closework global review - issue 1

Green Production: It Affects Your Future

Trading Up: The UrgentLeadership Challenge

Helping NASA Pioneer The Future

LEAN: How To Guarantee It Works

CELERANT CONSULTING Down on the ground helping to drive results up. Global Review 2010

EDITION ONE

CLOSEWORK©

cover 23/6/10 11:17

Celerant is one of the world’s Top 20 Operational

Driving Change

2 CELERANT GLOBAL REVIEW 2010

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

Annual Review AW pages 1-23 22/6/10 20:20

Management Consultancies*

CELERANT GLOBAL REVIEW 2010 3

*Kennedy Information.



For over 20 years, Celerant Consulting has delivered successful,

sustainable change for the world’s leading companies in the Energy,

Chemicals, Manufacturing, Consumer Goods, Life Sciences and Aerospace

& Defence industries. For over 10 years, we have successfully helped

Utilities, Telecoms, Healthcare, Consumer Services, Financial Services, Private

Equity and Public organisations. Our expertise covers the entire spectrum

of the Operations Management ecosystem, with a core focus on

Performance Improvement & Behavioural Change Management.

Every project is a strategic partnership where we get down onthe ground to identify and analyse a Client’s most significant business

challenges, then work with them to drive up results. With over 550team members and offices in 11 countries, we help implement customised

solutions that capitalise on existing systems, processes and people and

deliver substantial benefits for Clients. We change business for

good and over 90% of our Clients say they would work with us again.

CELERANTCONSULTING.COM

DNA



Agenda

Down on the ground helping to drive results up

Driving ChangeCLOSEWORK®

When people know what is expected ofthem, companies thrive.

Green ProductionBuild a Greenprint for the future.

How Military Strategies CanWin Corporate Hearts & MindsAn interview with Gil Baldwin OBE, ex Military Strategist and CEO.

The Burning PlatformDon’t get caught on the wrong side of change.

C-Cube. A Unique Club ForMasters Of ChangeProfessionals in Change Managementshare experiences, ideas and ambitions.

Driving PerformanceLEAN:How to guarantee it works.

Global Project SnapshotsEnergy, IT Solutions, FMCG, Utilities.

Trading Up: The UrgentLeadership ChallengeHow to reap the benefits of focussed innovation.

Global Project SnapshotsChemical, Telco, Energy, Utilities.

West Meets EastThe M&A Decade.

Global Project SnapshotsTransport, Manufacturing, Life Sciences, Energy.

Global Project SnapshotsConstruction, Manufacturing, Chemicals, Metals & Mining.

Global Project SnapshotsEnergy, Production, FMCG,Aerospace & Defence.

Driving ResultsKeeping Global BrandsRolling Off The LineA multi-site, multi-culture Change Programme.

Inking In The New Strategy3 paint manufacturing plants. 2 tasks. 1 Consultancy.

Moving Up A GearA double digit increase in truck availability.

A Vital Component In The Fight Against AidsIncreasing throughput to serve2,000,000 patients worldwide.

Rising To The TopBecoming a leading player in theEuropean Bakery Business.

Helping NASA Pioneer The FutureLaunching the new IDEA course.Change Programme.

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If You Make Apparel ForSurgeons, Your Operation Has To Be Spot OnRepositioning to become the UK’s N0.1 Workwear Apparel Company.

Driving TalentSo What Went Wrong At Toyota?Stan Gwizdak and Dennis McRae separate fact from fiction.

Down On The GroundHelping To Drive Results UpAntoine Dionis du Sejour explains whythe new office in Abu Dhabi will becomea regional powerhouse.

Outsourcing & Offshoring:Panacea Or Problems?Cathy Johnson believes there are 4 threats to a successful road trip.

The Man With The PlanDavid Smith explains how Gulf National OilCompanies are reviewing their operations.

Unleash The Inner Power Of Your WorkforceMatthew Marciniak shows how theCelerant 2010 Workforce ImpactabilityStudy will impact on everyone.

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Closework® Global Review 2010 is a magazine published by Celerant Publishing on behalf of Celerant Consulting. Edition One - June 2010. Publication Director: Thibaut Bataille.Chief Editor: Lisa Smith. Contributors: Thank you at all who contributed to this publication by sharing their exceptional experiences and knowledge with us. Editorialconception and realisation: Patrick Keating. Design conception and realisation: Andrew Barnes Jones. Printing: Nelson Direct Mail Services Ltd. The words, photos andimages in this publication cannot be used without the express consent of the Publication Director.


Driving Results


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

KEEPING GLOBAL BRANDS

As a world leader in liquid foods packaging solutions, Sidel has installed 20,000 machines in over 150 countries.

Recent installation cost and lead time overruns meant it was struggling to match client satisfaction levels.

The customer is King.

So Celerant Consulting was appointed to drive a global Change Programme.

he equipment installation phase is a highly visible element of Sidel’svalue chain. Having an installationthat starts and finishes on time,

and runs at its full potential, builds trust andenables Sidel’s clients to meet their operationaltargets. So focussing on this critical phasewould improve business performance and provide a true competitive advantage in atough economic environment.

To achieve this Sidel decided to launch The SIXProject (Sidel Installation Excellence) to driveinstallation practices at a world class level byimplementing global shared ways of workingand contributing to the business EBITDA andservice excellence. Celerant Consulting wasappointed because it demonstrated deepexpertise in managing complex projects in amulti-site and multi-cultural context and thisdecision was confirmed by the impressiveresults that Celerant had already deliveredacross the manufacturing sector.

Transforming 6 zones in 15 monthsCelerant was tasked with enhancing customersatisfaction and reducing installation cost by23% through:

T



• Decreasing lead time of installation.• Improving installation quality before leaving

manufacturing facilities.• Sharing best practices and developing

management and technical skills at all levels.• Creating a Continuous Improvement culture

and applying anticipation.

The project was deployed over 15 months inEurope, Africa, Latin America, North America,China and South East Asia Pacific and jointlymanaged by an international Celerant - Sidelteam in most of those locations.

Celerant developed and implemented commonworking practices, to avoid any extra costslinked to quality issues and to provide morereliable solutions for Sidel’s clients.

Behavioural change from bottom to topThe big challenge was to implement these solutionsglobally in 6 different commercial zones, eachmanaging its activity in an autonomous way andinvolving 500 people from Field Technicians toVice Presidents. Behavioural Change Managementwas therefore a critical aspect of the project sothat everyone became involved in the newways of working and the creation of a culture

of Continuous Improvement. Celerant’s expertsdrove this by providing more than 400 Closework®

coaching sessions at every level, gaining people’strust and a high level of commitment.

They also deployed Celerant’s MCRS® to play acritical role in developing the new cross-functionalway of working. It was designed to systematicallymanage the performance of the key installationprocesses to both anticipate any issues andprovide the most effective corrective actionshould they occur.

The whole organisation learnt fast and is still learningIn the space of just a couple of months, sharedreporting tools, effective process measurementsand efficient decision making that linked everylevel from bottom to top were designed andinstalled across the globe.

Alongside all this, a new Transversal ProjectManagement Process was defined to closelymonitor the Engineering, Development andManufacturing steps that were needed for suchcomplex projects. Formalised internal qualitygates and criteria were defined to place theglobal order fulfilment process under strict control,

and ensure that the organisation was learningall the time.

Today, all the engineering processes are moreefficient, shared and understood within the 6 commercial zones.

‘Our top client scored us as the best performer on installation among its different suppliers.’Client VP Western Europe & Africa

ROLLING RESULTS• Around €7m recurrent cost reduction on

installation - €1m more than the targetIn just over a year, Celerant Consultinghelped reduce installation costs by 23%

• 30% reduction on installation leadtime -down from 24 weeks to 17The project was not just a matter of reducingcost or lead times, it’s ultimate goal was toregain customer confidence and satisfactionand it emphatically achieved that

• A changed working cultureIt also embedded the cross collaboration and Continuous Improvement culture that are stepping stones for further growth

ROLLING OFF THE LINE


Driving Performance

We must learn to be equally good at what is short and sharp, as what is long and tough



oyota developed their LEAN production system in the 1950’s against an economic backdrop of hyper-competition and cost pressure that is remarkably similar

to today. It delivered phenomenal results anddespite recent problems has kept Toyota as the world’s No 1 car manufacturer and a benchmark company.

Over the years, the tools have evolved and the principles have been applied in most majorindustries. Yet the results have been nowherenear as impressive.

For example, in a USA Today Business article,only 19% of companies which deployed LEANstated that their programmes had achievedexpectations. So what’s going wrong?

Too much process focus, too little people focusWe believe the answer is simple. There’s beentoo much focus on process improvement andnot enough on people improvement. LEAN and Six Sigma techniques originate from thediscipline of Quality Management and thereforehave a tendency towards technical complexityand an over-emphasis on training. In our opinion, the terminology, statistics and elitism

T

LEAN can improveyour processes, butif you don’t improvethe mindset of yourprocess operators, it will never deliverreal value.Correctly applied, LEAN programmes candeliver outstanding value to the TransportationIndustry. But how do you correctly apply them?Here we examine the difference between theoryand practice and show how, by implementingthe Celerant Production SystemTM, you canguarantee that LEAN delivers.



fully engaged and so the key to making LEAN asuccess, deep seated and clearly understoodbehavioural change, is not happening. A furtherproblem is that executives often raise the bartoo high. Expecting ‘Real cultural change’ or‘LEAN becoming part of our DNA’ is simply notgoing to happen in a short space of time. Whatcan happen though, are rapid results and realbottom-line benefits that every member of theproject team can see. To guarantee this, wehave developed the Celerant Production SystemTM

which is based on our extensive experience of successful Change Programmes across industriesand focuses on both the technical and thechange dimensions of a LEAN deployment.

It also guarantees that the equation: Effect(Result) = Quality of Improvement x Making theChanges Stick will never end up as a big zero.

Projects involving LEAN or Six Sigma don’t haveto be complicated. With the right sensitivity ourcomprehensive approach has engaged andinspired each workforce and provided reallysustainable results.

Applying LEAN in the Transportation Industry LEAN methodology focuses on reducing waste in a process, increasing quality and stability,decreasing variance, cutting cycle times andimproving on-time delivery. Every element islinked, but the first is the core and the most

widely known. When correctly applied, it candeliver real value by reducing:

• Over-production: Making sure that only items for which there are orders are produced, therefore reducing storage needs and the costs of overstaffing and transportation.

• Unnecessary transport: Minimising the distance between processes and the movement of materials and finished goods in and out of storage.

• Unnecessary inventory: Reducing the inventoryof raw materials, work in process (WIP) or finished goods that drive capital employed and can hide problems like late delivery from suppliers, long set up times and defects.

• Waiting time: Ensuring people can work effectively at all times by minimising processingdelays, equipment downtimes, capacity bottle necks etc.

• Over-processing: Removing any unnecessary steps taken to process parts and focusing on what’s really needed to comply with customer expectations.

• Rework: Removing the need to rework or scrap faulty products by getting it right first time.

Driving Performance



have unintentionally alienated the workforce.Another criticism of LEAN is that it manages toovercomplicate the problem before offeringtangible solutions and results. That’s why weemphasise to clients that success can only comethrough a motivated workforce seeing rapid results.A long period of statistical analysis followed byfew results for weeks is a luxury no one can afford.Every initiative must rapidly add to the end-to-endvalue stream and increase competitiveness. You can legitimately tap into the LEAN toolboxand drive focused improvements without having to go through time consuming trainingprogrammes. The skill is getting the right personto use the right tool in the right circumstance.

The key is deep-seated behavioural changeLEAN programmes are primarily designed toreduce waste in a process and the most effectiveway to do this is to engage the people who areclosest to the process and therefore best ableto see that waste.

Yet according to a survey of 2,500 businesspeople by LEAN Enterprise Institute, the top 4obstacles to sustainable LEAN programmes are:• Middle management resistance (36.1%)• Lack of implementation know-how (31.0%)• Employee resistance (27. 7%)• Supervisor resistance (23. 0%)

The people who hold the answers are not being

‘To maximise the impact of LEAN, change must be embedded in the mind. Not simply ticked in the box.’


• Processes: The danger here is that often seniormanagement don’t have the full process pictureand rely on how they think it is operating, ratherthan how it actually is operating. So it’s crucialthat, supported by a dynamic leadership team,LEAN must be a bottom up approach. It’s far easierto identify and eliminate waste in a process when you are closely involved in that process.

• Systems: All too often, the question: ‘How are you managing your day to day systems?’ is answered by showing meeting agendas or drafts of complex reports, when what’s really needed is a transparent management system that goes far beyond this in both content and importance. That’s why we developed MCRS®.It ensures the right information is available to the right people at the right time. It also establishes decision making based on fact, not anecdotal opinion, and provides a tightly disciplined follow up for every action taken.

Everyone must have a sense of ownership Success can be guaranteed provided there’s a real commitment at senior level and a recognition that external support willalmost certainly be required. Once a LEANinitiative has been given the green light, it’s imperative that everyone keeps their eyes on the prize. They must fully understand the short, medium and long term objectives.

The people at the sharp end must be passionatelycommitted to making the changes work and besupported by a strong leadership team. Theremust be quick, proven results to keep the forwardmomentum and an ongoing measurement systemfor results and performance.

Above all, there must be a strong sense of ownership by the process operators and a belief that waste is not acceptable to anyonewithin the organisation.

SATISFIED CLIENTS

A Major European Airline• $19m inventory reduction• Reduction of inventory storage costs of greater

than $1m per annum• New ways of managing the repair cycle delivering

real performance improvements from suppliers

A Major European Airport• 17% process time decrease• Increased customer satisfaction• Continuous improvement culture• All key processes have measurable targets

and specifications defining performance


• Excess movement: Ensuring tools can be foundin one place and organising workstations so there’s no need to reach for parts and materials.

• Inadequate knowledge use: Listening and engaging employees to make sure that ideas, skills and improvement opportunities are not lost.

Once a programme is underway, the next challenge is to make the changes stick.

Engage and Inspire your WorkforceCelerant is one of the largest independent playersin the operations sector of the global consultancymarket and our experience has shown that asuccessful Change Programme must address 3 interlocking issues:

• People: As we’ve stated earlier, the key to successfully changing a process is to change the mindset of the processes operators. To fully embed a new way of working, people at each level of the business must understand why it’s necessary, own the solution, have an opportunity to try it in practice and see the fruits of their efforts. This requires support, communication, coaching and perseverance. Our approach to this behavioural change is called Closework® and it delivers sustainable results by getting people to do their work differently and challenging their peers to do the same.


here can be no doubt whatsoever that LEAN and the Toyota ProductionSystem (TPS) works. It reduces variation, waste, complexity and

supplier numbers, allowing companies to standardise the products they manufacture.

It has also allowed Toyota to grow and prosperfrom the early beginnings to the largest carcompany in the world. Toyota has been bench-marked and many companies globally haveadopted the TPS into their own operations.Others have their own production system modeled after Toyota’s.

Toyota has an operating model to run theirbusiness and everyone from the lowest level in the company to the CEO knows the rules andthe game plan. As long as they were sticking

to the game plan, Toyota was able to sustain a very strong quality system.

