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Welcome to the Operations Open Site! |
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Operations is a broad business function which spans the anticipation of customer needs in developing new products and services to the provision of after sales support. Like many organizations, we structure ourselves into areas of operations expertise. This helps us to provide the most relevant advice, to harness the know-how of our experienced consultants and to support ongoing our knowledge creation and codification. We continually maintain an integrated approach through, with many clients seeking counsel on strategic operations topics such as global production, supply chain and R&D networks as well as large scale operational performance transformations.
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Manufacturing
We counsel clients on all aspects of manufacturing performance and strategy. Our aim is to help clients align their manufacturing strategy with their overall business strategy and to design and execute effective, sustainable, and scalable business transformations. During implementation, our consultants work alongside the client at every level from senior management to the shop floor.
Transforming manufacturing operations
In transforming operational performance, we address three main areas: the operating system, management infrastructure, and employee mindsets, capabilities, and behavior. We combine our knowledge of the world’s best operating systems with internationally recognized improvement programs, such as Lean, Six Sigma, and Theory of Constraints, to tailor a solution to the client’s needs. Client mentoring and capability building also play an important role in sustaining the changes we help to implement.
Manufacturing strategy
We provide strategic advice on all key manufacturing related decisions, for example:
Network configuration. We design plant networks to help companies improve their return on invested capital (ROIC) through reduced cost, increased efficiency, and enhanced growth opportunities.
Capital productivity. We advise clients on capital spending projects and help them to improve the return or yield from existing equipment through overall equipment effectiveness (OEE) and maintenance strategies.
Make or buy. We help companies decide whether to make or buy and then support the decision by aligning all their processes along the supply chain and building up the necessary internal capabilities.
Our ability to serve clients is strengthened by 7 Production Systems Design Centers (PSDCs) in Europe, North America and Asia. These are internal academies for the creation of leading-edge knowledge and the development of world-class specialist consultants in production systems design and lean operations. Furthermore, in 2007, we opened our Center for industrial Productivity (CiP), a ‘model factory’ and joint initiative with the Technical University of Darmstadt in Germany, which enables us to very practically demonstrate manufacturing techniques and approaches to clients from all sectors.
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Product Development
We support our clients’ profitable growth both by improving the new product development process and by working directly on higher value products and more attractive product lines. We take a fully cross-functional approach to product development, working closely in conjunction with departments such as marketing, purchasing, and production. We apply our expert knowledge to process improvement by creatively transferring best practices between industries, and to product improvement by leveraging our consultants’ deep industry-specific experience.
Product development process improvement creates value by:
Speeding up time-to-market – which enables clients to reap early-mover price premiums and achieve higher market penetration rates.
Increasing the efficiency of R&D spend – savings that in most cases are reinvested into additional growth projects not otherwise feasible (often because of limited R&D capacity).
Reducing development risk – turning around troubled projects and mitigating risk in cases where deadlines have already been missed and successful project completion is threatened.
Even more often, we work directly on specific individual products, product portfolios, and product roadmaps, creating value in the following ways:
Developing product/market strategy – for example, identifying target market segments, defining and detailing winning new product concepts, and outlining the product and technology roadmaps that will enable future profitable growth.
Complexity management – here, product portfolios are rationalized to streamline the business and improve its manageability. In some cases, the definition of modular product architectures will enable a client to provide broad, customer-visible variety while still keeping complexity to the minimum in procurement and production.
Product margin improvement – combining aggressive product cost management (design-to-cost) with fine-tuning of product features and value to the customer.
By tradition, most of our work concerns physical and software products, but we are also aggressively expanding into new service development.
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Purchasing and Supply Management
We can help organizations build competitive advantage through sustainable world-class purchasing and supply management capabilities. Our consultants apply their knowledge of many industries to bring about the integration of purchasing and supply management with a client’s overall strategy and organization. We draw upon our broad experience of suppliers and sourcing strategies, and on our insight into the potential to change or leverage the structure and performance of industries.
Our approach covers the entire strategic sourcing value chain, including supplier selection, management, and development; the sourcing of innovation, products, and services; performance transformation of the purchasing and supply management function; and global sourcing. We place special emphasis on total cost of ownership. Our teams also develop integrated programs from a unique collection of proven, tailored problem-solving tools such as Linear Performance Pricing (LPP), best-of benchmarking, core cost analysis, lean production systems, and contracting suppliers for performance.
