JP Farrell & Associates

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© JP Farrell & Associates, Inc. 2009. All rights reserved.

Introducing JP Farrell & Associates, Inc.

Re-Orchestrating the Extended Enterprise

Confidential Material



29/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved.

Introducing JP Farrell & Associates, Inc.

Who We Are and How We WorkCapabilitiesOur Role Is Determined by the Clients NeedsOur Clients

Representative EngagementsFor More Information

Our Website http://jpfarrell.blogspot.comContact Information




Working with JP Farrell & Associates, Inc.

Clients work directly with a hands-on, executive consultantTwenty years of professional consulting experience

Officer-level positions with AT Kearney, TSC, Capgemini and Cleveland ConsultingAssociatesDesigned and led engagements in operations and strategy with more than 40 clients inthe Consumer Products, Retail, Food Service and other industries

Doctoral training in economics and econometrics at University of Michigan

Prior experience in strategy and development in both industry and governmentSchneider National, Inc.IU International, Inc.U.S. Dept. of Transportation (Economist)

The firm has the flexibility to bring in other, experienced consultingresources as required

Relationships with other consulting firms and individualsPartnerships with software developers as appropriate

The assignment is not complete until the client has become more capable

The assignment is not complete until the client has become more capable




The Consultant’s Role is Defined by the Project Needs

Engagement ManagerProject design and managementDetailed planning and reportingProgram integration

Process Facilitator

Workgroup facilitationIssues documentationProcess design

Process mappingPerformance evaluation

Gap analysisPilot demonstrationCoaching

Analyst and Subject Matter ExpertStrategy

InnovationExtended Enterprise ManagementSupply chain structure

OperationsBest practices in logistics andtransportationCapability assessmentProcess designFunctional requirementsOrganization of resources and

infrastructureInformation TechnologyInformation mapping and gap analysisBusiness intelligenceCapabilities of vendors andapplications

Typical RolesTypical Roles




Clients and EmployersFood & Beverage Companies

American Home ProductsAnheuser-BuschApplebee’s

Basic American FoodsBarillaCoca-ColaE&J GalloKelloggMcDonald’sNayaParmalatPepsi General BottlersPillsburyQuaker OatsSouthern Wine & SpiritsStarbucksYUM Brands!

Government and EducationUS Dept. of TransportationEastern Michigan University

Concordia College

Other Manufacturing, Retailand PrintingAllison EngineCaterpillar

Ciba-GeigyColgate-PalmoliveElmer’s ProductsExxonMobilHarris-Moran Seed CoLa-Z-Boy

LunaPactivParty CitySearsSoftsoapSuperValuTargetWMS GamingZenith

Transportation, Fulfillmentand UtilitiesBanta

Bell CanadaFederal ExpressIU International, Inc.Schneider National, Inc.

Consulting and Other Services

AT Kearney/EDSBank of AmericaCapgemini/Kanbay/Adjoined ConsultingCleveland Consulting/CSCTSC

Health CareBristol-Myers SquibbBlueCross/BlueShield unitEli Lilly

Rapidly growing HMOWyeth



© JP Farrell & Associates, Inc. 2009. All rights reserved. 69/29/2009

Representative Engagements




Summary of Representative Engagements Developed and Managed byJP Farrell

Process was adopted worldwidefor cross-functional, monthly,tactical planning

Developed Integrated BusinessPlanning Process for Marketing,Sales and Operations (new S&OP)

Needed to increase utilizationof manufacturing anddistribution capacity

Global Food Brand

Introduced customer-specificservice approaches and regainedcategory leadership

Facilitated adoption of newcustomer service strategy

Declining market share due toinflexible customer service

Major GroceryManufacturer

Reduced total inventory andimproved service by changinginventory, maintenance, flight

routes and purchasing policies

Facilitated development ofstrategy for improving aircraftavailability

Excess inventory of aircraftparts; high cost ofmaintenance

Global Air FreightCarrier

Developed plan to reducedistribution cost by 15% whileimproving service to W. Coast

Evaluated cost and serviceimplications of alternativedistribution network plans

Opportunity to rationalizedistribution networksfollowing merger of CPGcompanies

Consumer ProductsManufacturer

Reduced inbound transport costsby $72 mm annuallyBuilt business case for ordermanagement system

Designed inbound shippingoperationDefined materials managementrequirements

High cost of shippingmaterials to stores; poorinbound controls

Rapidly GrowingCoffee Retailer

Positioned client as thepreferred provider with broaderservice array for key customers

Provided “strategic selling”services, expanding the client’sfootprint with its customers

Wanted to offer turnkey printand fulfillment services

LiteratureManagement Divisionof Print Company

Confirmed opportunities toreduce spend by $70 mmannually

Evaluated transport operationsCost of shipping from bottlersto distributors

Top Beverage Brand

ResultsConsultant’s RoleIssueClient



Client Success Story


Situation Approach Key Accomplishments

• Client had nearly $1 billionin spare parts inventorystored in more than 100warehouses and depotsworldwide

