adoption of the • Re-engaged operations implementation management in setting systems plan the highest priorities priority 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 7
  8. 8. Instilling Management Discipline at Food Manufacturer Client Success Story through Integrated Business Planning “IBP is the way we do business” – Public statement of Chairman Situation Approach Key Accomplishments • Facing pricing pressure, the • An integrated business planning (IBP) process • Using the new process, tactical company was in the midst of a was designed using a facilitated approach plans developed at the functional major cost reduction initiative • Functional leaders from marketing, sales, level were reviewed cross- involving both sourcing and production, distribution, customer service functionally and updated as manufacturing. and information technology met in required • Plans were being developed to workshops to define the new process • By updating capacity plans more remove substantial excess • Team motto – “Learning by Doing” frequently and using constrained capacity from manufacturing • The process was implemented the second production planning, operations was • Promotion activity caused month, then continuously refined able to remove excess production substantial variability and • Process owners were designated and their capacity uncertainty in demand roles were formally defined • Profit improvement opportunities • Business functions could not • A consulting team worked with marketing, valued at $12 million were reconcile volume forecasts finance and sales to develop a single, unified identified over the first 6 months • Communication among sales, monthly volume and profit plan •The design of a marketing promotion management and • 12-month rolling forecast promotion was changed to operations were conducted at • Updated monthly improve sales performance low levels of the organization, • Predicted volume and profit by brand and •Excess inventory of fast-moving and were limited to remedies product, based on field promotion activity goods was identified and for near term issues, such as • The S&OP planning horizon was changed from removed expedited shipping from a two-month to a nine-month outlook • Business Unit management became • Product shortages occurred • Monthly functional and cross-functional actively involved in tactical too frequently, despite meetings were designed planning every month relatively high inventory • Standard preparation and inputs • The IBP process was adopted by all levels • Monthly cross-functional recommendations business units and implemented world-wide 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 8
  9. 9. Reducing Excess Inventory of Aircraft Parts Client Success Story Global Air Freight Carrier By repositioning responsibility for inventory, client improved focus on fleet uptime Situation Approach Key Accomplishments •Client had nearly $1 billion • Convened steering committee to • Rewrote stocking policies, in spare parts inventory reconsider role of spare parts inventory establishing that some classes of stored in more than 100 • Interviewed management to better inventory should be managed by warehouses and depots understand requirements and processes suppliers and that others should worldwide for maintaining aircraft and deploying be pooled with non-competing •High emphasis on parts spare parts carriers availability • Segmented inventory by purpose, value • Recommended that some aircraft •Wide range of aircraft types and urgency and benchmarked types be rerouted and ages supported performance • Developed plan for strategically •Parts ranged in value from a • Identified excess inventory for sourcing parts from low cost few cents to $1 million disposition suppliers •Users of inventory, the • Proposed alternative operating models, • Eliminated some classes of maintenance organization, including outsourcing some types of inventory from many stocking did not have responsibility inventory and amending service locations for managing it requirements for parts suppliers •Immature processes for • Modeled impact of aircraft route establishing alternative assignments on inventory requirements. sources of supply Reduced total inventory and cost of managing it 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 9
  10. 10. Shaving $70 Million from Distribution Costs Client Success Story Client: Leading Global Coffee Brand Identified changes in policies that streamlined operations and reduced spending on carriers Situation Approach Key Accomplishments •The client, one of the • Interviewed each department to • Identified actionable, verifiable world’s largest beverage understand policies for production tactics for reducing distribution brands, faced significant scheduling, plant warehousing and costs and transport-related cost reduction targets distribution, wholesaler order materials costs by >$70 million •The Transportation management and transportation annually. For example: Department managed a • Analyzed wholesaler orders at the brand • Direct ship full truckloads of spend of some $500 million and wholesaler level to identify fast-selling product to high to deliver finished goods opportunities for cross-docking and volume distributors among company-owned direct shipping • Arrange for low-weight subsidiaries and from • Identified major logical flaw in the trailers and fill them to bottling plants to model used to estimate truckload costs capacity wholesalers • Identified opportunities to substitute • Locate bottle supply closer •The Procurement • Determined that certain high volume to bottling plants Department negotiated inbound lanes for materials could be • Institute dedicated contract contracts for materials combined with outbound lanes to form carriage program and multi- (including bottles and cans), continuous moves, including round trips stop truckload deliveries F.O.B. Destination, freight • Found other lanes where lower-cost prepaid modes could be substituted •Procurement, Plant • Determined that outbound equipment Operations and was not optimally loaded and that Most savings Transportation operated opportunities to fill excess trailer came from independently capacity were not being recognized operational changes 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 10
  11. 11. Helping a Literature Management Company Become Client Success Story the Preferred Solution for Key Accounts Restructured a supplier’s relationships and spans of responsibility with major customers Situation Approach Key Accomplishments •The client, a printer, wished • Worked with the client’s business • In one case, recommended that to inaugurate turnkey development teams and senior client’s customer outsource all literature management management to structure deals and printed material management to solutions for key customers project plans client in sole-source arrangement •Originally a multi-media • Through two different, concurrent • Estimated annual cost advantage printer projects, audited the supply chain and detailed how service •Redefining service structures, policies and performance of advantages would improve offering to include two of the client’s key customers, one a customers’ value proposition •Printed materials retailer, the other a managed health while avoiding investment in design and production care provider systems •Inventory stocking and • Managed project teams composed of • In second case, recommended management consultants and key representatives of restructuring of supplier •Print on demand the client and its customers responsibilities, increasing total •Distribution • Analyzed impacts of alternative supply efficiency management chain approaches to devise new •The consultant was engaged strategies to help the client increase • Considered industry dynamics, client its share of the print and and customer capabilities and costs fulfillment volume at two of its key customers Increased revenue at key accounts by $15 million annually 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 11
  12. 12. Creating the Inbound Distribution Network for a Client Success Story Rapidly Growing Coffee Retailer Developed store distribution plan for rapidly growing coffee retailer Situation Approach Key Accomplishments • Company was expanding • Segmented restaurant supply chains by • Management agreed to rapidly, both adding new type of product, recognizing differing undertake multi-year effort to stores and developing new service requirements and logistics create distribution infrastructure channels of trade characteristics • Store deliveries were reduced to • Having little distribution • Developed common fact base for volume, no more than one per day infrastructure, the company activities, costs and locations • New flow paths for products was receiving some thirty • Interviewed senior management as well were defined, based on product deliveries per week at each as store operators, logistics service and customer segments of its operations, with high providers, suppliers and staff departments • A network of third party embedded transportation to understand growth plans, service providers was selected to costs requirements, operating constraints and operate distribution • Multiple order processing cost drivers • Ordering processes were systems confused • Modeled costs of alternative distribution simplified and consolidated procurement processes and scenarios • Metrics for controlling customer prevented store operators • Working closely with both functional and service were put in place from having supply chain executive management teams developed visibility distribution strategy • Network expansion was • Identified operating changes required by generating decreasing new strategy returns to scale, despite • Developed systems plan to support new increasing network density strategy, estimating costs of $72 million implementation operating cost • Created time-phased implementation plan savings identified 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 12
  13. 13. Designing Business Intelligence Dashboards Using Client Success Story Rapid Visualization A Major U.S. Liquor Distributor Had the Data—But it Was Not Actionable Situation Approach Key Accomplishments •One of the largest U.S. • The consulting team suggested that the • Demonstrated that the data were liquor distributors, with simplest way to get consensus on data available to create a 360° view of warehouse and delivery requirements and reporting tools would be operations across geographies operations in some 30 to mock up an interactive set of reports and over time states, had difficulty • The consulting team developed an • Presented full-color, realistic, comparing and managing the operating model to describe the interactive demo within 2 weeks effectiveness of its components of operating costs and • Identified sources of data, operations inventory carrying costs obstacles, and workarounds to •The