BrazilOperations Consulting
Operations consulting, also referred to as operations management, is defined as advisory and/or implementation services that improve a company's internal operations and performance in the value chain. Operations management consulting projects create more effective client operations by advising on and supporting the implementation of changes to target operating models, functional business processes, management systems, culture and other elements part of the value chain.
Operations consulting market
The market for operations management services is estimated to be worth around $70 billion, accounting for just under 30% of the global consulting market, making it, together with Financial Advisory, the largest segment in the industry. Over the past six years, the market has seen continued growth, with an average CAGR of 5%, taking the market size from $56 billion in 2011 to $71 billion in 2016. Key demand drivers are cost cutting and downsizing – particularly during the crisis years and their aftermath – performance improvement, as well as the need for transformations in functional areas such as HR, finance, sales & marketing and legal.
A key characteristic of operations consulting is that it is more resilient to economic conditions than other advisory segments across the board. Consulting demand in strategy consulting is, for instance, strongly linked to growth strategies, while M&A Advisory / Corporate Finance leans heavily on a buoyant economy and acquisition appetite and IT Consulting is, to an extent, reliant on economic conditions that shape capital investment budgets. In contrast, operations management can be used to improve company performance under favourable as well as unfavourable market conditions, either enabling revenue growth plans, or supporting downsizing and efficiency agendas.
Operations consulting services
The market for operations consulting and management services consists of eight disciplines: Organisational Operations, Sales & Marketing, Supply Chain, Sourcing & Procurement, Finance, Business Process Management, Research & Development and Outsourcing.
Organisational Operations focus on improving the performance of all aspects that support the organisation’s structure including; organisation design, governance (across functions and departments), roles and responsibilities, and employee performance. Typical activities relate either to the implementation of organisational strategies such as workforce optimisation/ redesign of employee roles, or are prompted by an event or crisis situation such as a merger or a transition as part of a broader corporate restructuring effort.
From a functional perspective, operations consulting aims at boosting the processes, ways of working and underlying systems across a broad range of areas, of which Sales & Marketing, Supply Chain, Sourcing & Procurement, Finance and Research & Development are the largest areas in terms of size. ‘Sales’ looks into how sales operations can be improved, including boosting channel management, professionalising the level of customer support (i.e. from call centres to specialised helpdesks) and advancing engagement with clients, commonly referred to as customer relationship management (CRM). Other areas that fall under Sales include the optimisation of account & promotion management, Sales & Operations Planning (S&OP), and improving workforce effectiveness. Marketing encompasses, among others, the fields of customer & market research, marketing intelligence, product design & engineering, category management and customer experience & loyalty.
Supply Chain Management (SCM) consultants aim at streamlining a business' supply-side activities across the full value chain, spanning from production to logistics (inbound/outbound) and warehousing to customer delivery. Key offerings include optimising the supply side of Sales & Operations Planning, enhancing the accuracy of planning (e.g. demand planning, forecasting), manufacturing operations improvement, logistics optimisation (e.g. network design, transport modes), inventory management and managing operations risk. The latter area spans all non-compliance-driven efforts (which sit within Financial Advisory) aimed at minimising the risk of supply chain failures to normal business operations. Key activities include the assessment of gross operating risk, the development of operations risk-mitigation plans, scenario modelling, and the development of frameworks to automate responses to operations disruptions.
One of the major areas of growth in Supply Chain Management consulting is sustainability – in light of the growing value attached to corporate social responsibility, companies are investing significantly in boosting the ecological footprint of their operations. Supply chain consultants typically work downstream of research & development (e.g. product development, marketing) and upstream of sales and post-sale activities (e.g. sales, customer service).
The Sourcing & Procurement segment of operations management looks at all procurement activities aimed at finding, evaluating and engaging suppliers for acquiring goods and services. Consultants can, for instance, provide support through improving the sourcing cost and process of raw materials or product / service components, enhance contracting terms & conditions with manufacturers / suppliers, and manage interaction with suppliers (including outsourced contracts), also known as supplier-relationship management. Key offerings include conducting a spend analysis in order to find synergies, improving both the direct as well as indirect procurement operations and supporting clients with transitioning to a greener procurement portfolio.