Where Toyota went wrong was in not followingits own playbook.

The 4 areas that drove Toyota off trackAs we heard in the recent US CongressionalHearings, Toyota’s drive to be No.1 led to the situation the company finds itself in today. In thedesire for growth, internal resources and thesupply chain were stretched by the opening of somany new plants and locations around the world.Quality and Genchi Genbutsu (Go to the sourceto get the facts) are hallmarks of the ToyotaProduction System. These fundamentals are whatdrove Toyota to become a large respected company,and abandoning them is how things began togo wrong. There were 4 key problem areas:

The Drive to be No1In 2002, Toyota set a target to be the No.1Global Automobile Manufacturing Company in the world, an aggressive goal that required50% growth. This is the equivalent of Toyotastarting up a company the size of HondaAutomotive in just 7 years. Because of thisfocus, Toyota decided to stop their goal of slowand steady growth, which had allowed them tocontinue to make quality cars and grow marketshare. This growth stretched their resourcesand their supply base.

It became harder for them to stay focused onquality when they were growing so fast.

ComplacencyToyota invented the TPS and it was working sowell that they felt they didn’t need to worry

T

So What Went Wrong At Toyota?Some commentators are pointing to the recent problems at

Toyota and saying that LEAN and the Toyota Production

System doesn’t work. Stan Gwizdak and Dennis McRae,

VPs at Celerant Consulting Americas, strongly disagree.

Driving Talent

Success always demands a greater effort.


x


about being vigilant with their manufacturingprocesses anymore. They believed that they hadall of the answers and took their eye off the ball.

In fact, Katsuaki Watanabe, the former Presidentof Toyota, admitted in 2006 that the companyhad quality problems. At that time, Watanabeacknowledged that lengthening developmenttimes might be necessary. Instead, the companycontinued its drive for rapid growth.

Top Down Decision MakingToyota’s philosophy of ‘Genchi Genbutsu’ (Goto the source to get the facts) became harderwhen there were many levels of managementbetween the decision makers and the problems.

As a result of their rapid growth, manufacturingwas taking place all over the world. However,

corporate headquarters in Japan continued tomake the decisions at a distance instead of takinginput from local ‘sources’ where the factorieswere located.

Cost Reduction PressuresIn response to a pressure that all automobilemanufactures were feeling Toyota started aprogramme of buying products manufacturedlocally to their plants, instead of shipping in all components from Japan.

This created more suppliers and more complexityin the Toyota system. It also put additional strainon the engineering teams and the business asthey also were growing at a fast pace.

The Lesson?As we’ve seen this play out in the news over

the last several months, it is clear that otherfactors also contributed to the scale and publicfallout of Toyota’s difficulties.

No doubt a faster response to customer complaints, more visibility of the CEO and better public relations could have limited thelevel of damage to the company.

Nevertheless, the problems began in manufacturing,and the lesson other manufacturing companiescan learn is that it is vital to be constantlychecking that the principles of LEAN are beingapplied - and that implementing these principlesis an ongoing process.

The opinions expressed are those of the authors

and not necessarily Celerant Consulting.


x

x

x


Driving Performance


We must learn to be equally good at what is short and sharp, as what is long and tough.

BUSINESS CHALLENGE 10 years of high growth in W. Africa for this globalenergy leader had led to an increased demand on Logistics support acrossmultiple on/offshore locations. Its Aviation and Marine departments hadno management system or defined processes to consistently ensure safe,reliable operations. There was also a lack of HSE focus and both expatsenior management positions had to be filled by local nationals.

CELERANT SOLUTION Celerant was brought in to deliver a comprehensiveand flexible management system that would support the day-to-day deliveryof the company’s Operations Management System within the Aviationand Marine departments - and to provide training and coaching to build astrong base for future growth. Efficiency and effectiveness KPI reviewswere held with frontline customers, resulting in a root-cause analysis, theidentification of key actions needed to address gaps and a customerService Level Agreement. Then, as the first step towards an integratedLogistics schedule, a weekly rolling Boat Schedule was agreed. Revieweddaily to incorporate changes, it was integrated with the Aviation scheduleto optimise movement between offshore installations. Weekly and monthlyTeam meetings between Marine and Aviation departments reviewed efficiencyand effectiveness KPIs, focussing on reasons for delays and low assetutilisation. All department members attended to improve communication andinformation flow and the inclusion of Health & Safety in these meetingsled to a dramatic increase in HSE-related indicators, making HSE leaderswithin their departments.

RESULTS $4m annualised savings in Fleet fuel costs. •Planning accuracyincreased by over 50%. •Flight delays by the sole air services supplierdecreased by 44%. •As a direct result of Celerant’s coaching programmesto improve skills, the company felt confident about promoting two localnationals to key Management positions where they have establishedthemselves as highly regarded professionals. •The client now feels theyare managing an organisation built for scalability and ready to integrateadditional customer contracts and optimise future growth.

Ensuring A Smooth Handover

IT SolutionsEnergy

BUSINESS CHALLENGE The client’s ambition is to become one of the world’sTop 5 players, but it operates in a highly competitive market with pricepressures and low customer loyalty. It was also lacking a One-Companyapproach to drive quality and operational improvements in its complex,20 country business. The challenge was to change all that.

CELERANT SOLUTION Working closely with the client team, Celerantdesigned and implemented a global Six Sigma programme that establisheda One - Company approach to quality improvements through:• A Programme Governance structure• Aligned training and coaching support in 20 countries• A web-based tracking methodology for over 100 parallel projects per wave• A step-by-step handover of responsibilities to internal functions

RESULTS The client saw a dramatic improvement in the cost - NPV €250m- and quality of its operations through reduced major incidents andimproved SLA compliance. It also saw its customer satisfaction soar by20% in an external survey. Across the globe a One-Company, autonomousContinuous Improvement programme was developed, with more than 20Master Black Belts and 100 Black Belts in 20 countries.

‘Six Sigma became for us a key enabler for our vision to achieve success and implement change. Celerant was and is a reliable partner on this journey of change.’ Head of Process & Quality Management

One Company. One World.



BUSINESS CHALLENGE The client is one of the world’s leading suppliersof carton based packaging systems for liquid food and non-food products.Production normally operated at maximum capacity, so each market unitwas fighting to get its orders in on time, in full. But with no structuredapproach to prioritising customers and a poor structure of the generalS&OP process, including roles & responsibilities, the organisation wasexperiencing a lot of noise and stress because the correct data for accuratedecision making was not readily available.

CELERANT SOLUTION A new management system was needed andCelerant was chosen to help build it using our proprietary MCRS®.Tomake this S&OP project work, Celerant involved extensive numbers ofpeople from the 3 production facilities, together with key people from the5 most significant market units. It also developed cross-function meet-ings and workshops to ensure a wide buy-in and acceptance for thechanges that the project was bringing. Individual Client-Consultantgroups developed fit-for-purpose management systems (MCRS®), and an overarching S&OP MCRS® linked them all together. Enabling tools,including a new forecast machine and an integrated planning system toensure the new ways of working were sustainable were also deployed.

RESULTS Total annualised benefits of around €365k. It also benefited fromincreased delivery performance, effective performance managementthrough relevant KPIs and MCRS®, a structured customer segmentationprioritisation and service level management, the integration and alignmentof activities along value chain - and most importantly, greatly improvedcustomer satisfaction.

‘Due to the supply chain project, the right people now make the rightdecisions, based on up-to-date data’ Managing Director

Correct Data. Correct Decision.

FMCG

Building A Powerhouse

Utilities

BUSINESS CHALLENGE With over 1.5 million customers, the client is one of thelargest players in the Belgian energy market. It was born as a conglomerate oflocal electricity companies and focuses on generating electricity (Generation)and well as sales in the wholesale (Trading) and consumer (Retail) markets.Celerant first worked with the company in the Generation area i.e. 21 powerplants each with their own maintenance and operations organisation. Byinstalling a common-way-of-working in one national organisational model Celerantsuccessfully brought a culture of transparency and continuous improvement.‘You have done in 40 weeks what has not been possible for us to do in 40years!’ The CEO then decided to push forward the company’s cultural integrationby launching a second improvement initiative, this time putting all other depart-ments in scope, and the Best-in-Class programme 2010 (BIC 2010) was born.

CELERANT SOLUTION By including all departments, BIC 2010 needed toimprove customer satisfaction, reduce cost and increase profitably throughthe implementation of ‘Best-in-Class’ end-to-end processes. Retail: Theservice centre consists of a call centre and a back office. Both became moreeffective through improved service levels, leaner processes and a ‘Right FirstTime’ attitude. Using our proprietary MCRS®, the company better understoodwhy customers were calling and was able to better forecast workload. Thisin turn led to better staffing models, better service levels and better customersatisfaction. Other improvements included better Contract Registration, CashCollection and Sales Force efficiency. Trading: Celerant helped the client optimiseits asset portfolio by creating a transparent link between the company’s grossmargin and the different value drivers. As a result, it can now steer its financialperformance much more pro-actively. IT - Business Solutions: Celerant’sexperts helped IT move from black box to a service oriented business partnerwith a clear service portfolio, significantly improved project management andclearly defined roles and responsibilities. Other Departments: BRIC 2010also involved Procurement, Finance, Legal, HR, Safety, Quality, CorporateAffairs and Risk Management.

RESULTS €15.6m annualised savings. •More than 430 milestone deliverables.•Financial results at the end of the 1st year that exceeded plan by 70%. •A companywide centralisation involving more than 1,000 people.


Driving Change



Celerant’s team of 44 different nationalities guarantees a locally customised solution to every problem


When Flint Group

wanted to transform

the working practices at its

printing ink manufacturing

plants in Stuttgart, Milan

and Barcelona, Celerant

Consulting was given

a blank sheet

of paper.

lint Group is one of the leading international suppliers of printing inks for the global packaging and print media industries. It currently

employs 7,800 people and achieved its positionas No.1 or No.2 in every region it suppliesthrough several rounds of consolidation withinthe fragmented european printing ink industry.

3 Sites. 2 Tasks. 1 Consultancy.For it’s Sheet Offset Printing Inks operation,Flint Group combined several strong brandsto form the Sheetfed Europe Division, with its 3 most important production sites in Stuttgart,Milan and Barcelona. Following the mergers,Flint Sheetfed Europe decided on a doublestrategy of consolidation and centralisation.First, each production site was to concentrateon specific product lines to lower productioncosts and improve both quality and productavailability. Second, tied-up capital was to bereduced across the whole operation. To helpdrive both these initiatives, Celerant Consultingwas called in.

A Double WhammyCelerant’s analysis showed that both the largeproduct portfolio and the high level of productvariations were having a negative impact onthe stock situation. Short-term reductions incosts had been achieved by consolidation, but

INKING IN THE NEW STRATEGY

Driving Results



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they necessitated adjustments of the supplychain and supply concept. At the same timedemands on the management of tied-up capitalwere increasing. So the project focused onreducing floating assets and production coststhrough the development of a new productionand stockage strategy. The levers for achievingthis were the modification of operational andorganisational processes, the introduction ofsales and operation planning (S&OP) and anew manufacturing concept.

The catalyst for changeThe catalyst for change was the introduction ofCelerant’s MCRS®. Its indices were developedjointly with Sheetfed Europe’s managementand geared to the new manufacturing concept.In addition, a new distribution concept wasdeveloped and the immediate implementationof the inventory/stock force meant that allstock could now be quickly checked. Thesechanges were successfully implemented at all 3 sites and at the end of the project, variousservice level agreements (SLA) were drawn upwithin the organisation and recorded in thesupply chain manual.

New methods brought new informationTo maximise Sales & Operational Planning, theproducts were classified and, for the purposesof the new stockpiling concept, split into various

categories. Items that were to be manufacturedand stored (SKU) were identified and optimisedthrough a newly developed calculation model anda new forecasting (FC) process. Then, with theaid of a modified SAP module, new informationwas extracted on trends, seasonal variations andconsumption patterns. This was complementedby a systematic customer segmentation, whichmade it possible to obtain further precise andprioritised data for production purposes.

‘Celerant achieved sustainable stock reductions for our company of approximately 30%. One year later these results have even been surpassed.’Dirk Wollenweber, Director of Operations, Sheetfed Europe


STRIKING RESULTS• STOCK REDUCTIONS OF APPROX 30%.• FIXED COSTS REDUCED CONSIDERABLY.• New stockage strategy developed through

implementing improved operating processes• New distribution concept developed to supply

products direct from production sites• Stock turnover and warehouse capacity

controlling system reorganised• Responsibilities between Sales, Logistics and

Production reorganised to maximise profitability.• New system parameter model for stock control

developed and programmed• New forecasting process to match new Sales

& Marketing structure developed• Profitability through systematic customer

segmentation optimised• Balanced score card to monitor and continuously

improve S&OP process introduced


Driving Talent



DOWN ON THE GROUND HELPING TO DRIVE RESULTS UP

Last year, as a result of strongregional demand, Celerant Consultingexpanded its global presence with a new office in Abu Dhabi.



elerant had already been advising

some of the world’s largest

national oil companies in the

region for nearly 10 years.

Now, with a permanent presence, the priority

is regional growth.

‘Celerant already has significant relationshipswith a range of leading Abu Dhabi andGulf organisations, and it’s vital to ourpartnership model that we’re here to supportthem locally. Celerant’s business model isbased on working alongside our clients toimplement what are often complex operational

and behavioural change programmes todeliver tangible, sustainable results. TheUAE and wider region present an interestingchallenge for business because trust is everything.Our expertise supports the economic visionof the UAE’s ruling families and that is whatreally matters to them. We have also developeda unique perspective on skills transfer - aprocess that is invaluable to any organisationdealing with local human capacity building.’

Antoine Dionis du SejourExecutive VP Celerant Consulting Middle East& Head of Regional Operations

C


he bottom line is that outsourcing

is a new build. In a new culture, with

new and sometimes inexperienced

people. It’s complex, highly

challenging and if it can go wrong, it will. So you

have to be absolutely sure what you’re getting

into and what you want to get out of it. Above

all, you have to remember that the key to success

is behavioural change.

Beware the myth of massive savings

In survey after survey, the main driver for out-

sourcing is cost reduction. Yet all too often,

senior executives don’t have a clear idea of the

details of the operations they’re planning to

outsource or offshore. So they jump to solutions

before examining all the options. The result?

Savings aren’t as substantial as first envisaged

and not measured to the bottom line.

Technology would seem an obvious route to

cost reduction. It provides a global business

with the opportunity to operate virtually and is

a critical element of process delivery in today’s

environment. The downside is that there’s

inconsistent visibility and understanding of the

real impact it has on an operational environment.

So if the way forward is determined solely by a

technically focused staff group, rather than

those accountable for service delivery at the

sharp end, it can result in technology being

selected which determines how business processes

should work, rather than supporting them. And

that’s not a sensible way to save money.

