In a recent online poll Material Handling Management asked readers if their investments in outside consulting services had been worth the money. Half of the respondents answered, "No." And almost a quarter said such services were successful about half of the time. Why do consultants fare so poorly in everyone's esteem?
This article digs a little deeper into that question and offers tips on how to get the biggest payoff from consultant/client relationships. Here are six strategies that may help put a shine back on consultants' reputation.
1. Maintain Ownership
Problems in the consultant/client relationship can start early if expectations are not clearly established from the start. For example, when Sysco's (www.sysco.com) William Day hires consultants, he commits to managing them rather than submitting to their management.
"You're still responsible for the performance of your company," he says. "I have to manage them just as I would any other part of my team."
Learning to manage consultants is an acquired skill. With larger consulting firms, the skill must be more acute. Large firms bring their own political and managerial structures with them. Day says he makes sure to familiarize himself with such structures and targets whoever in that firm has the authority to deliver the necessary resources to get his work done.
"The other mistake is making the arrangement too complex," Day adds. "They'll say, ‘We can save you so much money by changing this business process and we'll share that benefit with you,' or ‘I'll get paid based on what you save.' Once you get into that kind of relationship, they have a vested interest in the decision process, and in my view you never want that."
Day is careful to avoid potential conflicts of interest. He also expects absolute honesty from consultants who report to him. "If I'm doing something you don't agree with you better tell me right away," he says. "I'm not going to spend $2 million on a project then get to the end of it and have you say ‘We need to do it another way because there's a problem.'
That level of honesty calls for a certain level of familiarity with the consultant's people. Day requires resumes or bios on each person brought into a job. Day recalls how his relationship began with one consulting company, Tompkins Associates (Raleigh, N.C., www.tompkinsinc.com), "I was looking for a company that does warehouse consulting and saw an ad in a trade magazine. I called them and Dale Harmelink came out to see me. It's an informal process for me. I'm looking for chemistry and depth of resources. I can tell pretty quickly whether or not they know what they're talking about. It's like an interview process. I try to match the person to the job."
Again, operations managers must make sure that any hired consultants are structured under their management team. However, as with any successful relationship, it may become tempting to steal talented people away from the consulting firm. Be careful, Day advises. This is a very touchy issue among such firms.
"When I have [hired people away], it was with the agreement of the consulting firm," Day says. Not having that agreement would be a good way to ruin a relationship with the consulting firm. There has to be an element of trust.
Even among consultants on the systems integrator side, the need for client ownership and commitment is strong. "That commitment should include the project management, maintenance, engineering, operations, and executive teams, as well as the shareholders," says Mike Kotecki, senior v.p. of sales for HK Systems (New Berlin, Wis., www.hksystems.com).
"They need to provide data and sit down in meetings and view alternatives, to be available for weekly conference calls and to set priorities. It all boils down to ROI. We do an analysis both at the functional component level and then overall. You can't do that without a ton of data from the customer. If they're too busy or not being compensated for this, the client won't get the results they need," he adds.
2. Train for Tomorrow
There are consultants who specialize in every area of material handling logistics. An important one is helping companies match the capabilities of their human resources to the demands of any new technology and equipment. Susan Rider, principal of Rider & Associates (Upton, Ky., www.riderandassociates.net), has made this her specialty because she's convinced that good training helps clients achieve their return on investment. The problem is many companies don't include training in their capital equipment budget.
"I have gone into DCs that have had software systems for up to five years," she says. "In one they were only using about 40% of the system's functionality. Why? Because DCs have staff turnover. Then they lose the domain knowledge from the initial implementation. When training gets done by word of mouth, every year the amount of functionality they use shrinks because people don't pass all of the information along."
Anthony Roden, v.p. of distribution for low-price retailer Dollar General (Goodlettsville, Tenn., www.dollargeneral.com), and a client of Rider's, says vendors must take responsibility for training the end users of their technology.
"We've told our vendors, training does not mean that for three days or two weeks you stand in front of people and cover a bunch of stuff," he says. "Training means people can correctly execute the operation of your equipment or software. A lot of vendors come to me and say ‘It's not our fault if you guys aren't able to do this.' But it should be their fault if they can't train reasonably competent people to use their equipment."
3. Collect Good Data
Another reason companies have bad experiences with consultants is they don't do their own homework. Jamie Veitch, project manager for National Grid USA (Albany, N.Y., www.nationalgridus.com), says managers have to know what they want from consultants going into a project. National Grid specializes in electricity and natural gas delivery.
"There are a lot of consultants ready, willing and able to wing it," he warns. "That's why you have to work with them. Pick out the areas where they can help you."
He also suggests that before hiring a consultant, that companies should consider hiring some student interns from the local college or university. Get them to measure a thousand things around the plant or distribution center and start to manipulate the data.
"Many of these kids are great at Excel," Veitch says. "If you can get your arms around that chunk of work you may not need a million dollar consultant."
Then again, maybe you will. Consultants can bring a holistic view from many other worlds to an assignment. Susan Rider says it can be beneficial to take a DC through an operational audit and checkup so managers can make a case to whomever in the organization holds political and financial sway.
"I was recently brought in by a retailer who needed a second opinion on productivity standards and workforce planning," she recalls. "He had one consultant come in, but brought me in so he could use it as additional proof for his unionized workforce. That gave him a lot more credibility."