company was operating • Then working with the client to identify make model operational with 8 different versions of available data and its sources, consultant • Worked with client to fine-tune three legacy order and constructed a series of metrics to track the ways data would be displayed inventory management operations performance in the context of • Within 4 weeks produced a systems this model working demo of a reporting •Data was reported to • Using a PC-based version of a popular model that was easily visualized various managers in many Business Intelligence tool, the consulting and endorsed by skeptical different ways, but no one team worked with the client’s operations operations managers from had a simple, consistent experts to mock up a set of on-line, diverse locales view of all operations interactive reports with which the client •Although a data warehouse could interact had been designed to Client previewed capture some critical data, the tool at its annual operations management could not meeting and won agree on what to report approval to proceed 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 13
  14. 14. Helping a Top Consumer Products Company Regain Client Success Story Category Leadership by Reorienting its Service Approach Redefined policies, permitting account-specific integrated service and promotion policies Situation Approach Key Accomplishments •The client was concerned • Developed customer experience • Convinced management that that its ability to maintain framework, describing interactions with several areas needed attention: its margins with retail customers at each stage of the service • Rigid logistics practices customers was eroding as it lifecycle, from product development to • Overly complex, insufficiently lost market share service after the sale documented promotions •Why were customers • Conducted (1) in-person top-to-top • Inflexible invoicing procedures unhappy in spite of the interviews and (2) telephone surveys with • Packaging, bundling and client’s acknowledged middle managers at major retail accounts logistics offerings not well strengths? to determine: matched to channels •Strong consumer • What do customers consider important • Developed process for tailoring preference for the aspects of service? service offerings to channels and client’s product line • How did the client measure up relative accounts •Competitive spending on to competitors at each stage in the • Introduced display-ready pallets trade promotions lifecycle? for promotion, customer-specific •High order fill rates • How did customers’ requirements vary unit loads, customized invoices •Efficient logistics by channel of trade and business • Improved metrics operations strategy? • Added service metrics to •Ethical business practices • Assessed current performance relative to customer scorecards •Experienced customer customers’ stated expectations to find service representatives areas requiring improvement •Attentive sales force • Met bi-weekly with cross-functional team Regained of client vice presidents to review Category approach, hypotheses and findings Leadership 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 14
  15. 15. Streamlining Distribution for a Client Success Story Consumer Products Manufacturer Developed post-merger distribution plan for CPG Manufacturer Situation Approach Key Accomplishments • Conglomerate purchased CPG • Interviewed senior management to understand • Significant disparities were manufacturer and wanted to goals for growth, cost and performance; customer discovered between operating merge its operations with those of service policies; and perceptions of current practices and performance of a previous acquisition to form a performance the two companies category leader • Assessed operating performance at current • A common set of customer • Companies had substantial, but facilities service policies were not complete overlap in customers • Developed extensive fact base to model costs and developed, recognizing that • Each company had different service implications of alternative network orders would be consolidated service policies, even for common structures at the customer level customers • Volumes, orders and shipments by customer • Emerging customer • Neither company had sufficient and/or SKU requirements for service and distribution capacity to serve the • Detailed costs of transportation and information were identified needs of the other distribution • Recommendations were made • Both companies were in the • Alternative costs associated with new to add a west coast DC, process of outsourcing much network elements remove a suboptimal production to Asia • Inventory levels and policies by location and distribution facility and improve • Companies were in the early SKU systems and operating stages of integrating supply chain • Current and expected sourcing plans practices and financial systems • Modeled cost and service implications of alternative paths for each SKU Costs reduced by 15% and service improved 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 15
  16. 16. For More Information Commentary and Resources 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 16
  17. 17. Contact JP Farrell & Associates, Inc. JP Farrell & Associates, Inc. 436 N Grove Ave James P Farrell Oak Park, IL 60302 Management Consultant Phone: (312) 545-3452 Fax: (708) 386-5844 E-mail: website: 10/5/2008 © JP Farrell & Associates, Inc. 2008. All rights reserved. 17