Services geared at the Finance department, also known as CFO services, focus on a range of financial activities. More strategic offerings include financial planning and target operating model development, which belong to the field of operations consulting. The segment may also include mergers & acquisitions, capital budgeting and asset management, although these services are commonly also part of the Financial Advisory service portfolio of consulting firms.
Implementation services focus on improving the performance of one or a group of financial processes, such as order to cash, procure to pay, cash management, working capital and the financial closing and reporting process. Finance operations are also all about supporting decision-making, and consultants are frequently engaged to improve the flow of relevant information to the appropriate stakeholders (management reporting) through, for instance, data management, business intelligence and financial dashboards. Engagements that seek to raise the maturity of the entire finance organisation, known as finance transformations, represent the largest mandate that consultants can be given in the domain.
Business Process Management (BPM) focuses on improving operational performance by optimising a company's business processes – it is, therefore, also described as process management and/or process improvement. The BPM landscape consists of several streams such as business process design, which sets out to define the ‘to-be’ situation and model process-flow and activities to support the blueprint, and business process re-engineering (BPR), which re-designs the entire process cycle, commonly performed to reduce inefficiencies, complexity, or inefficient legacy ways of working. Continuous improvement techniques aimed at systematically removing waste from processes, such as Lean, Six Sigma or Lean Six Sigma, form another major part of BPM projects, and although they originated and flourished for long in industrial sectors such as automotive and manufacturing, lean principles are applied nowadays across industries, and expert consultants (or certified advisors) are frequently hired to facilitate such transitions.
The Research & Development (R&D) service area is all about the business side of innovation. Consultants are engaged to develop and improve the bottom-line of innovation spending, which ranges from optimising new product development (NPD) processes to boosting portfolio complexity management and improving the efficiency of the R&D organisation, both from a ‘hard’ (e.g. structure / process / system) as well as a ‘soft’ (e.g. human capital) point of view. Product lifecycle management (PLM) is another source of productivity- improvement in the area of innovation. Decisions involving how long to keep a product in a portfolio and when to take a product out of service can be particularly difficult to make internally – consultants are, therefore, frequently brought in to advise around the elimination of no-longer-profitable products and to extend the profitable life of products currently in the market.
Outsourcing advisors tackle all client dilemma’s related to the outsourcing of responsibilities and activities to third parties. While outsourcing focused mainly on the offshoring of labour-intensive activities to low wage countries in its early years, the domain has grown into one of the largest services markets over the past decades, and has become a mainstream line of operating models today. Consultants typically support clients with the design and build of outsourcing blueprints – mainly for back-office processes such as finance & accounting, HR and recruitment, legal, IT infrastructure and applications – and subsequently support the transitions. Of late, there has been a trend towards bringing certain activities back to home- base geographies (‘reshoring’), and advisors are also intensively involved with such projects. Establishing Shared Services is also included as part of the Outsourcing domain by analysts, primarily because it essentially builds on similar skills & expertise (moving processes towards a new owner) and typically may include an outsourcing component if organisations choose for an external party. Prior to establishing a Financial (FSSC) or HR (HRSSC) Shared Service, consultants provide support through, among others, the harmonisation and standardisation of processes, as well the shift towards a common template.
What does an operations consultant do?
Operations consultants are hired by clients to support them with improving the efficiency of their value chain. These services include developing and implementing target operating / service delivery models, executing cost reduction programmes and optimising business processes. In addition, it includes designing and implementing business transformations in both primary and secondary functions. Examples include boosting the 'Customer Experience' (Sales, Marketing), improving the efficiency of logistics (Supply Chain), redesigning the manner in which raw materials are sourced (Procurement) and other front-office and back-office initiatives. In many cases improvements leverage technology meaning that projects include close cooperation with digital and IT consultants.
Operations consulting firms
As operations management stands at the heart of the majority of management issues, a large share of consulting firms provide services in one of the eight key service areas. Analysts typically distinguish between two types of firms: 'pure-play' operational consulting firms (i.e. those which focus exclusively on operations or one of the functional areas) and 'operations practices' of multi-service firms (a service line of a generalist consulting firm that provides operations offerings).