Make sure any documentation is credible. Rider recalls when she worked for an RFID system vendor, and a consultant charged one of her customers $250,000 for a 35-page generic whitepaper. The document came with the foregone conclusion that whoever wielded this document would get an ROI from RFID. As a result the customer came to Rider saying they wanted to buy her company's RFID system. After asking her customer to cite the document's payback formula, they turned to a page in the document that predicted they'd be able to buy RFID tags for five cents each. At that time RFID tags were 98 cents. Bottom line, their ROI was based on a false assumption. The lesson: Garbage in, garbage out.
4. Foster Industry Knowledge
Once operations managers have had a few successful projects with one consultant, or a team of consultants, they begin to educate each other. That pool of knowledge can become a valuable asset in itself, and as such, is something to foster.
National Grid's Jamie Veitch is building a new warehouse and will be consolidating 14 other facilities into it. Tompkins Associates helped him lay out the new warehouse, taking into account the necessary flows for shipping and receiving and what the company would need for racking and from a warehouse management system. Slotting and yard management were other critical elements with which Tompkins assisted.
"They knew our materials, and we didn't have a yard at the original warehouse," Veitch says. "We have 13 or 14 yards spread out over New England, and we're bringing those into one. By living this with the consultants, and coming to conclusions together, we're using them as training. I have a couple guys now who are as sharp on WMS as consultants. Our products aren't things that fit nicely into rows of rack. They're ugly, heavy, lopsided, and very expensive materials."
Because WMS usage among utilities isn't widespread, Tompkins can also tout the experience the company has gleaned from this project to serve this niche.
Mike Wagner, materials manager for Augusta Aerospace (Philadelphia, www.agustausa.com), has a similar close relationship with Gross & Associates (Woodbridge, N.J., www.grossassociates.com). Agusta sells and services helicopters made by its parent, U.K.-based AgustaWestland. Wagner has been able to tap Gross's relationships with pharmaceutical companies to benefit from the consulting firm's experience with regulators.
"Companies like Gross, that had experience with the FDA and the pharmaceutical industry, seem to have a better sense of the interaction required with regulators," Wagner says. "Gross's Geoff Sisko made a presentation to us that we were then able to present to the FAA to explain this end solution we're building and why they don't have to worry that a non-approved part could get into our production environment."
Augusta Aerospace also benefited from Gross's experience with designing and equipping distribution centers. For example, Gross recently recommended the use of the Fiddler, a four-directional lift truck from Raymond (Green, N.Y.,www.raymondcorp.com). This allowed Wagner to make the aisles tighter in his production facility, helping it store parts more efficiently.
"We're used to storing helicopter blades in their boxes and putting them in racking," he explains. "They proposed a padded cantilever type rack that allows us to protect them and store them in serialized order. Since its production, we don't need to store them in boxes and it allows us to return the box to Italy so they can reuse them. That saves us from buying more shipping containers."
5. Use Integrators Wisely
The talent pool of material handling knowledge and experience continually reinvents itself and makes itself available in a variety of forms. Some consultants started out as systems integrators. Ideally, a consultant or consulting firm will offer an objective, analytical analysis of a situation and offer a broad spectrum of solutions.
An integrator can offer end-to-end design and build services. But be careful of those experts with readymade solutions to complex problems. For example, not all storage problems call for an AS/RS. HK's Mike Kotecki says such off-the-rack solutions have tarnished the image of systems integrators.
"Our challenge as integrators is to demonstrate objectivity," he says. "We're designing an enormous, complex distribution center for a very large pharmaceutical distributor. It has four different automated technologies—none of them HK's. It's killing me, because I wish the answer were AS/RS, but it turned out to be pick-to-light and A-frame technology. We bring a process to the relationship."
Daniel Lattz, manufacturing engineering superintendent for Caterpillar's Mining and Construction Equipment business (www.cat.com) in Decatur, Ill., leans more toward system integrators when tackling a complex material handling flow problem. Recently his AGV system reached its capacity so he looked for some alternatives. Adding more AGVs wasn't an option. Instead, he worked with SI Systems (Easton, Pa., www.sipasystems.com) to apply an in-floor towline system. This was not something SI had to sell him on. He recognized his facility's limitations and relied on a system integrator's expertise to implement it.
"A consultant is more of a facilitator," he notes. "There are facilitators with the necessary expertise and they'll give you a third-party non-biased opinion, but system integrators provide that technical expertise along with material goods and product at the end, not just facilitation."
6. Follow Through
Whether contracting with a consultant or in integrator, success will depend on how clearly objectives are stated. Dollar General's Anthony Roden has no sympathy for people who don't have a game plan.
"If you get to the end of a project and it didn't turn out as you hoped, well shame on you," he says. "I never met a consultant who was a good operator, or could do the job the customer was trying to do. They're not responsible for sticking to a budget or executing to this level."
What's required is a mix of vision and technical competence. Whether this mixture flows smoothly or explodes depends on project execution and follow-through.
"Even very poor plans executed well can turn out great," Roden says. "Outstanding plans executed poorly are poor. I go into a project assuming the consultant probably can't do this job, but if I can get an idea and look at the probability of operationally being able to execute it, then they're giving me something I can use. The greatest benefit of the consultant is that they challenge the status quo."