Before any major strategic decisions are taken,

it’s essential to identify any issues within the

existing operation and formulate an effective

plan to deal with them. A broken process is a

broken process, wherever you locate it. In fact,

there’s a real danger that you could actually end

up in a worse position, because inexperienced

people in a new, remote location will never be

a successful substitute for a highly skilled

onshore workforce that has learned, sometimes

over decades, to compensate for broken processes.

It could also prove very costly if these processes

aren’t handed over in the best possible shape -

even taking labour rate arbitrage into account.

With labour rate inflation in parts of the new

economies now running at 60%, getting fit for

purpose is not just desirable from a control point

of view, it’s a fundamental cost imperative.

Beware the ‘Lift and Shift’ mentality

Only a small percentage of companies confirm

that they have achieved or exceeded the up-front

cost saving promise of outsourcing. The aim

must be to join them. Opting to simply ‘Lift and

Shift’ won’t cut it anymore - if it ever did.

‘Improve - then Move’ must be the watchwords.

Even if it’s not possible to get an operation into

the best possible shape before you offshore, it’s

crucial that you don’t take inefficiencies with you.

Sustainability is about achieving the correct

and lasting alignment between the work that

needs to be done and the best ways to do it.

So reorganise key functions around processes to

achieve that alignment. Automate key activities

so that the potential for variation is reduced to

a minimum and ensure that you can continue

to manage all aspects of performance. Set

accountability for the design of the new operation

before deciding on the solution, then set

accountability for delivery at every level of the

operation. Measure the performance of your

current operation so that you can deliver a bottom

line improvement in the new model. All this can

be done through a robust management system,

MCRS® in our language, which glues together

the transformation programme and manages

the transition of the project into the new way

of working.

Beware the challenges of the ultimate

change programme

It’s pointless improving the processes within an

operation if you neglect the people. How many

outsourcing decisions are taken using people

as a criteria? All too often they are not given

the support they need to make outsourcing,

and particularly offshoring, a success. A new

T

Driving Talent


Outsourcing & Offshoring:Panacea or Problems?

Over 80% of large companies in Europe, North America and Asiahave outsourcing arrangements, but almost half say that thesearrangements fall short of expectations. So what’s going wrong?Cathy Johnson, VP at Celerant Consulting UK, believes there arefour threats to making a successful road trip.



report ‘How companies are managing change in

a recession’ from The Economist Intelligence

Unit and sponsored by Celerant, clearly shows

that the two main reasons change programmes

fail is a lack of clearly defined or achievable

milestones and objectives and the inability of

management to win the hearts and minds of

their senior managers and employees.

Outsourcing is the ultimate change programme.

So leaders have to demonstrate that they are

totally committed to a best practice transfer.

This will help them secure real support from

people at all levels of the business, particularly

those leading the project.

They also have to ensure that they can embed

behavioural change within all the employees

involved. These people will undergo an emotional

journey throughout the process and it can be

uncomfortable at times, so they need to be fully

supported and coached. This is particularly true

of mid-level managers who, despite being at

the sharp end, are often brought in later.

Behavioural change is the key to a successful

transfer. Leaders must get commitment to

results and buy-in through effective communi-

cation management. They must make it happen

through support and leadership and then make

it stick through coaching and training.

Beware the spikes in the road

Change is never simple, but if it’s properly

planned towards the business objectives and

then well executed, it will deliver real value in

these challenging times. Recognising the com-

plexity of the processes behind the operations

intended for outsourcing and the need to get

them right is only half the battle. To win, you

need to think through the implementation

process; acquiring the knowledge on how.

BASELINE: It’s crucial to gain a deep under-

standing of how key processes currently operate

in your organisation and how the work really

gets done. What goes wrong most often and

why? What are the hidden workarounds?

What is the size of the prize to outsource?

What levers will deliver the improvement and

how will you manage the new operation?

GET LEAN: Using the baseline, implement a

quick win plan that tackles the inefficiencies

in key processes fast. Combine activities and

improve communication. Make sure everyone

understands the impact of their work on others.

IMPROVE: Implement a plan for deep improve-

ment that will prepare the operation for real

transformation. Measure the work that most

directly relates to real output. Eliminate root

causes of variation and error. Create solutions

that reduce complexity and improve performance.

TRANSFORM: Align your processes to the

excellent experience your customers demand.

Re-define your performance management systems

and set accountability at each level of the

organisation to measure and drive performance.

SUSTAIN: The ultimate measure of success

with process excellence is sustainability. The

goal is a positive legacy. ‘Improve - then Move’

with a set of processes that will go on adding

value anywhere in the world and ensure that

you’re ready for the challenges of Next

Generation outsourcing.

Remember, it’s not your location.

It's your culture

Finally and most crucially, you have to create

a culture of continuous improvement. A culture

that is endemic to the way you do business.

It should be able to evolve with your changing

needs and the growing expectations of your

customers.

Above all though, it must be portable, so that

your business will continue to benefit, no matter

where your process operations are located.



adical changes are taking place across the world of business. Models that have been with us for years have been swept aside

and new ones are rising in their place.

So it’s vital that organisations do all they can to future-proof their business. A fundamentalrethink now will lead to a fundamentally betterperformance when the economy gathers steam.

So all eyes turn to the leadership team.‘Where to now?’

Tough times to live. Even tougher times to lead.Rising loan defaults, deleveraging of householddebt, increasing taxation and deterioratingemployment numbers will continue to stifle consumption in 2010. Even after that, theprospects for any significant growth in GDPremain weak.

So it’s time for leaders to recognise that the newconstant of business is that nothing remainsconstant. A culture of ‘This is the way we’vealways done it’ must be ruthlessly challengedand innovation and experimentation mustbecome an integral part of every business andleadership approach.

Management systems must be social, inclusiveand critical of out of date assumptions.

Processes must be designed with an embeddedability to evolve.

Oganisational environments must be architectedto encourage real learning through action. Andthe customer must be the alpha and the omega.

Go back to go forwards.It’s no surprise that the future starts with thecustomer. But unless leaders go back and testall their natural assumptions, not only thosethat are stated and explicit, but also those thatare implied by action or behaviour, the right wayforward will continue to be elusive - despite thecomfort of a well intentioned customer focus.

So start by mapping all the stakeholders acrossyour value chain, from order to fulfilment.Including the customer and all suppliers ofmaterial, parts, finance and information.

From this, you can identify any weak links andjudge what the consequences might be of anyshort term actions on your operational model'sability to respond to changing customer needsand expectations.

For example, it might seem like an easy, short termwin to extend payment terms to your suppliers.But if your underlying planning systems don’timprove and your back office cycle times aren'treduced, you won’t actually improve your business

operationally. You may in fact weaken it, asyour security of supply is threatened and yourfuture ability to respond is damaged.

Remember, success is a moving target. Having identified any weak links in your valuechain, listened to the real voice of your customerand gathered all the ‘best available’ knowledge,leaders must now create the right decision makingsystem for their leadership team.

A system that:• Accepts that the ‘best available’ knowledge

is just that. The best at any precise moment andnot something that roadblocks the future.

• Routinely captures data on the current reality, destroys out of date perceptions and illustrateshow the work really gets done.

• Encourages real collaboration by makinginformation available when and where it’smost needed.

They must then give their best people theauthority and accountability to study the dataand encourage well designed experiments todeliver improvements.

Innovation. Not complication.It’s a fact that the best innovation is focusedinnovation. Test it - Prove it - Apply it. It’s assimple as that and anything that complicatesmatters must be torn up. It’s also a fact that

R

Driving Performance


TRADING UP:

The Urgent Leadership ChallengeWith the global economy continuing to ride a recessionary rollercoaster, it’s vital that companies Trade Up to a New Way of Workingand reap the benefits of focused innovation.


Annual Review AW pages 24-47 22/6/10 20:37 Page 1

people learn most effectively through ‘practice’.So every innovation must be backed up by ‘positive practice’. That way you stimulate yourorganisation's ability to evolve and determinethe new competitive frontier.

Finally, when delivery has been proven in eacharea, Leaders must ensure that all the benefitsof this major investment of leadership time andenergy are given real momentum by deployingbest practice right across their organisation.

Do amazing things.In ‘The Art of War’, Sun Tzu observed that whentroops are faced with no possible escape, they doamazing things. So after making all the obviouscuts, there comes a time when Leaders must movetheir people forward because there’s nowhereleft to retreat.

That time is now. And Celerant can help.

We have worked with major companies fromevery industrial and commercial sector to helpthem to Trade Up. And the delivered benefits of that successful change have increased theirshareholder value and grown their market share.


After making all the obvious cuts,there comes a time when Leaders mustmove their people forward, becausethere is nowhere left to retreat.


Driving Performance



Improving From The Inside Out

BUSINESS CHALLENGE One of the client’s Swedish plants had tremendousgrowth opportunities, but faced some tough internal challenges to achieveit. Strong demand for its principal product meant an urgent need to: •Maximiseoutput with less variance. •Increase plant availability. •Improve planning& control of maintenance and contractors. •Achieve an internal and externalculture of collaboration.

CELERANT SOLUTION Celerant already had a track-record of success withthis client, so it was brought in to help design and drive a Change Programmethat focussed on 3 areas: Production Excellence Understanding the reasonsfor process variation enabled the introduction of improved process controls,including clear roles and responsibilities. An Effective Management SystemImplementing Celerant’s MCRS® and supporting it with clear KPIs andbottom-up reporting meant more transparency and control. MaintenanceExcellence Optimising maintenance systems and controls and improvingthe management of its contractor interfaces meant the company couldimplement an improved approach to Maintenance. Regular cross-functionalmeetings delivered closer co-operation between internal maintenance co-ordinators, the service provider and production functions. Everyoneunderstood both the common problems and the specific needs of each party.New KPIs, with daily and weekly reports, provided transparency and aframework for effective decision making. Once the technical managementroutines were in place, Celerant shifted the focus towards Closework®

tactical and behavioural training to ensure sustainability.

RESULTS Financial benefits 50% above target. •Increased productionoutput with much less variation. •Cross-functional co-operation in rootcause analysis and problem solving. •Behaviour change throughout theorganisation. •Upgraded management systems. •New maintenance contractor selected.

‘4 months after the consultants left, all 3 of our plants achieved 100%availability for the first time ever!’Manufacturing Manager.

Chemicals

‘Right First Time’

Telco

BUSINESS CHALLENGE As one of the southern hemisphere’s major Telcos,this client wanted to improve customer satisfaction by making sure that allthe services it provided were ‘Right First Time’. It also wanted to reduce costs,build programme management capabilities and install a companywideculture of Continuous Improvement.

CELERANT SOLUTION Working closely with the client Management Team,Celerant developed a fit for purpose Change Programme that was implementedwith representatives of the various businesses. All processes that relateddirectly to the customer were standardised and improved from end-to-endand specific ‘Right First Time’ measures were built and implemented, - ensuringthat the promise ‘Right First Time’ was delivered every time. These improvementswere supported by a solid Performance Management System (MCRS®)that provided clarity and an ability to steer, based on data in every stepof the process. The programme was also aimed at specifically buildingthe organisation’s ability to develop future waves of improvements, so asolid Programme Management Office was built and trained to run furtherprojects aimed at improving the customer experience.

RESULTS Over 40m dollars of benefits have been approved by the business.A culture of Continuous Improvement and ‘new ways of working’ has beendeveloped, with more than 800 people trained on topics like problemsolving, performance management and root cause analysis. After anintensive design and implementation period, the client is now extremelyconfident that by leveraging its new internal coaches, it can go on toachieve its goal of being the best performing, customer focused onlineand communications company in Australasia.

‘Right First Time’ has quickly become the widely accepted way of workingin our business. Celerant supported us to build the framework, drivingthe delivery and increasing our capability to continue improving customerexperience. I’m convinced RFT will continue to add value as we use theframework.’



BUSINESS CHALLENGE The client is one of the Middle East’s largest oilproducers and wanted to improve its operations in 3 main areas: •Increaseproduction efficiency by 5% points at project week 40, equating to anannualised benefit of $31m @ $25.5 BO (or $65m in real market terms).•Increase the efficiency and integrity of the operational environment byimplementing a sustainable Continuous Improvement Programme thatcould be expanded across all customer operations. •Implement tools andsystems that would increase nationalisation (transferring roles to localnational citizens) in the field of 95%.

CELERANT SOLUTION To break down a culture of departmental silos,Celerant designed and implemented an integrated management system(MCRS®) that ensured all operational departments were aligned andshared the overall customer business goals and objectives. This immediatelyled to real time operational performance information, better strategic andoperational planning and enhanced collaborative team working. KeyPerformance Indicators were developed for the business goals to providea field balance score card, which was cascaded all the way down to operatorand technician levels. Alongside this, structured departmental and crossfunctional meetings were installed, based on performance managementfor fact based decision making.

RESULTS •A 6% increase in production efficiency. •$23.7m cumulative benefit- ahead of the $12.8m target. •$36m annualised benefit. •An increase innationalisation from 90% to 96.3% - 1 year ahead of target. •By projectend, 56 positions, including 10 Leadership and Supervisory roles, hadbeen nationalised.

Ahead Of Every Target

Energy

Performance To Match Demand

Utilities

BUSINESS CHALLENGE This electricity generating site is crucial to supplying the needs of a major european country, but site performancewas not matching management expectations. The challenge was toincrease organisational efficiency, boost equipment availability to 90% and empower the maintenance workforce.

CELERANT SOLUTION To competitively and sustainably produce MWethat would match the plant’s key role, management launched a 3 YearPlan. Celerant was brought in to conduct an analysis and help drive aChange Programme that would increase the availability and performanceof one 250MWe and two 600MWe power units by focusing on maintenanceaccuracy and efficiency, and the impact of operating equipment and reliability.Celerant and client teams worked closely to combine the necessary skillsto drive changes. To meet the Management group vision, Celerantaddressed the issues through 4 workstreams: Maintenance EffectivenessCelerant supported the production unit in defining strategic /criticalequipment and an associated maintenance plan, with the result that theEngineering department now knows exactly how to analyse failures, measuretheir impact and avoid them. Maintenance Planning & Scheduling Planningand reporting meetings were made more effective to steer activity and KPIshighlighted performance accomplishments and opportunities for furtherimprovements. All planning was shared with other departments.Maintenance Work Execution (In-house and contractors). New proceduresand tools were deployed to support the team to follow up on operations.These new system elements are now used during all breakdowns/planned shutdowns. MCRS® This system covered all processes andhelped Management drive performance to new levels.

RESULTS The site’s image radically changed in the eyes of the entireorganisation and its contribution now represents a significant percentageof profits achieved by the coal-fired power division.

‘I am impressed by the project quality and the amount of work accomplished,especially in this challenging social environment. We are on the right track’.


Driving Results



bout 2 tons of oil sand, a blend of clay, sand, water and bitumen, are required to produce a single barrel of oil.

Rugged conditions tax heavy vehicles to breakingpoint, but Oil Sands operators can't afford excuses.

‘Operating costs in the Oil Sands are inherentlyhigh,’ says Thomas Zengerly, Shell Canada’s VPfor Heavy Oil Operations. ‘So you can’t be ahigh cost competitor, in a high cost sector, andexpect success.’