• High emphasis on partsavailability

• Wide range of aircraft typesand ages supported

• Parts ranged in value from afew cents to $1 million

• Users of inventory, themaintenance organization,did not have responsibilityfor managing it

• Immature processes forestablishing alternativesources of supply

• Convened steering committee toreconsider role of spare parts inventory

• Interviewed management to betterunderstand requirements and processesfor maintaining aircraft and deployingspare parts

• Segmented inventory by purpose, valueand urgency and benchmarkedperformance

• Identified excess inventory fordisposition

• Proposed alternative operating models,including outsourcing some types ofinventory and amending servicerequirements for parts suppliers

• Modeled impact of aircraft routeassignments on inventory requirements.

• Rewrote stocking policies,establishing that some classes ofinventory should be managed bysuppliers and that others shouldbe pooled with non-competingcarriers

• Recommended that some aircrafttypes be rerouted

• Developed plan for strategicallysourcing parts from low costsuppliers

• Eliminated some classes ofinventory from many stockinglocations

Reduced totalinventory and

cost ofmanaging it

Reducing Excess Inventory of Aircraft Parts

Global Air Freight CarrierBy repositioning responsibility for inventory, client improved focus on fleet uptime






Integrated Business PlanningClient: Global Food BrandDeveloped tactical planning process for 100-year old brand, focusing management on “making the plan”

• Facing pricing pressure, the

company was in the midst of amajor cost reduction initiativeinvolving both sourcing andmanufacturing.

• Plans were being developed toremove substantial excesscapacity from manufacturing

• Marketing and Sales managed

promotions separately causingsubstantial variability anduncertainty in demand

• Business functions could notreconcile volume forecasts

• Communication among sales,promotion management andoperations were conducted at

low levels of the organization,and were limited to remediesfor near term issues, such asexpedited shipping

• Product shortages occurredtoo frequently, despiterelatively high inventorylevels

• An integrated business planning (IBP) process

was designed using a facilitated approach• Functional leaders from marketing, sales,production, distribution, customer serviceand information technology met inworkshops to define the new process

• Team motto – “Learning by Doing”• The process was implemented the second

month, then continuously refined

• Process owners were designated and theirroles were formally defined• A consulting team worked with marketing,

finance and sales to develop a single, unifiedmonthly volume and profit plan

• 12-month rolling forecast• Updated monthly• Predicted volume and profit by brand and

product, based on field promotion activity• The S&OP planning horizon was changed fromfrom a two-month to a nine-month outlook

• Monthly functional and cross-functionalmeetings were designed

• Standard preparation and inputs• Monthly cross-functional recommendations

• Using the new process, tactical

plans developed at the functionallevel were reviewed cross-functionally and updated asrequired

• By updating capacity plans morefrequently and using constrainedproduction planning, operations wasable to remove excess production

capacity• Profit improvement opportunitiesvalued at $12 million wereidentified over the first 6 months

• The design of a marketingpromotion was changed toimprove sales performance

• Excess inventory of fast-moving

goods was identified andremoved• Business Unit management became

actively involved in tacticalplanning every month

• The IBP process was adopted by allbusiness units and implementedworld-wide






• The client, one of theworld’s largest beveragebrands, faced significantcost reduction targets

• The TransportationDepartment managed aspend of some $500 millionto deliver finished goods

among company-ownedsubsidiaries and frombottling plants towholesalers

• The ProcurementDepartment negotiatedcontracts for materials(including bottles and cans),F.O.B. Destination, freightprepaid

• Procurement, PlantOperations andTransportation operatedindependently

• Interviewed each department tounderstand policies for productionscheduling, plant warehousing anddistribution, wholesaler ordermanagement and transportation

• Analyzed wholesaler orders at the brandand wholesaler level to identifyopportunities for cross-docking and

direct shipping• Identified major logical flaw in the

model used to estimate truckload costs• Identified opportunities to substitute• Determined that certain high volume

inbound lanes for materials could becombined with outbound lanes to formcontinuous moves, including round trips

• Found other lanes where lower-costmodes could be substituted

• Determined that outbound equipmentwas not optimally loaded and thatopportunities to fill excess trailercapacity were not being recognized

• Identified actionable, verifiabletactics for reducing distributioncosts and transport-relatedmaterials costs by >$70 millionannually. For example:

• Direct ship full truckloads offast-selling product to highvolume distributors

• Arrange for low-weighttrailers and fill them tocapacity

• Locate bottle supply closerto bottling plants

• Institute dedicated contractcarriage program and multi-stop truckload deliveries

Most savingscame fromoperational

changes

Shaving $70 Million from Distribution CostsClient: Leading Beverage BrandIdentified changes in policies that streamlined operations and reduced spending on carriers