As global sourcing becomes a pressing management issue for many clients, McKinsey has responded with strategic and tactical support services that help companies to source products from low-cost regions, such as Eastern Europe, India, and the rest of Asia. Our global sourcing centers in Germany, Poland and India are an important resource in providing global sourcing solutions quickly and effectively. Staffed by consultants who bring local and cross-continental expertise, their purpose is to help companies identify sourceable commodities and components, develop sourcing strategies, and build relationships with suppliers. We also organize on-site audits, facilitate negotiations, and locate third-party suppliers. We assist clients with established offshore operations and those who are just starting the global sourcing process in all aspects of building and strengthening an effective sourcing organization, improving suppliers’ performance, and engaging suppliers higher up the value chain.
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Service Operations
The Service Operations Practice helps clients to tailor their services to and beyond customers’ expectations, while achieving their business aims in terms of cost and profitability. We scrutinize the day-to-day operations in retail outlets, branches, distributed service networks, back offices, and other functions in order to select the delivery options that best serve the business strategy. Our core belief is that working closely with clients at all levels is the only way to lay the foundation for continuous improvement in the way they deliver services. The McKinsey approach goes beyond physical system design and the application of technical tools to address management infrastructure and employees’ attitudes and behavior in service industries. We also coach the top team and managers leading change thereby building the client’s ability to lead change independently.
We focus on five main areas:
Lean in service industries. Lean and Six Sigma are among the principles we apply to service operations with the aim of transforming the client’s organization. Each solution is tailored to the client’s specific needs.
Sales transformation. The lean services approach is also applied to the sales organization in order to maximize growth and productivity.
Aftermarket parts and services. We build and improve after-sales service businesses, covering the delivery of parts and services through the entire life cycle of a product. Areas addressed include the key service delivery model, distributed service network operations (with emphasis on the need to improve quality by, for example, reducing the number of repeat calls customers have to make), and cost reduction.
Customer care. We design strategies to transform the customer-facing parts of operations from sales to service. We choose distribution channels, design lean processes, and recommend outsourcing and offshoring practices.
Business support functions. We optimize organizations’ overhead functions such as finance, accounting and human resources by drawing on a wide portfolio of tools, including external benchmarks and the measurement of internal capabilities. Depending on the diagnosis, improvement levers can include demand management, process redesign and automation, consolidation, and new sourcing strategies such as outsourcing and offshoring. These levers are commonly applied in programs focused on shared service center design, optimizing operations overhead, and corporate center design.
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Supply Chain Management
We help clients in the planning, management, and control of the entire value chain, with the goal of achieving superior customer service at minimal total cost. Supported by a rich analytical toolset, we develop logistics networks, design supply chain processes, and devise supporting organizations that enable seamless product and information flows between customers, suppliers, production, and distribution. Beyond operations, we integrate the broader business perspective of our clients – from strategy to sales and marketing or finance. We view market and customer service level requirements as the foundation of any supply chain design.
In serving our clients’ senior management, we ensure that corporate strategy objectives drive our supply chain solutions. Examples include supply chain engagements in support of globalization or growth strategies, or in merger and acquisition or financial turnaround situations. Special attention is given to global supply chain solutions. Our tightly knit global network of supply chain professionals enables us to deliver fast and effective responses worldwide and at the highest professional standards. Going well beyond delivering strategy papers, we help clients to implement practical solutions and reap expected benefits.
With unique approaches, we achieve the short-term impact frequently necessary in financial turnarounds or service level crises. For long term, fundamental transformations, our technical solutions are complemented by a wide range of proven change management approaches. We tailor our proposals to the specific characteristics of an industry. Taking fresh ideas from one sector, we can lift the performance of clients in another. Our breadth and depth allow us to transfer our experience, for example, from fashion to electronics, from wholesale pharmaceuticals to the automotive industry, or from retail to defense.
Our consultants may be distributed around the world but working in global teams and attending regular practice meetings allows us to get together to share insights from client experiences, discuss developments within global industries and codify knowledge as it emerges.
We also undertake numerous internal research projects, often with leading academic institutions, where colleagues with shared specialist interests are allowed the time and resources to further thinking in a certain field. Our knowledge-building efforts have led to numerous publications of articles and books and we frequently present externally at conferences and executive forums.
McKinsey has quick-response research capabilities in place around the world to support our consultants in serving their clients. 60 knowledge professionals and industry experts in Asia, Europe, and North America are assigned to the Operations Practice. Top
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Note on confidentiality
We protect the confidentiality of our clients at all times – a commitment that is naturally enforced by the strong relationships our consultants develop with their clients. Means to ensuring client confidentiality include strict rules preventing individuals from serving potentially competitive clients, careful file segregation (including the establishment, if necessary, of separate office facilities) and everyday enforcement of security guidelines.
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