Keeping the trucks movingAt the Muskeg River Mine in Alberta, giant shovelsload surface-mined oil sand onto the world’slargest trucks, Caterpillar 797Bs, for transportationto bitumen extraction facilities. This extremelyheavy crude is then solvent diluted and trans-ported via pipeline to be upgraded and refinedinto a wide range of synthetic crude oils. Theshovel-and-truck operation runs 24/7. 365 daysa year. So high truck availability is an absoluteimperative to achieving production that's at ornear the mine’s design capacity of 155,000 barrelsper day.

‘When I arrived in mid-2008, I was surprised tosee our truck fleet availability numbers werebenchmarking down in the 4th quartile,’ recallsJohn Rhind, General Manager of Shell Albian Sands.

To drive it up, Zengerly and Rhind launched MMEI.‘As the fleet at the mine grew, we were challengedto sustain truck availability at a rate that met

expectations,’ recalls Larry Gouthro, Finning’sRegional General Manager for the Oil Sands.‘We supply the trucks and the mechanics, soShell Albian’s management saw us as part ofthe solution and invited both us and Caterpillarto participate in MMEI. Our companies devotedsubstantial resources to the project. We were therefrom the start, working in the MMEI team to definethe right crew structure, the right supervisorystructure, and the right number of people toovercome our truck maintenance backlog.’

The other team member was Celerant Consulting.

‘We’d had good previous experience withCelerant’ says Rhind. ‘Bringing them to AlbianSands sent a message that we were serious aboutincreasing truck availability. We were makingthis investment and we expected to see results.’

Getting a clear view of the road aheadCelerant’s analysis of the situation immediatelyidentified several root causes for low truckavailability, including: •Urgent repairs to broken equipment, at the

expense of preventive activities, perpetuating low equipment availability

•A weak planning process to ensure completion of preventive maintenance (PMs)

•A lack of active management on the ground

‘Trucks working essentially out in the wild, inextreme temperatures, climbing steep gradesand travelling unpaved surfaces, are going tobreak down. That’s a given,’ observes MikeEidet, Team Lead with front-line responsibility

A

Shell Albian Sands is among the largest developers of the Canadian Oil

Sands, transporting surface-mined oil sand in mega Caterpillar trucks.

They recently launched the Mobile Maintenance Excellence Initiative

(MMEI) in partnership with Celerant Consulting, Caterpillar and Finning.

The objective? An ambitious double-digit increase in truck availability.

MOVING UP A GEAR

‘We didn’t get bogged down in conducting a prolonged analysis. We got right down to business.’



for maintenance and repair of heavy equipment.‘But we had a fire fighting mentality. We weredoing everything we could to get trucksrepaired and out working in the mine as fast aspossible. Our mechanics were so focused onurgent repairs, PMs weren't getting done. Thatled to even more trucks needing repairs. It wasa losing battle.’

Moving up a gearCelerant’s core recommendations were to: •Define a clear Preventive Maintenance Strategy,

dedicating 20% of mechanics to PMs, regardlessof the demand for truck repairs

•Design a more robust planning process •Implement a management system (MCRS®) to

ensure that people had the right data to make the right decisions, based on their role in the organisation

•Implement ‘Short Interval Controls’ to ensure people knew what was happening, what they should do, where the issues were and how they were performing against the plan and using white boards to keep everyone informed and involved

•Implement more active management behavioursand provide intensive on-the-ground coaching to supervisory staff.

‘The goal was aggressive’ says Andy Carter,Manager of the Muskeg River Mine and immediatesponsor of the Mobile Maintenance ExcellenceInitiative. ‘On a fleet our size, increasing truckavailability from the low 70’s to the low 80’s wouldallow us to move about a million more tons ofmaterial every month - with virtually no additionalcosts. I was pleasantly surprised how quicklywe achieved that step change in performance.’

A Closework® Partnership MMEI is a clear example of the consultingapproach that Celerant call Closework®. Celerant held weekly meetings with all theMMEI members to:•Shape the improvement initiative•Define and document the improved processes

and the respective roles and responsibilities•Review project progress and assign new

action items to remove barriers and move things forward.

‘We didn’t get bogged down in conducting aprolonged analysis,’ says Zengerly. ‘We gotright down to business - and Celerant gave usvery good implementation support on the ground.’

Celerant consultants immersed themselves in

the Maintenance operations, working side byside with teams of mechanics and providing real time coaching to supervisors. The coachinghelped supervisors secure a more visible,involved presence on the shop floor, engagingwith the mechanics and tracking data to ensurea smooth execution of the planned andunplanned maintenance tasks.

‘Our supervisors typically have a strong technicalbackground, but not necessarily a lot of experiencebeing leaders,’ notes Eidet. ‘Celerant coachedus to spend at least half our time out on thefloor. We learned how to interact more effectivelywith the mechanics. Now we put our headstogether as we work through a shift and at shiftchanges, so we can make smarter decisions.Instead of rushing through a PM and putting atruck back into service with a broken headlight,only to have it come back in for a headlightrepair during the night shift, we fix it right then.We try to make the most of each time a truck isin our bays. We’re clearer now on what matters,and we’re very good at getting it done.’

Celerant also worked with the MMEI team usingCelerant’s proprietary MCRS® to help the teamcustomise its management system. Today thatnew MCRS® drives timely, coordinated decisionmaking and ensures that people at each level of authority have access to critical data and the power to influence the results for whichthey’re accountable.

‘We gave people systems that eliminated thechaos we had experienced all too often before,’says Linus Nurkowski, Manager of Execution atthe mine. ‘And we listened to the people closestto the work. 90% of the time they’re the oneswho have the answers you need. MMEI was successful largely because it gave our peopleon the floor more of a voice.’

AGGRESSIVE TARGETSIMPRESSIVE RESULTS

•Truck availability increases to 83% and sustains at that level, dramatically improving the mine’s production potential

•Operating costs are trimmed by more than $30 million

•Mean Time between truck stoppages increases from 42 to 72 hours

•Preventive Maintenance completion rate improves from 52% to 100%


On the one hand, focussing on Asian targets makes perfect sense becausethere are huge ROIC improvement opportunities. On the other, integratingcross-continental organisations will create a unique and complex set ofchallenges which must be overcome.

Serious rivals lie in wait While Western Chemical companies are best placed to execute M&A in Asia,there are now leading Asian companies that also have the capability. Theyhave the financial power, the cultural synergy and the premium equity valuations that can be used to leverage any acquisitions. There are around20 of these potentially serious Asian acquirers, including major players inChina, Japan and South Korea, together with a few leaders in countrieslike India and Thailand. So real competition exists. And it will get fiercer as regional and multinational producers slug it out for a significant shareof this rapidly expanding market.

The time is nowAsia is ripe for M&A consolidation and integration. Asian players may largelylag their Western counterparts in terms of average returns, but future growthrates are expected to be considerably higher. Over the last 5 years, TheShanghai Composite Index has risen 162.5% - with the industry showing a greater 5- year revenue growth than its Western counterparts. A recentstudy by Celerant Consulting into the performance of 329 publically quotedChemicals companies around the globe shows that there are 215 in Asia,compared to 61 in the Americas and 53 in Europe. Total market capitalisationfor the companies in each region is similar at around $280bn-300bn. Butthe average values differ markedly. In the Americas, the average marketcapitalisation is $5.06bn, in Europe $5.88bn and in Asia it’s just $1.23bn. That makes them very attractive targets for M&A. And recent changes in the regulatory landscape have only improved that.

T


Driving Performance


The Opportunity

Sell Western made chemicals to a growing

Asian market

The Focus

Procure base chemicals and intermediates to

use in the West

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8

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6

5

4

3

2

1

00 100 200 300 400

Celerant ResearchDollar Value of M&A vs No. of Global Chemical Co.

Tota

l $B

n M

&A

Total Mkt Cap $282,819



Americas Asia Europe

West Meets East

he opportunity for regionalM&A by European and

North American Chemicalscompanies has all but dried up.

80’s 90’s


Strong valuations Strong prospectsBased on a variety of metrics, the valuations on Asian Chemicals companiesare 30-40% higher than their Western counterparts. Their stock prices havealso performed far better. The downside is that they underperform on nearlyevery operating metric. The market is still highly fragmented and dominatedby a plethora of relatively small companies in terms of market capitalisation.But that’s also the opportunity. Particularly in the current economic climatewith Asian economies growing faster than those in the West.

Celerant can point the wayWhen considering an eastern merger or acquisition, cultural congruity,higher comparable valuations and less disciplined organisational processeswill all come into the equation. For Western companies willing to meetthese challenges by adjusting the internal business processes to reflectWestern standards of efficiency, Celerant’s research demonstrates thata 179% increase in ROIC is realistically achievable. We are the globalleaders in Post Merger Change Implementation and the best supportpartner to secure your company’s future growth.

Celerant’s chemical experts are well positioned to facilitate a strategy and

targeting workshop with your executive team. Using the operational and

financial data already collected on the 329 listed Chemical companies,

we can rapidly prepare an analysis to demonstrate the financial and

operational impact of future strategic decisions. Involving us as Operational

Change experts from the outset will mean that the 2 largest acquisition

risks, selecting the right target and operationally integrating the new

company, are significantly reduced.


The Opportunity

West – East M&A to create truly global integrated producers

The Build Up

Build capital expenditure and capacity in Asia thenmove products globally

70

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0

-10

-20

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Celerant ResearchROIC Improvement Opportunity for Chemical Co.

Rest of World Avg: 13.4Asia Avg: 4.8

*Excludes a nominal amount of outliers for presentation

179%}

The M&A Decade

Now Leaders are asking whetheror not acquiring Asian targetswould secure their growth andboost long-term profitability?

00’s 10’s


CLOSEWORK®: Companies run more efficiently because their as empowered individuals, not components. Layers and departmrather than compete. They’re given precise ways to measure wcan use their initiative to improve. Operational areas performthey have a stake in the process of setting goals and can seachieved. Single individuals understand their role and their perperformance, so their work becomes more satisfying. Everyonesetting the targets, so they become a shared objective and a ppride. Wariness and rivalry give way to real respect and teamwimprovements continue to be achieved long term because peopthe results they create. Real behavioural and organisational chaKnowledge is power. When people know what is expected of them, c

Driving Change





®: Companies run more efficiently because their workers connectndividuals, not components. Layers and departments collaborate

mpete. They’re given precise ways to measure what they do andnitiative to improve. Operational areas perform better becauseke in the process of setting goals and can see what is beingindividuals understand their role and their personal impact ontheir work becomes more satisfying. Everyone plays a part in

ets, so they become a shared objective and a point of personaland rivalry give way to real respect and teamwork. Optimumontinue to be achieved long term because people feel central tocreate. Real behavioural and organisational change takes place.wer. When people know what is expected of them, companies thrive.


Driving Change



With energy costs rising and global resources falling,every business must scrutinise its consumption and produce a Greenprint to retain a competitive edge.

GreenProduction:IT AFFECTS YOUR COMPETITIVENESS.IT AFFECTS YOUR IMAGE.IT AFFECTS YOUR FUTURE.



very single one of us, from major companies to private households, faces increasing energy costs. Our consumption may remain pretty static, but our bills keep

going higher. And it’s going to get worse, becausethe world’s natural energy resources are limited,but our population keeps growing and growing.

In 1974, around 4 billion people lived on ourplanet. By 1999, this had jumped to 6 billion andit’s estimated that in 2050 there will be around9.2 billion of us - an increase of 77 million or1.2 % per year. Another troubling statistic isthat currently, just 1.2 billion people live in wellindustrialised countries, so 5.2 billion peoplewill increase their energy usage as they attemptto catch up.

Contrast that to the obvious fact that, excludingrenewables, the world’s energy resources arelimited. The estimated lifespan for natural gasis approximately 65 years and 43 years for crudeoil (for known exploration fields and constantenergy demand).

Energy and petrochemical companies are alsoproducing 4-6 % less oil than in previous years.‘The investment to keep the production level isaround 30 billion dollars each year and a certainoil price is needed to invest’, Peter Vosser, CEOof Royal Dutch Shell recently told Germany’sHandelsblatt.

Energy Management is not an option, it’s a necessityFaced with this growing population and dwindlingnatural energy resources, what parameters willan organisation need to set itself to ensure pro-duction or service provision competitiveness?

One absolutely key measure will be the energydemand per item produced or service providedand the only way to efficiently deliver this is byimplementing a load carrying and sustainableEnergy Management that is driven by internalexcellence and routine best practice.This will ensure the highest energy efficiency,predictable energy demand, reduced and con-trolled costs, and altered energy consumptionbehaviours and attitudes.

How much, if anything at all, companies currentlyinvest in Energy Management depends mainlyon their size, as well as the attitude of their topmanagement towards ‘GreenProduction’. The bigger the company and the higher theirpublic profile, the more likely they are to adoptgreen solutions.

Bigger companies also have the advantage ofbeing able to release employees from theirordinary work to focus full time on EnergyManagement. Medium-sized and smaller companies cannot normally afford this luxury.There can be no doubt though, that if a companycan take the time and effort, and in some cases

E

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Energy and Petrochemicalcompanies are producing

4-6% less oil than in previous years.


Driving Talent



the investment, to really understand how energyefficiency can be improved, it will gain significantvalue and increased profitability.

15-50 % of energy costs can often be savedDifferent organisations face different energychallenges. Heating costs are the biggest problemfor service providers, whereas in industry thechallenge is reducing electricity costs. Manycompanies try to reduce their consumption, butfail due to lack of transparency, control, time,manpower, knowledge and sustainability. Energyconsumption is also often taken for granted byemployees, despite the fact that 15-50 % of thecosts can often be saved.

To tap into an organisation’s full potential for energy saving, Celerant recommends thatits Clients apply the Celerant 5 Box Model®,

which examines Energy Production and Energy Consumption across in every facet of their value chain.

Take for example, steam production. Imaginethat a large waterspace boiler is operating as a steam producer for a chemical plant and has2 MW power. The boiler efficiency is around 84 % and there are distribution losses ofapproximately 15%. So the overall efficiency of the system is around 70%, with an energycost of 2.7 Cent per kilowatt hour (kWh).

The boiler requires €300,000 each year to produce 1.4 tons of steam/hour at 7 bar pressure, assuming 8496 operating hours andone start. 15-20 % of the end energy equals€50,000 of the energy bill and by increasingefficiency that can be saved.

15-50% of energy costs can often be saved.



What gets measured gets improvedIf a company wants to maintain its competitiveedge, it's vital that it gets to grips withGreenProduction and encourages real behaviouralchange among its workforce:

• Start to monitor your energy consumption

This should begin with the implementation of key performance indicators (KPIs) and ameasurement system for energy consumptionby type and area. The second step is to set anenergy target for every service or produceditem. This will enable you to prioritise and focuson the biggest energy consumers in your plant.

• Draw the process, locate the biggest consumers

A process map of your energy consumers and thevalue of their consumption will enable you toidentify old or bad connections. Improvementscan then be made and consumption anddemand re-tracked and recalculated.