• The client, a printer, wishedto inaugurate turnkeyliterature managementsolutions for key customers

• Originally a multi-mediaprinter

• Redefining serviceoffering to include

• Printed materialsdesign and production

• Inventory stocking andmanagement

• Print on demand• Distributionmanagement

• The consultant was engagedto help the client increaseits share of the print andfulfillment volume at two ofits key customers

• Worked with the client’s businessdevelopment teams and seniormanagement to structure deals andproject plans

• Through two different, concurrentprojects, audited the supply chainstructures, policies and performance oftwo of the client’s key customers, one a

retailer, the other a managed healthcare provider

• Managed project teams composed ofconsultants and key representatives ofthe client and its customers

• Analyzed impacts of alternative supplychain approaches to devise newstrategies

• Considered industry dynamics, clientand customer capabilities and costs

• In one case, recommended thatclient’s customer outsource allprinted material management toclient in sole-source arrangement

• Estimated annual cost advantageand detailed how serviceadvantages would improvecustomers’ value proposition

while avoiding investment insystems

• In second case, recommendedrestructuring of supplierresponsibilities, increasing totalefficiency

PositionedClient asPreferredProvider

Helping a Literature Management Company Become

the Preferred Solution for Key AccountsRestructured a supplier’s relationships and spans of responsibility with major customers






Creating the Inbound Distribution Network for a

Rapidly Growing Coffee RetailerDeveloped store distribution plan for rapidly growing coffee retailer

• Company was expanding

rapidly, both adding newstores and developing newchannels of trade

• Having little distributioninfrastructure, the companywas receiving some thirtydeliveries per week at each

of its operations, with highembedded transportationcosts

• Multiple order processingsystems confusedprocurement processes andprevented store operatorsfrom having supply chainvisibility

• Network expansion wasgenerating decreasingreturns to scale, despiteincreasing network density

• Segmented restaurant supply chains by

type of product, recognizing differingservice requirements and logisticscharacteristics

• Developed common fact base for volume,activities, costs and locations

• Interviewed senior management as wellas store operators, logistics service

providers, suppliers and staff departmentsto understand growth plans, servicerequirements, operating constraints andcost drivers

• Modeled costs of alternative distributionscenarios

• Working closely with both functional andexecutive management teams developeddistribution strategy

• Identified operating changes required bynew strategy

• Developed systems plan to support newstrategy, estimating costs ofimplementation

• Created time-phased implementation plan

• Management agreed to

undertake multi-year effort tocreate distribution infrastructure

• Store deliveries were reduced tono more than one per day

• New flow paths for productswere defined, based on productand customer segments

• A network of third partyproviders was selected tooperate distribution

• Ordering processes weresimplified and consolidated

• Metrics for controlling customerservice were put in place

$72 millionoperating cost

savingsidentified








Streamlining Distribution for a

Consumer Products ManufacturerDeveloped post-merger distribution plan for CPG Manufacturer

• Conglomerate purchased CPGmanufacturer and wanted tomerge its operations with those of a previous acquisition to form acategory leader

• Companies had substantial, butnot complete overlap in customers

• Each company had differentservice policies, even for commoncustomers

• Neither company had sufficientdistribution capacity to serve theneeds of the other

• Both companies were in theprocess of outsourcing much

production to Asia• Companies were in the earlystages of integrating supply chainand financial systems

• Interviewed senior management to understandgoals for growth, cost and performance; customer service policies; and perceptions of currentperformance

• Assessed operating performance at currentfacilities

• Developed extensive fact base to model costs andservice implications of alternative network

structures• Volumes, orders and shipments by customer

and/or SKU• Detailed costs of transportation and

distribution• Alternative costs associated with new

network elements

• Inventory levels and policies by location andSKU• Current and expected sourcing plans

• Modeled cost and service implications of alternative paths for each SKU

• Significant disparities werediscovered between operatingpractices and performance ofthe two companies

• A common set of customerservice policies weredeveloped, recognizing thatorders would be consolidatedat the customer level

• Emerging customerrequirements for service andinformation were identified

• Recommendations were madeto add a west coast DC,remove a suboptimal

distribution facility and improvesystems and operatingpractices

Costs reducedby 15% and

serviceimproved



© JP Farrell & Associates, Inc. 2009. All rights reserved. 159/29/2009

For More Information

Commentary and ResourcesContact Information




For More Information

Commentary and Resources

http://jpfarrell.blogspot.com




James P Farrell

Management Consultant

JP Farrell & Associates, Inc.

436 N Grove AveOak Park, IL 60302

Phone: (312) 545-3452Fax: (708) 386-5844E-mail: [email protected]: http://jpfarrell.blogspot.comProfile: http://tinyurl.com/kvnhld

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Re-orchestrating the Extended Enterprise

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JP Farrell & Associates