• Select new equipment

In the example mentioned earlier, a new high-speed steam-raising boiler was selected.The new boiler will be in the range of €100,000-€125,000 (including erection and auxiliaryequipment). The new boiler will be able tooperate with constant efficiency at 94% in aload range from 20-100%. With a distributionefficiency of 90% the overall efficiency willincrease up to 84%.

• Train your operators in SIC

As well as training on any new equipment, yourworkforce will also need training in short intervalcontrol, efficient meetings and reporting systems.This will help to ensure the sustainability of themonitoring of your energy consumption andsupport the maintenance routines and the decision making process.

• Make optimized rebuild/replace decisions

The availability and necessity of new equipmentneeds to be checked on a regular basis. Anyinvestment decision can then be made on thebasis of the measured consumption. In the

steam boiler example, the investment in a newboiler and the optimisation of the distributiongrid will save around 50,000 Euro/year(165,000 m3 natural gas). At current energyprice levels, the payback period will be around2.5 years. And with increasing price levels, itwill be much shorter.

Practical steps Positive Solutions Every organisation can save energy and addvalue by conducting regular energy audits,implementing capacity planning, optimisingroles and responsibilities and capturing andstandardising best practices.

Energy procurement alliances and negotiationswith your energy supplier can further reduceyour bill (In our example, a reduction of theenergy price by 0.09 cent/kWh will result in€8000 per year savings).

Financial Services, Telecoms, Utilities &Infrastructure organisations can also make further savings with a combination of:

• Innovative techniques - the remote cut-off of air conditioning in unused meeting rooms, the installation of office lightning sensors etc

• GreenIT - automatic standby of computers, screens with LED Technology, dynamic server cooling etc will reduce the energy bill up to 50%

• Smart Metering - identifying and subsequentlyeliminating load peaks

Further down the line, the production of energy,e.g. biomass energy, combined heat and powerplants, wind power and photovoltaic, can resultin independence from your energy supplier.What’s more, these opportunities are oftenstate-aided and help to reduce payback periods.

GreenProduction is a challenge and a realopportunity. Implementing it creates the frame-work for cost and consumption transparency.When monitored and controlled, this in turncreates tremendous value by strengthening acompany’s competitiveness, improving theenvironment and creating a ‘clean’ image forcustomers, employees and society.


Driving Performance



Shining A Light On Success

BUSINESS CHALLENGE ‘I don’t want this organisation to be in the bottomquadrant.’ That was the rallying cry of the new CEO of a $400m leadinglighting electronics company. To kick - start change, he wanted to improveEBITDA to 11% - 15% once a reduced cost base had been established andto improve overall corporate growth to 10% - 15%. All within 12 months.

CELERANT SOLUTION The Company asked Celerant to conduct a Productivityanalysis and chose its factory in Mexico as the test bed. Working closelywith the Client Team, Celerant identified 3 issues: •A lack of organisationalclarity, particularly over duplication of roles between Mexico and Corporate.•Poor upfront planning and design that led to project delays. •Poor controlsduring project execution. The majority of these issues were driven by decisionsmade by Corporate. This contributed to what the company called ‘A NervousSupply Chain’. On top of this, they were not enforcing their own policy aroundaccepting returns ($1.2m identified). So the joint teams implemented acomprehensive Change Management Programme that: •Restructured theorganisation with lower levels, higher control spans and clarified accountabilities.•Redesigned the supply chain architecture and created 4 integrated sub-processes. •Rationalised SKU’s and created an inventory/service level policy.•Expanded demand planning into the sales regions, with more rigour. •Adopteda one week frozen schedule. •Implemented OEE (productivity) metrics todrive Continuous Improvements. •Created a new inventory deploymentprocess to increase service levels. To manage the Change Programme acrossMexico and Corporate, Celerant also set up a Project Management Office toensure centralised co-ordination on the Supply Chain project and 3 furtherprojects – Pricing, SAP integration and HR.

RESULTS An organisational structure that is aligned with the company’smission, vision and business imperatives. •$13.7m annualised savings.•$2.1m inventory reduction. •Customer service levels at 92%+. •20% Cycletime reduction to introduce new productions. •Decision made to keepproduction in Mexico due to improved service, lower costs and shorterlead times.

Going With The Flow

Transport

BUSINESS CHALLENGE With almost 48 million passengers passing throughthis major european airport, providing good customer service, while main-taining full regulatory security compliance, was increasingly challenging.The task was: •Increase customer satisfaction without increasing costs.•Instil a more customer-focussed culture across the business.

CELERANT SOLUTION The project team identified 3 problem areas: Lack ofTransparency between Departments. Simply co-ordinating the activitiesperformed by a range of suppliers and in-house staff would not be sufficient.Everyone had to look at the business in a new way and understand the valueof specific roles in a complete service experience picture. So the Celerantteam interviewed more than 100 employees to get a ‘bottom-up’ view ofkey processes and identify effective metrics that would increase visibilityinto real day to day performance. Processes not fully supporting businessobjectives. A key issue In the area of security is the sheer number of stake-holders. Police, Immigration Services, Screening and Site Control all have tobe co-ordinated, so a concentrated Six Sigma programme was deployed tocreate a culture of ownership among the 3,500 personnel involved. Improvedproductivity to increase passenger satisfaction. Six Sigma methodology wasalso vital in the analysis and improvement of passenger handling and theplanning of security lanes. Agents now continuously measure process timesin their own security lane.

RESULTS Lack of Transparency •Improved interdepartmental co-operation.•Improved decision-making linked to overall vision and strategy. Processes•All key processes have measurements, targets and specifications definingperformance. •Six Sigma organisational structure supports ContinuousImprovement. Productivity •17% process time improvement. •10% less timespent on passenger and luggage checks. •Increased customer satisfaction.

‘What makes Celerant different? They are very hands-on. They are veryaction-driven. And they are very results-driven. They have taken our peopleto a new level with a real sense of urgency I have not seen before.’ Airport EVP & COO

Manufacturing



Changing To Stay No.1

Energy

Motivating 11 Global Sites

BUSINESS CHALLENGE To maintain its leading position within the globalnuclear power industry the client wanted to implement a major transformationprogramme across its Plants sector and create a new Reactors & ServicesBusiness Group. The objective was to enable it to deliver several nuclearplant building projects in parallel.

CELERANT SOLUTION Celerant was brought in to help set up the ProgrammeManagement Office for the change programme and to help design theorganisational structure for the new R&S Business Group. Celerant developeda customised organisational Change Programme to prioritise and pilotthe 12 transformation initiatives that were to cover the Plants sector until2012. The team also helped the Change Management Officer to set up aProgramme Management Office (PMO), motivate the transformation networkof key project and business leaders and help provide an operational focus onkey initatives to accelerate results. The creation of the new R&S BusinessGroup required a smooth transition between two different organisationsthat employed 20.000 people, spread over 3 countries. During the transitionphase, the Celerant team managed the PMO and key activities such asorganisational design and position allocation.

RESULTS Plants Transformation Programme •A clear vision for the Plantssector and an understanding of how each initiative contributes to the overallobjective. •A simplified programme structure around the 12 initiatives and5 key axes. •Common governance rules and management tools for theinitiatives. •A programme MCRS® that allows better control, visibility andcommunication. •An ‘industrialised’ PMO that is a real decision-makingtool for the Executive Management. R&S Business Group •A smooth andmonitored transition. •Business Unit Managers supportive of the newways of working. •Excellent management of interfaces and consistency at Business Group level.

‘You can be proud of the amazing job that has been done. Your Change expertise was key.’ R&S Business Group Snr Vice President

BUSINESS CHALLENGE Margins were under pressure at the Nutrition Divisionof this global Life Sciences & Materials Sciences Leader, so the challengewas to increase operational performance and engage and motivate 11 globalsites to embrace Continuous Improvement.

CELERANT SOLUTION The company wanted deep seated and positivechange to occur. To help achieve this it produced a Process ExcellenceProgramme (PEP) and as the preferred partner for strategy implementation,Celerant was brought in to help drive the new standardisation. The contextwas not easy. Workers had already spent a lot of energy on an earlierintegration programme and the organisation’s desire for a predictableperformance environment was further complicated by its own physicalreality - 11 manufacturing sites, in culturally diverse locations from Europeto China. PEP began with pilot schemes at european and US plants wherejoint Celerant-Client teams developed and implemented sustainable changethrough process integration and optimisation, delivering target savings.The pace of work was fast: a 6 week analysis, then getting buy-in, roll-outand implementation in 12 months for each plant. In total over 100 employeesbecame Change Champions to help with the anchoring of new processapproaches. Within a short space of time, all the company’s sites hadimplemented PEP and the next steps to stabilise the improvements were underway.

RESULTS €270m sustainable cost savings. •Ahead of the company’s 5-yearstrategic plan - stretch target exceeded by more than 20%. •Control andtransparency - increased reliability through full control and insight intoperformance per site, production plant and product. •Productive interactionbetween employees through competence networks to exchange best practices.

‘Celerant absolutely matched our ambition and really adapted their approachto help us to steer our manufacturing base. Showing improvements andsuccesses really helped anchor the changes in the organisation.’Division President

Life Sciences


Celerant's experts put together a 6 Step Plan

which was then reviewed with the Workstream

Leaders, so that they understood it's structure,

appreciated it's discipline and recognised the

benefits it would bring .

1 Definition of the project management structure.

2 Definition of team charters.

3 Development of SIC and steps to milestones

for each Workstream.

4 Definition of the communication strategy.

5 Training of team members.

6 Closework® and tracking of activities to

milestones and SIC.

Celerant also provided each Workstream with

its own set of goals and employed Closework®

to help them achieve success.

Production

• Install an integrated Production MCRS® to

manage plant performance against defined

operational and financial targets.

• Improve labour productivity through improved

inconsistent equipment downtime data and

analysis, and issues with information being

shared too late and in an informal manner.

To correct these problems, Celerant recommended

implementing their proprietary MCRS®.

Changing the way people think

Celerant’s challenge at Abbott Italia was to

change the culture and behaviour of a sizeable

workforce in a short space of time. To do that,

the team needed to install and teach new tools

and methodologies to 200+ working 24/7.

The Director of Operations had already stated

that he would judge the success of the project

by the feedback from his Directors. So it was

vital for him to see a real change in the mindset

of his people, because that would lead to real

KPI improvements.

6 Steps to success

After immersing themselves in the business,

ealthcare costs are rocketing

worldwide and one way to reduce

them is through the use of generics.

So as a recognised centre of

excellence, Abbott Italia was determined that

its manufacturing plant would become more

efficient to enable it to cut costs and deliver a

final product that was competitively priced

against competitors who were using cheaper

raw materials.

To begin this process, Management decided to

perform a LEAN Diagnostic and brought in Celerant

Consulting to help drive things forward. The

diagnostic covered the entire plant and quickly

showed that there were Continuous Improvement

opportunities in the areas of Production, Quality

and Maintenance.

The opportunities identified were connected to

poor visibility of daily and weekly activities,

poor communication between the 3 areas,

Driving Results



A vital componentin the fight againstAIDS. Abbott Italia is the sole manufacturer of

the active ingredients of an HIV treatment drug. Faced with

intense competition from India and China they needed to

become more efficient to dramatically increase throughput

and serve 2,000,000 patients worldwide.

H


efficiency in daily/weekly planning, active

supervision, and process improvements.

Quality

• Improve communication and coordination of

activities among QC/IPC, Raw Materials Lab,

Production and Receiving to maintain a high

customer service in the face of changing volumes.

• Install MCRS®, KPIs, and communication to

make the right information available at the

right frequency to drive decision making

and improvements.

Maintenance

• Improve the integration and effectiveness of

their planning and scheduling process in

alignment with Production needs to better

manage activities and labour productivity

Warehouse

• Improve efficiency to support planning

production activities.

Harnessing People Power

The Abbott Italia Workstream Leads and Steering

Group were highly educated, very technical people

and they had challenged some of the analysis

results from the LEAN Diagnostic. So In the

beginning, it would be true to say that they were

somewhat sceptical of some of the numbers

provided and did not have complete trust in

Celerant. However, working together on the

project and experiencing the benefits of

Closework® and Celerant’s MCRS® process,

they quickly realised the real value of the work

and totally committed themselves to the new

ways of working.


LEANER, FITTER, MORE COMPETITIVE.

• $356K in savings for 2009 due to MCRS®

improvements, plus additional savings from

the LEAN Diagnostic

• Enhanced capacity and resource planning on

all departments

• Maintenance past due reduction from 280 to 4

• Maintenance schedule compliance greater

than 95%

• QA weekly non conformities KPI reduction

from 30 to 9

‘For me the most crucial thing was to haveCelerant help us keep the

pace to maintain the direction of the project.’

DIRECTOR OF OPERATIONS

‘I owe a lot toCelerant.They showed

me how to plan, use thetools, analyse data and

how to behave in meetings.’

MAINTENANCE PLANNER


Driving Results



perating in 12 European countries, the Belgian food group Vandemoortele focuses on 2 business segments: frozen bakery

products and margarines and fats. One of itsambitions is to become a leading player in theEuropean Bakery Business by 2012 throughincreased market share and total revenues, as well as improvements on EBIT and EBITDA.

To achieve this, it appointed Celerant to helpredesign its industrial business model with a focuson key accounts and an integrated EuropeanSupply Chain and to shift its corporate culture tobecome more proactive, making sound decisionsbased on facts and a Total Chain perception.

The programme had 3 key objectives :• To install a culture of Continuous Improvement

by helping to build and implement the new Vandemoortele Way of Working -WOW.

• To realise an annualised P&L impact between€9m and €13.5m and reduce Working Capital by €6.7m to €11m.

• To train and coach 15 Taskforces (internal consultants) and a Management Team to

implement Waves 3 and 4 of the programme on their own.

Creating the right mix Celerant’s experts immersed themselves in thebusiness in order to deliver the programme benefitsto Vandermoortele’s customers in 3 waves. Wave1 focused on Supply Chain Optimisation and thedesign and implementation of WOW in 4 pilotsites. Wave 2 focused on rolling out WOW to 6 new sites, this time with the newly trainedVandemoortele Taskforces in the lead andCelerant coaching in the background. Waves 3and 4 would be executed entirely by the Taskforces.To optimise the value chain Celerant installedLEAN principles, including a systematic monitoringof performance (lines availability and rates,overweight, waste etc), Key PerformanceIndicators, standards tools and a customisedCelerant MCRS®. It also upgraded the productionloss accounting system and implemented abest practices sharing process.

Power to the peopleArguably the most critical phase of the programmewas the coaching and training of the 15 key

Taskforces and the Management Team to providethem with the skills and confidence to drive theprogramme once Celerant was no longer thereto help. That involved an intensive Closework®

partnership where they were shown how to changethe culture, mentality and capabilities of theBusiness Line Bakery Division from reactive toproactive, from Silo to Total Chain and from ‘gutfeel’ to ‘fact based’. They learnt quickly, performedbrilliantly and now drive the programme.

RISING TO THE TOP

O

When Vandemoortele wanted to transform itsBusiness Line Bakery Products into a leadingplayer in the European Bakery Business,Celerant Consulting was a vital ingredient.

RESULTSThe shift in corporate culture throughout the organisation went beyond expectations:

• Business benefits were 20% above target

• An annual P&L saving of €11.1m has been achieved

• Working capital has been reduced by €6.7m

• The ‘One Way Of Working -WOW’ has been successfully implemented with a great level of engagement by all stakeholders

• 15 Celerant trained and coached internal consultants are now ready to further roll out the programme to all sites by the end of 2010



‘ A programme of this magnitude has never been seen in the historyof Vandemoortele.We really believe this programme lived up to our expectations and we could never have done it without Celerant.’Eddy de MûelenaereManaging Director Business Line Bakery Products

‘ What made the difference in my opinion? Engaged skills and team work of the Celerant and Vandemoortele team members… and a very robust MCRS© for programme management.Antoine WrobelProject Manager - Celerant Consulting


Driving Talent



Senior VP David Smith is a leading figure in Global Energy Operations for Celerant Consulting and heads the team that is helping Gulf National Oil Companies prepare their operations for a bumpy future.

He explains why their expertise is in such demand.

THE MAN WITH THE PLAN



aving worked with 9 of the Top 10 industry leaders and delivered $2.5bn in client value, Internationaloil companies have been Celerant’s

traditional client base. Now though its expertiseis coming to the aid of Gulf National Oil Companies(NOCs) struck by a dramatic reversal in their fortunes.

Raking in a mountain of petrodollars after oilreached a record peak of $147, NOCs in the world’smost oil rich region were able to embark onprojects aimed at raising capacity in anticipationof a continued price climb. But a dramatic collapseto $32 slashed company profits and led toambitious expansion plans being hastily movedto the backburner.

Prices have since rallied, but an uncertain globaleconomic future and question marks over near-termcrude demand, have meant that the region’sbig state-owned oil players are suddenly lessoptimistic about the future.

DS: $32 oil definitely got people’s attentionand there’s a realisation that it could go backthere. A couple of years ago no one wanted totalk about costs as everyone was making somuch money it didn’t come top of their list ofitems - now that’s changed.

This turnaround persuaded Gulf NOCs to call onCelerant for the first time, with the result that itis now working on everything from improvingthe drilling rate at offshore oil rigs by 20% toincreasing the number of Omani nationals at aUS oil and gas firm’s operations in the Sultanate.

DS: There’s not a lot been done around thisregion or in Saudi Arabia. I think some NOCshave used strategy consulting houses whichgive you ideas, but the danger is that those siton the shelf and nothing happens. So there’s acertain amount of cynicism and disillusionmentwith strategy consulting. At Celerant, we workwith our clients on implementation. We do anin-depth analysis to find out what needs to bedone and then we partner with the client andwork together towards the agreed result.

As prices continue to stabilise, the most pressingissue that may affect NOCs in the short term isa skills shortage. This could lead to bottlenecksin completing projects designed to ramp upcapacity, as NOCs embark on infrastructuredevelopments following a period of spendingrestraint when prices were lower.

DS: The key thing that will affect NOCs now isthat a skills shortage will start showing again. This could be particularly true in Iran as thegovernment looks to raise production on theworld’s second-largest oil and gas reserves.With places like Iran opening up in the regionand with the fact the oil price is now lookingattractive, the pace of projects will startincreasing. That could mean we will start coming into some bottlenecks which were verymuch there a year back when NOCs couldn’tget the skills set they wanted.

Working with one of the major NOCs in theregion, Celerant’s objective is to improve thedrilling rate at the company’s 5 offshore drillingrigs by a minimum of 20% over 9 months.

DS: They had 5 offshore drilling rigs and weregoing to have to get another one, but we saidas an alternative, ‘why don’t you improve thedrilling rate at the ones you’ve got?’ Thatmeans they don’t need another rig, which is a lot of money.

Taking steps to make the client’s existing workforce more productive was also a key way to increase efficiency.

DS: We’ve found from elsewhere in the worldthat there’s a lot of lost time and a lot thatgets in the way of things working in an idealway and we identify what those problems areand make sure they get taken care of. A lot ofit is around planning, as our experience is thatpeople don’t plan enough.

Planning will form a key role in a second projectwith this client where Celerant are demonstratinghow they can reduce purchasing spend and make

their supply chain organisation more efficientand effective.

DS: We have a unique way of looking at ener-gy and know we can bring something to theparty in terms of reducing energy cost, whichis a huge expenditure in some of these plants.

In Oman, Celerant has worked closely with theirclient to boost the percentage of Omani nationalsworking for the company from 85% to 95% tomeet a government-set quota, with the resultthat the number of Omanis at two oil fields hasrisen to 98.2%.

DS: At a technician level it wasn’t a problem,but at the supervisory and management level,there weren’t many Omani nationals. Up untilrecently, the temptation for many national oilcompanies was to bring experienced expatriatesover and not give local people the opportunitythey could potentially take advantage of. Butwhen you look at the skills that local peoplehave, they’re often very capable. The key wordhowever, is confidence as they’re used to anenvironment where they’re told what to do and have to get on with it and aren’t so used to taking responsibility.

H

‘ I think some NOCs have

used strategy consulting

houses which give you

ideas, but the danger is

that those sit on the shelf

and nothing happens.

So there’s a certain

amount of cynicism and

disillusionment with

strategy consulting.’


Driving Performance



The Rapid Route To ExcellenceCollaboration-Not Frustration

BUSINESS CHALLENGE The client is one of the world’s leading engineeringcompanies in the design and construction of chemical, refining and otherindustrial plants. With a workforce of nearly 5,000 across multiple sitesand countries in its Technologies segment, support was needed with amanagement system for the construction phase of projects to overcomethe geographical and cultural challenges that existed between its homecountry Germany, Egypt and Romania. These included: •Significant costand time overruns in mega-projects (100-500 million Euro projects).•Disconnect between Divisional Management (CM Division) and constructionsite Management teams. •A Management attitude that believed theestablishment of handbooks, operating procedures, etc. was enough tochange fundamental ways of working. •Project management teams withvarious backgrounds and standards (including many contractors) which madeit difficult to enforce unified working and management methodologies.•Comprehensive SOPs, but little or no compliance. •A vicious circle ofblame, with no issue resolution focus.

CELERANT SOLUTION Celerant was brought in to reshape the organisation’sworking practices with the objective of increasing collaboration and alignmentand reducing challenges and frustration. To achieve this, the Celerant teamdesigned and implemented a comprehensive Group Construction MCRS®,then piloted it and rolled it out to the 2 construction sites in Egypt andRomania. They also integrated the Construction Division and DivisionalManagement MCRS® and used Closework® for knowledge transfer to keydivisional and construction management personnel. Celerant also provideongoing support in the roll out and implementation of the Group ConstructionDivision MCRS®, to new construction sites as they come on line.

RESULTS A worldwide standardised reporting structure for construction sites.•A worldwide standardised way of working. •Short Interval Controlsimplemented at the point of execution. •Improved Site Cost Management& Control. •Improved communication between different company interfaces.•Clear roles and responsibilities.

BUSINESS CHALLENGE From plants in North America and Mexico, the clientprovides the world’s best in innovative bonding and surfacing solutions,together with outstanding agricultural and natural resources applications.The CEO described the situation as: ‘We had good people, but we didn’thave good processes.’ That had to change and quickly. It had to be OneCompany, One System.

CELERANT SOLUTION Charged with a fast turnaround, Celerant’s expertsworked closely with a selected client team to: •Design a Sales & OperationsPlanning (S&OP) process to facilitate demand planning, inventory acquisitionand control. •Create action plans to improve the efficiency and effectivenessin the Sales, General and Administrative functions. •Uncover ways to increaselabour productivity in the plants. •Tackle opportunities for Batch Cycle Timereductions. •Collaborate on ways by which the company could optimiseits formaldehyde production process and its associated sales. •Develop,understand and use standardised KPIs through the introduction of Celerant’sMCRS®. To summarise the task, the team developed the name E4 - EnhanceEfficiency and Effectiveness for Excellence and deployed to the company’splants in Canada, United States and Mexico to begin implementation.

RESULTS Annualised savings of $2.61m against a plan of $741k - but thereal story is the sheer volume of quality work that was completed in sucha short time span. •At 11 plants across 4 time zones in 3 countries the E4Taskforce installed a basic MCRS®, a Production Loss Accounting System, aDWOR system with universally defined KPI, Root Cause Analysis methodologyand action plans, a Quick Wins programme and a detailed analysis of allwork activities performed at the plants. •In addition, project work streamsat client Headquarters laid the foundations for a complete S&OP system,a Sales, General & Administration system, and an Executive MCRS® systemthat tied it all together.

‘We have built One Company and it is sustainable. Everyone has stepped up.’CEO.

Construction Manufacturing



Three Are Bad. One Is Good.

BUSINESS CHALLENGE One of the world’s leading steel companies wasexperiencing problems at one of its major european sites. It had manystrengths, but intense competition from low cost Asian producers seekingnew markets in Europe, and higher structural costs due to its isolatedposition in the centre of France, meant there were real risks to its medium term sustainability. The challenge was to: •Radically improveoperational performance in productivity, costs, customer service andcash management. •Implement organisational and cultural changes to deliver sustainable competitiveness.

CELERANT SOLUTION Celerant was brought in to design and implement a 3Stage LEAN programme that would increase 1st choice volume and customerservice and lower inventory and costs. Stage 1 Working closely with theplant’s steering committee, Celerant’s experts used intensive Closework®

coaching and training to begin sustainable cultural change. The resultswere an increase in performance, a reduction in costs and a clear demon-stration that the required levels of stock and customer service could beachieved with no degradation of other performances. Stage 2 Celerantcompleted its background work on the restructuring processes and control systems for product quality, supply chain and maintenance.These organisational changes were then implemented and an internalproject team established. Stage 3 Celerant then independently tested theinternal resources and on achieving success were able to build an ambitiousbudget based on all the improvements made during the previous phases.

RESULTS Annual volume increased by 21%. •Cost per tonne reduced by€22. •Stocks reduced by €60m. •Rate of Service (IRD) increased from68% to 85%.

‘The Celerant project was a major success. The Management of the site is now confident that the sweeping changes that have been installed will allow us to maintain our position.’ CEO

Leading From The Front

Metals & MiningChemicals

BUSINESS CHALLENGE With operations in more than 20 countries, the clientis a worldwide and highly diversified leader in the niche markets of specialitychemicals, plastics converting, the gelatin industry, natural derivativesand agricultural solutions. In 2009, it realised that its PVC Business Unitwas not in great shape. It had 3 plants in Belgium and France that wereoperating with absolutely no synergy. That had to change and fast. Toprepare the future the decision was taken to merge its global strategyand create a single banner across all 3 plants that would bring back profitability, change behaviours and improve customer satisfaction.

CELERANT SOLUTION Celerant was brought in to design and implement amulti site Change Programme that would create a Business Unit driven bysynergies and simplification. The project would impact significantly on bothEBIT & Cash, from operations to sales, with financial objectives of €9mannualised REBIT, €3.8m cumulated REBIT and a €7.8m reduction in WorkingCapital. Results had to come quickly, so Celerant’s first task was to defineand implement a visionary strategy, with a new organisational and BUMCRS® that would build the pillars of an efficient operation by improvingproductivity, quality and maintenance. Working closely with the ClientTeam, Celerant also implemented measures to control costs and cashflow, reduce stocks, rationalise products, rationalise and professionalisepurchasing - and key to long term success, increase sales force effectivenessand customer satisfaction.

RESULTS YTD Annualised REBIT savings: €9.5m vs. €9m target. •YTDcumulated REBIT savings: €6.3m vs. €3.1m target. •YTD Working Capitalsavings: €9.5m vs. €7.8m target. •All Qualitative deliverables completedOTIF. •The new Business Unit has initiated a positive trend, reached its2009 targets and is aligned with its 2010 objectives.

‘We are now more and more one single team who behave differently. Weshould have asked Celerant to come here 1 year before. If a big transformationprogramme comes up again, I won’t lose time. You delivered what youpromised.’ Executive Committee Member.


Driving Change




Celerant is a designated ConsultingPartner for 90 of the

World’s Top 500 Companies



Driving Results



Helping NASA engineers thinkoutside the box



ASA named the new course, the

Innovative Design for Engineering

Applications course (IDEA) and its

Academy of Programme, Project &

Engineering Leadership (APPEL) asked Celerant

to, in essence, coach its engineers and designers

to think outside the box.

This would provide them with an understanding

of the tools and processes that can be used to

increase innovative thinking and help them

move from fuzzy front end innovation to final

design solutions.

The work for this task was performed over

3 days at NASA's Kennedy Space Centre.

As NASA enters a new era of space flight and exploration, its engineers must develop innovativedesigns that leverage the latest technology. This challenge required a new training course whichCelerant was asked to design and instruct.

‘ Celerant is thrilled to have been selected for this essential programme and looks forward to a collaborative future with NASA.’John Sturrock

Celerant VP and Course Instructor

N

Image courtesy of NASA


Driving Change


HOW MILITARY STRATEGIES CAN WIN CORPORATE HEARTS & MINDS



ost people would imagine that the strict chain of command in the military is the opposite of entrepreneurialism?

It is and it isn’t. I believe that in peacetime thestrict military command chain is the absoluteantithesis of entrepreneurialism. However, theminute you go into somewhere like Iraq orAfghanistan, all bets are off because whatyou’re dealing with is chaos. You’re trying tobring order to chaos. And that is a very, veryentrepreneurial situation. In my career, I’ve run everything from garment factories to awater utility. I’ve worked with the EU to getnationwide power running, dealt with organisedcrime and so on. Where do you get entrepre-neurialism from? If you live in chaos, you eitherlearn it or you don’t. I think it’s one of thosethings you’re born with or not and it developswith time and experience.

So what were your first thoughts on taking upyour new command as CEO? When I arrived the business was failing. So inmy naivety, and by dint of my military trainingand experience, the first thing I did was to ask a simple question: Did we have the right strategy?Did we really understand what made the business work? As far as I could see, we didn’t. Now In the military we’re very rigorous about thissort of stuff. There’s a set format to determine astrategy. You look at: Enemy. Friendly Forces.Aim. Resources. In our case that meant:•Enemy: Both the Protection and Health

Insurance markets had very dominant players

who derived significant competitive advantage from their size and positioning. So we could not possibly compete as the lowest cost player.But no one had actually articulated that.

•Friendly Forces: On the other hand, we had a very loyal and sticky customer base who wouldprobably stay with us while we reformed. We were also part of a Group who, if you made the right case, and my predecessor had, were prepared to invest. And that was critical to the turnaround.

•Aim: This was clear - to double our profit contribution to Group.

•Resources: They were very limited. So - and I also took this from the military - I was quite brutal about assessing my Leadership as a resource. Did they have the skill sets, capacity and entrepreneurial culture to really deliver this programme? And I have to say, I felt the answer was no. So over the next 2 years about 80% were changed, from the Board all the way down to the lowest management level. Withoutthat, I don't think we could have done what we did.

It can often be difficult to get real ‘Intelligence’about a business. Did you find that? As well as conducting a fundamental analysis ofthe situation I also needed to know what thekey financial drivers were – and to be honest, ittook about 9 months of me being quite difficultwith my actuaries to discover that, in essence:

•for every 1% of new business you put on, you make £X profit.

•for every 1% you take out of your expense ratio, you make £3X profit.

M

For 3.5 years, CEO Gil Baldwin led the team

that transformed the market positioning

and organisational culture of Aviva

Healthcare, increasing profits from just

over £35m in 2005 to around £100m in

2009. Here he explains how that success

was a direct result of 4 key themes he

brought with him from the military.


‘If you want to win people’s hearts and

minds, a good first step is to get to know

them. When my direct reports told me they

felt they were winning the hearts & minds

of the people who worked for them, I asked

when their direct reports birthdays were?

What pastimes they had? How many

children? What their names were and what

schools they attended? I told them that

this information is required knowledge for

every soldier with accountability for others.’

An interview with

Gil Baldwin MBE (Ex Military Strategist)

The Cabinet War Rooms, London. A Celerant ‘Iconic London’ corporate event.


‘I won’t wait 15 weeks for the approval processto go all the way up and back down, because bythat time one of our competitors will have nickedthe opportunity.’ It took a long time and a great deal of effort, but that equation led to a fundamental and radical shift within the culture of the organisation.

How did you balance this new entrepreneurialism with the controls necessary for a streamlined business?Let me answer that by using another militaryanalogy. I think one of a leader’s greatestresponsibilities is to not just set the direction of the strategy, but also to make certain thateveryone understands the context of that direction.At Aviva, our strategy was to put clear bluewater between us and the fourth player, so thatwe could go to the suppliers and say ‘We knowyou don’t like duopoly because they pressuriseyou. Look what we’ve done over the last 2 years.We’ve grown our market share by 3 - 4 %. If yougive us a better deal we’re now really growing.And you’re a credible player in that.’ That’sabout setting, to use military terms, the Left andRight Arc. Within those parameters, go and doit. Beyond those arcs, you need to come andask me. And then of course, you set up systems,authorities and forums where everyone can feelcomfortable about putting forward their ideas.

The third theme you deployed was The OODALoop. Where does that acronym come from?The OODA Loop was built by the US Air Forceduring the Korean War. In the early part of thatwar their technically superior aircraft werebeing shot out of the sky by a pretty rubbishNorth Korean aircraft and they wanted to knowwhy? When they analysed the problem, theydiscovered that in a dog fight, their pilots werebeing ‘out decided’ by the opposition. That was the genesis for the OODA Loop -Observe, Orientate, Decide, Act - and The TopGun Programme.

How did it work in real terms?It had a huge impact on both the structuralorganisation and culture of the business. I toldmy team that we were in a dog fight and if wewere to be successful, we had to build anorganisation where, even if we didn’t invent it,we heard about it before they announced it -and announced it before they heard about it.My stated aim was that I wanted our competi-tors to wake up every Monday and feel sickabout opening a newspaper and seeing whatwe’d just announced, because if you do thatloop faster than your competitors, what happens

Driving Change


‘I don’t think you can be a genuine leader unless you have a real interest in the people who work for you.’

‘Celerant helped us save over £14m by helping to introduce a culture of businessmeasurement that determined if our processes were run efficiently.’


•for every 1% more customers you retain, you make £6X profit.

•for every 1% you improve your loss ratio, you make £12X profit.

At that point, our investment choices becamevery clear. It was all about keeping customersand giving a great service!

Did that mean taking the company in a new direction?Absolutely. We set out on a strategy to com-pletely change the dynamics of the business.We wanted to change from a Health Insurer to a Health & Wellness Provider - and build a psychological contract with our customersthat encouraged them to look after their health and well being.

To do that, we invested heavily in: •Rebuilding our claims process to auto authorise

minor treatments and give specialist help for complex ones. This led to better outcomes, lower loss ratio through managed care, better retention rates and greater operational efficiency, because in 90% of cases staff interventions were minimised.

•Online services for health awareness and medical screening for those ‘at risk’,

•Health services, both in house and with partners like Lloyds Pharmacy, that drove innovation to return people to health quickly and efficiently.

•Redesigning our supplier relationships.

The second military theme was the equation: The Ends (to be achieved) = The Means(resources, time, people) x The Way3

Why is The Way cubed?It’s cubed because The Means are always finite.There’s never enough time, money, smart ITpeople and so on, to do a task. So the reallycritical determiner in doing it optimally is TheWay you go about it.

How much did that impact on the existing culture?For us, this was a massive shift. As you canimagine, we were pretty hierarchical. That’s theway large corporate organisations work. Risktaking at an appropriate level, the governancethat goes with that, the delegation of budget todo the right thing in the moment at the time,was all sucked upwards. Everyone said, ‘Here’s my plan boss, is that OK?’ Then his bosstook it to his boss and so on. If you look at veryentrepreneurial firms, all that gets cascadeddown. So when there’s an opportunity ‘in themoment’ that person can do something about it.


Profile: Gil Baldwin MBE was a Regimental

Commander in Iraq and has extensive

experience of the Balkans, both in the military

and civil spheres. He was a key architect

of the Madrid Peace Implementation

Conference that began the process of

returning 180,000 displaced persons to their

homes and has extensive experience of

international strategic policy formulation.

He was then appointed Operations

Director for the Stabilisation Unit, with

particular responsibility for cross Whitehall

strategic planning for Iraq, Afghanistan

and Ache Province, Indonesia. On leaving

the military, Gil joined Norwich Union

as the Operations Director for all shared

services in the UK and was subsequently

appointed CEO of Aviva Healthcare.

Gil is now a Director of Minerva

Advisory Group which specialises in

strategic risk analysis and integrated

stabilisation planning.

is, they react to you. You'll then notice whatthey've done and get inside that loop again. Theirreaction becomes ever more inappropriate to thepoint where they get to some sort of institutionalparalysis. We were very successful at this.

The final, and from your perspective, most important theme was the concept of The Main Effort - the critical part of a strategythat cannot fail, because if it does, the wholething starts to unravel?That's right. In military terms The Main Effortderives from where do you place your artillery?You remember the equation, Ends, Means andWays and my point about The Means alwaysbeing insufficient? Well. You designate TheMain Effort to resolve those resourcing con-flicts. So when that resource crunch comes,when everyone is calling for the artillery, it'sautomatically slave to The Main Effort. Designating our loss ratio on Private MedicalInsurance as the Main Effort was the turningpoint for the business.

You see, all decisions about whether we coveryou or not are human decisions. So designatingour Main Effort as: ‘In all those decisions, if youdo nothing else, err on the side of the companyrather than the individual’ made a huge difference.

Wasn't there a danger that some genuineclaimants might miss out?No. It's not a weasel thing. If people are covered,they're covered. That's what we're here for. Butwhat had been happening was that it was mucheasier to say yes to everything, because as humanbeings, that's what we like to do.

Can you give us a specific example of howthese themes won hearts and minds?I could give you quite a few. In 2008 and 2009,we hit or exceeded our targets in the worstrecession we've all experienced. And they werestretching targets. Our customers told us thatwe were significantly better in all aspects andstayed with us. Our people also told us some-thing. In January 2009, we decided to doubleour yearly Large Corporate new business target.By April we'd done a full year of that LargeCorporate target. In order to get all this businesson the books, we had 65 - 70% of my on-boardingstaff coming in at 3 am so there would be nohiccups before the deadline. Nobody askedthem to do it. There was no overtime. They justdid it. They did it because they believed thatwhat we were trying to do was right. Theybelieved that we as a company were doing right by our customers.

Was there anything you had to unlearn whenyou transitioned to the corporate environment?There were lots....not shouting at people? I think I had to learn a different leadership style. I have quite an eclectic brain and the way I learnis to ask questions. What I hadn’t realised wasthat in a very hierarchical FS type business likeAviva, every time I asked a question, that wasseen as a ‘tell off’ from the boss. I’d ask someonein my Leadership a question and they thought itmeant they had to do something. And before theygot out the door, I’d asked another 3 questions,so they thought they had 4 things to do and itwas causing absolute mayhem. It took me awhile to see this. Eventually I had to call themall in and say ‘Listen guys, I don't want you toactually do anything. What I want you to do iswrite down my ideas and then come backtomorrow and say: ‘This one and this one arerubbish, but that one’s actually quite good, wecan do something with that. That’s all you’vegot to do.’ It took me about 8 months to learn that.

What about aligning the organisation to your ends? That was also a steep learning curve. In the military,there’s an assumption that because it's a volunteerarmy and by and large, young men and womenquite like adventure, when you say, ‘Guys we’reoff to war’ the alignment of the organisation toyour ends is relatively straight forward. That'ssimply not the case with a corporate organisation.In the end, the way we did it was that I wentand spoke to every single member of the organ-isation. I did something like 26 Road Shows inthe space of 5 weeks. I went and explainedexactly what we were trying to do, what wasimportant and their part in it. On the back ofthat I instituted a huge leadership programme.Not only did we go through the Leadership andset the bar high, but those that were then left gotleadership courses, mentoring rings, businesscoaches etc. So that those we felt were able todo the job were up to the requisite standard.We also did a whole host of other things, fromlittle booklets that said what we stood for todatabases that meant if you were fed up withthe car parking arrangements you could put iton. You could put it on, but you couldn't hand itoff. Your line manager will make certain thatyou resolve the issue and support you in that.But you can’t just absolve yourself from responsibility. So there was a huge alignmentand cultural change programme.

The final lesson?You can’t just say ‘Take the hill!’ It’s a bit morecomplex than that.


Driving Performance



Powering Up The Turbines

Production

BUSINESS CHALLENGE The client is one of the world’s largest manufacturersof wind turbines and its Marketing and Projects Department is responsiblefor the configuration and sale of entire wind farms, including transportation(one turbine requires up to 10 heavy goods transporters), site preparationand supervision, turnkey installation and operational sign off. In recentyears, delays in the construction of the turbines had led to missed customerhandover deadlines and high contractual compensation payments. Thechallenge was to increase project efficiency and dramatically decreasepenalty payments.

CELERANT SOLUTION Celerant had worked successfully with the client onother projects, so it was logical to entrust it with such an important task. Thefact that only 75% of turbines were being completed on time convinced theteam that it was dealing with a process problem and this was confirmed whena customer survey carried out by Celerant also raised process and projectmanagement issues. To solve them, the team focussed on 3 areas:Improvements to the organisational setup. •The introduction of a mandatoryStage-Gate process and the optimisation of supporting processes, such astransport planning and the ordering of options. •The introduction of operatingfigures, as well as meetings to direct business performance and project planning.The core element was the Stage-Gate process which involved all activities frominitial customer contact to final turnkey handover. To drive this, Celerant’s expertsused Closework® to build close collaboration with the workforce and to developthe skills, roles and responsibilities of the project planning department.Celerant’s experts were also members of the executive board.

RESULTS The number of turbines completed on time rose to 90%. •Contractualpenalties dropped dramatically. Only 50% of the budgeted sum was paid out,equivalent to just 15% of previous years.‘The project was a complete success. One measurable result was the drasticallyreduced number of contractual penalties. In addition, we have a whole seriesof improvements in the Stage Gate Process which we have used to introduceclear guidelines on how to complete projects. And this Stage Gate process is nowbeing consistently followed.’ Client Director

Doing What No One Else Does

Energy

BUSINESS CHALLENGE The client’s operating fields in the North Sea area prestige asset, producing around 400,000 BOE per day and representingaround 10% of total revenues. To maximise their importance, it wanted to achieve top quartile cost and production performance and develop asustainable culture of Continuous Improvement.

CELERANT SOLUTION The project was a strategic partnership, with a balance between consultant and client resources from all parts of thebusiness, both onshore and offshore. One of the most successful deliverables was the overall Continuous Improvement work methodology.An annual operational baselining session determined the business goalsand kick-started workstreams with individual goals to support them. Eachworkstream was cross-functional and consisted of a number of full timeemployees, supported by a Celerant consultant. The consultant and theclient teams lived and worked together to achieve the business goals ontime and in full. Offshore personnel on all platforms, shifts and rotationswere trained in problem solving techniques, while onshore personnel weretrained in areas such as Leadership & People Competence Development,Cost Management and Contract Management. In addition, Celerant certified76 Black and Green Belts, as well as 2 Master Black Belts. After Celerantleft, the newly trained Management Team sustained the ContinuousImprovement methodology to drive operational business performance.

RESULTS More than 3 billion Nok savings to date - of which 476 millionNok are OPEX. •Operational improvements that put the company top ofthe McKinsey benchmark study on Production Efficiency. •A culture ofContinuous Improvement that generates savings and one that Industryregulators are extremely positive about.

‘No-one else in this industry is doing what we’re doing (IPL & IO)’.Operating Unit Manager.



A Flagship LEAN Programme

FMCG

All Sytems Go

Aerospace & Defence

BUSINESS CHALLENGE The client is a multi-national, pan-european supplierof autonomic, guided, unmanned aerial vehicles, products and systems.In a changing economic and political climate where they compete with otherglobal companies the challenge it faced was to: •Reduce the cost of itsproducts and systems through activities/workstreams across the wholebusiness grouped together in a single Change Programme. •Achieve aminimum cost reduction of excess €26m in its ‘cross-functional business’activities by rationalising headcount across its European Operations.

CELERANT SOLUTION Celerant was brought in because of its unrivalledknowledge of the industry, the market place and an intimate understandingof the operations of the global sector leaders. Celerant put together amulti-lingual team to analyse where support function activity was under-taken, identify opportunities for headcount reduction and return a highlevel business case and implementation plan that would enable the companyto make the necessary savings in a controlled manner, whilst protectingits on-going business. The assignment was completed in an intensive 8week time frame. The team worked simultaneously across multiple sitesand business functions in all countries to collect data and completed theanalysis at the company’s headquarters as part of a joint Celerant - Companyworking team. During the analysis, periodic progress reports were made toa joint Celerant - Company Sponsor Board and a final results presentationwas made to the company’s full executive team in early 2010. Celerant isnow awaiting confirmation that the company are prepared to implementthe plan and to understand what support they require.

RESULTS Celerant confirmed that in excess of €26m savings were achievablethrough a combination of early retirements and cost-savings from betterprocesses and the removal of duplicated effort. •Celerant also identified amore testing savings target of €48m and defined a high level implementationplan to achieve this. •The client was impressed by the work and confirmedthat Celerant’s analysis had galvanised the top team into action andagreement around the necessity for change.

BUSINESS CHALLENGE With rising raw material and utility costs, theclient’s North American Morning Foods Division faced an extremely difficultenvironment. To meet budgetary goals, it needed to: Identify substantialcost savings. •Increase output of existing capacity. •Upgrade its ProductionSystem. •Increase the effectiveness of its management system. •Realign itsorganisational structure to meet best practise.

CELERANT SOLUTION Celerant had already completed a Divisional projectfor the company where Management had completely embraced its Closework®

approach. Now it designed and implemented a flagship LEAN Programmeacross the value stream that delivered sustainable results in 4 key areas:Production SICs and Visual Controls through LEAN principles increasedproduction equipment availability, drove improvements in throughput andreduced total plant scrap. Maintenance SICs and Visual Controls reducedequipment downtime, unplanned/emergency work orders, MRO spend,maintenance overtime and contractor spend. Integration A project prioritisationtool selected and resourced key projects under a project managementsystem that was integrated into a new plant wide MCRS®. OrganisationEffectiveness. A core of LEAN Practitioners in Kaizen Continuous Improvementmethodology was built to begin the realignment of the organisation to meetthe company’s strategic objectives moving forward.

RESULTS A visual MCRS® with integrated leading and lagging KPIs. •Anupgraded Production Loss Accounting System. •An upgraded and integratedproduction and maintenance scheduling. •A preventive maintenance systemthat delivered a 50% availability improvement by reducing unplanneddowntime and changeover cycle time. •Scrap reduction of 33%. •Improvedorganisational effectiveness through increased control spans and reducedsupervision layers that enabled a reduced salary headcount.

Celerant initially worked with the client at its Nebraska plant. Based onthat success, work has expanded across North America and the globe inMorning Foods, Frozen Food and other Divisions.


Driving Results



anting to be No.1 in any business is a powerful motivator for change.So Celerant’s experts quickly diagnosed the main areas where

Alexandra could improve, and then designedand implemented a comprehensive, rapidresults Change Programme across all majorbusiness functions, including Sales, CustomerService, Purchasing & Supply Chain andAccounts Receivable.

A customer-centric programme to shape the futureWorking closely with the client team, Celerantfocussed the new programme on 3 areas:

One Shared Service Centre: To improve theirinteraction with customers, the Sales and CustomerService Teams needed to work together muchmore effectively. So Celerant consolidated 5 sitesinto one Shared Service Centre and completelyredesigned their organisational structure, management systems and operating procedures.The improvements were immediate.

Improved Cash Management: There was also a strong need to reduce both outstanding debtand slow and non-moving inventory, so a RapidCash Release programme was set up and aworking capital management process designedand implemented.

Improved Supply Chain Management: To getthings moving more smoothly across the entire

supply chain, Celerant designed and implementeda new Production Management ForecastingSystem that included a new organisationalstructure and clear roles and responsibilities. It rapidly led to a clear visibility of businessperformance across all major functions.

A Closework® PartnershipCelerant used Closework® to coach and trainAlexandra’s people in the new ways of workingand to ensure they took ownership of thechanges, so that together they could build astrong foundation for their 2010 strategic goals.The Client now believes it is ideally positioned toachieve its new performance targets and confidentthat its new ways of working are sustainablethrough any challenges that lie ahead.

IF YOU MAKE APPAREL FOR SURGEONS, YOUROPERATION HAS TO BE ABSOLUTELY SPOT ON.When Alexandra noticed adecline in profits and growingpressure to satisfy customerneeds, Celerant was brought in to help.

The objective?

Improve the value chain. And start to reposition Alexandra as the UK’s No.1Workwear Apparel company.

‘ People within the business have

been well engaged throughout the

project and their opinions and ideas

have frequently been incorporated.

The Celerant team were very flexible

in their approach, however they

ensured that we stay focused on our

goals, even during tough times!’

Tim Gifford, CEO Alexandra

W

SUCCESSFUl OPERATION SUCCESSFUL RESULTS

• Over £6.9m business benefits from a new Shared Sales & CustomerService design structure, reduced slow andnon-moving inventory and a significant improvement in overdue debt levels

• A significant increase in customer satisfaction

• A reduction in support function volumes due to a ‘Right First Time’ mentality


Driving Change



The Burning Platform:Don’t get caught on thewrong side of changeCelerant Consulting is sponsoring a series of reports by The EconomistIntelligence Unit on the major challenges facing business today. The latestis The Burning Platform: How companies are managing change in a recession.

n order to assess the degree of change that companies have been experiencing since the onset of theeconomic crisis, and how they are

handling its internal consequences, the EconomistIntelligence Unit surveyed over 500 executives

in Europe and the US in July-August 2009. Many firms find this an inauspicious environmentin which to attempt fundamental change inprocesses, behaviours or structures, for fear of subjecting the organisation to even greaterstrain. Others, however, see the current crisis

as a unique opportunity to achieve just that.According to Harvard Business School professorJohn Kotter, the reason many change initiativesare unsuccessful is that they fail to establish asense of urgency. The current economic crisisprovides the perfect burning platform.

I



REPORT CONCLUSION:

In the recession of 2000, Johan Stael von

Holstein, then CEO of Letsbuyit.com, told The

Sunday Times newspaper, ‘This is a bad time

for people who don’t like change.’

Mr Holstein could have been speaking today.

This recession has left no industry untouched

and, as our survey shows, no function untouched.

There is an unprecedented level of

organisational change.

Mr Trevor of Judge Business School describes

the degree of change as ‘quite humbling and,

at the same time, also quite exciting’.

Many businesses are certainly using the crisis

to their advantage, questioning old assumptions

and using the burning platform to drive through

change. And the news seems to be encouraging.

Despite the previous 5 years showing a dismal

record of change implementation, most executives

in our survey believe that change at their

organisation is being handled well. There is a

danger, however, that firms are using the crisis

to launch change initiatives too rapidly, with

too heavy a focus on short term objectives.

While the winning of hearts and minds is

consistently cited as the most difficult aspect

of change, many firms must be achieving just

this, judging by the finding that over 50% of

executives say half or more of their change

initiatives have succeeded in the past 5 years.

Employee resistance remains a constant challenge,

but change projects mainly seem to fail because

managers do not set clear objectives and

achievable milestones. Perhaps because this is

not deemed to be the most taxing part of a change

initiative, it can be overlooked or rushed.

If the success rate of Change Programmes is

to improve, more time should be spent in the

planning of projects, in order to ensure that the

objectives are understood by all stakeholders

and the milestones are attainable. The crisis

may have produced a sense of urgency, but a

steady hand on the tiller is as critical as ever.

To read the first report in the series: A Change for the Better - Steps for successful business transformation, go to celerantconsulting.com/ieu/change

Economist Intelligence Unit


Driving Change


In a world where 75%* of Change Initiatives fail


95Annual Review AW pages 48-67 22/6/10 20:04 Page 15


of Celerant Programmes succeed.**

*The Economist Intelligence Unit global survey in 2009. **Based on payment of client success fees.

Celerant are so confident of delivering significant financial and operationalresults against client agreedtargets, that we’re preparedto put some of our fees atrisk against non-delivery.95%


Driving Talent



The global business community is in the midst of an economic and demographic shift that is forcingcompanies to reshape the way they operate. Matthew Marciniak, Director of Strategy and BusinessDevelopment, Celerant Consulting Americas, has produced The 2010 Workforce ImpactabilityStudy that demonstrates that adding value to employee contributions makes a huge difference.

UNLEASH THEINNER POWER

OF YOURWORKFORCE



ith the emergence of economic powerhouses like China, India andBrazil, traditional Western giants are having to adapt to keep pace,

so squeezing the most out of existing infrastructurehas become a high priority. Reducing headcountis an obvious route, but Leaders sometimesunderestimate the debilitating consequencesof downsizing. They can put their company in amuch stronger position by focussing instead onIMPACTABILITY - employing efficient levers thatincrease the value of workforce productivity,with no capital investment.

Non Value Activity versus Value ActivityCovering the period from 2007 to 2009, one ofthe most critical business cycles in recent history,the 2010 Celerant Consulting Impactability Studyanalysed the direct activities of 208 operatorsand supervisors in 4 different industries on aday to day basis. After assessing 11,000 workhours, common themes emerged by comparingtime spent on activities that add no value (NVA)to the sale price of a company’s products orservices, with those that do add value (VA). A third category was also considered, as timemust be attributed to activities that are ‘non-valueadding but required’ (NVAR) - for example,employee breaks.

In all 4 industries surveyed Value Add activityaccounted for just 50% or less of time spent onthe job. Industries like Healthcare and Chemicalsmay be exposed to greater bureaucratic hurdlesthat direct more hours to approval processes,but there is no question that every industry canreduce costs by refocusing the contribution ofits workforce.

Improve the process and improve the operationAlthough the study demonstrates that NVAactivity is extremely high, much of the waste is

Impactable. Time spent correcting human error,attending unnecessary or poorly organisedmeetings, travelling and awaiting developmentsor approvals before taking next steps, can becondensed or eliminated with the right processesin place. There are 3 main areas that lendthemselves to improvement:

1 Extract far more value from supervisors The study showed that operators generate astunning 50% more value than supervisors.Much of this is because operators are in thetrenches, and very little of their time is spentaway from product development and delivery.Even so, that separation in NVA means thatoperators are 5.43 times more likely thansupervisors to participate in focused, value-adding tasks. However, its encouraging to notethat 43.5% of a supervisor’s daily work loadcan be effectively Impacted. Companies musttake a closer look at supervisory activities anddetermine which portions of the day can bealtered to make more effective use of their time.This means examining specific roles and ensuringthat the right employees are performing theright tasks. Loosely defined roles and ineffectivepractices create a frustrating daily work experiencewith a great deal of lost time. Implementing asimple architecture with clear accountabilitiesis the first step in breaking this cycle.

2 Get it ‘Right First Time’ A tremendous amount of time and resource canbe saved by correctly performing assigned tasks.No product is lost, no post-mortem is necessaryto determine where the process broke down, andperhaps most importantly, related elements ofthe organisation can move forward uninterrupted.The study shows that the single most wastefulactivity is rework, but as the root cause of rework isnormally human error, it’s the most Impactable.Putting management control processes in placethat open up communication is one step towardslimiting rework. By getting the right informationto the right people at the right time Leaders arebetter equipped to make decisions that driveContinuous Improvement.

3 Promote greater end-to-end understanding Throughout the study, NVA issues were strongerthe further employees were from customer contact.This was especially true for companies that operatein silos with a focus on departmental performance,instead of effectiveness across the organisation.A lack of unilateral cohesion brings greater risk not

only for errors, but errors that often go uncheckeduntil they have set back the whole operation. A holistic perspective and process allows man-agement to make the right decisions, improvescommunication and reduces the negative effectsof errors from one department to the next. Inaddition, a team that understands its contributionsand feels connected to the entire business is moremotivated to deliver results.

Immediate benefits are within reach Enacting these 3 changes to impact NVA activitieswill substantially improve processes and reduceshort term costs. The typical operator observedduring the study had an average day comprisedof 49% NVA activities. Assuming an annual salaryof $50,000 ($24.04 per hour), the survey indicatesthat 3.92 hours of a standard 8 hour day or2.45 days per week are being spent on NVAactivity, resulting in an average employer costof $24,501 per employee on an annual basis.However, 56.6% of the NVA activity of operatorsis Impactable, which translates into savings of $13,867 annually per operator. Given thisinformation, it’s striking that in a separate2009 report from the Economist IntelligenceUnit and Celerant (The Burning Platform: Howcompanies are managing change in a recession),only 22% of executives surveyed indicated thatthey implemented a change in business processesto offset the effects of the down economy.

Both studies highlight the importance of havinga sustainable business strategy that will createshort term financial results, while propellingthe organisation to long-term success. Alteringprocesses to support this strategy often callsfor a concerted change management effort, aninitiative whose success rests with communication,measurement and accountability. Winning thehearts and minds of the entire organisation iscrucial, so to promote buy-in, foster positivechange and create a sense of unity it’s vitalthat companies:

• Articulate a vision • Share ownership and establish financial

Key Performance Indicators • Monitor and communicate progress

to encourage ongoing buy-in.

Change is always a difficult undertaking, butCelerant’s 2010 Workforce Impactability Studydemonstrates the key way forward for mostcompanies is to unleash workforce potential.

W

17%

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

27%

44%

50%

56%

52%

47%

17%

2%ENERGY

VA NVA NVAR

HEALTHCARE & LIFE SCIENCES

CHEMICALS

CONSUMERSTAPLES

Value Assessment by Major Industry

3%

3%

57%


Driving Change



C-CubeA Unique Club for Masters of ChangeThe Celerant Change Club brings together professionals in Change Management to share experience, ideas and ambitions.

hange Management is a major strategic issue for companies. It’s a subject that spans the spectrum ofsociety from business professionals,

to academics to journalists and other influencers.It’s also what Celerant Consulting has deliveredfor many of the world’s top companies over thepast 23 years.

It was therefore a natural step to create C-Cube, a community of change agents and the perfect forum where Change Managersfrom both multi-national corporations andmedium sized companies can share their ideas and issues with members of Celerant’sOperations teams.

Members meet at quarterly roundtables and thetopics under discussion include: The Mechanismsof Change, The Dynamics of Change and The Impactof Change. Interactive workshops have also beenset up where Change Managers work togetherto pool their experiences and best practices.The ambition is to issue a comprehensive report‘Change: From Ideas To Reality’ written and editedby C-Cube members.

C-Cube promotes a culture of ‘step back’ in an areawhere constant adaptation is needed, enablingcontinuous improvement in the implementation ofchange and the opportunity for Change Managersto develop personal awareness and cement theircredibility as leaders of internal change.

C


Tanguy AppertProject Director The Dow Chemical Company

‘Being a C-Cube member is really

enriching. All members are involved in

change initiatives, sharing the same sense of urgency and

pressure. The Club enables us to take distance and time to

think about the strategic aspects. It helps us dealing with

the high level of complexity of a Change Management

Programme. Talking with peers from different sectors

gives me a unique chance to benchmark my personal

approach and find good ideas to reinvest in my company.’

Isabelle DomergueChange Management Officer Areva Plants

‘We improve ourselves when we talk

to our peers. This is especially relevant

for Change Management as we engage the human part of

a company. Change is science of the alive. In this Club, I get

new and fresh ideas on change. We all want to learn from each

other and get pleasure to meet other Change Managers.

We discovered we have the same issues and don’t feel

alone. Respect, Humility, Passion and Conviction are our

common values.’

Nicolas OrfanidisCFO, Rail Automation Business Unit Siemens Transportation Sytems

‘Thanks to the Club I meet different

profiles of Change Managers. We can

address the same Change Management issues through

different aspects. This is a relevant source of inspiration

and a perfect environment to challenge what makes a

success or failure of a Change Programme. It gives us

the time to re-think our strategy or approach and the

elements to take right decisions.’

Régis BrachetSupply Chain ManagerSKF

‘Above all, I think the Club provides

a highly enriching opportunity for

experience sharing with professionals facing similar

situations. We also share our best practices concerning

complex issues, which helps us to advance in our

business. The Club broadens my vision of things,

as it helps me take a step back from the day-to-day.’



Americas + 1 781 674 0400 Belgium + 32 (0) 2 762 52 38 Denmark + 45 35 45 90 01

Finland + 358 10 396 8800 France + 33 (0) 1 56 69 53 00 Germany + 49 (0) 211 58 33 00 33

Netherlands + 31 (0) 20 570 5400 Norway + 47 22 43 29 23 Sweden + 46 (0) 8 670 6579

United Arab Emirates + 971 (0) 2 406 98 77 United Kingdom + 44 (0) 20 8338 5000

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


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