Confidential Material

Introducing JP Farrell & Associates, Inc.

Re-Orchestrating the Extended Enterprise

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

Introducing JP Farrell & Associates, Inc.

Who We Are and How We Work

Capabilities

Our Role Is Determined by the Clients Needs

Our Clients

Representative Engagements

For More Information

Our Website http://jpfarrell.blogspot.com

Contact Information

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 2

Working with JP Farrell & Associates, Inc.

Clients work directly with a hands-on, executive consultant

Twenty years of professional consulting experience
 Officer-level positions with AT Kearney, TSC, Capgemini and Cleveland Consulting
Associates
 Designed and led engagements in operations and strategy with more than 40 clients in
the 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 government
 Schneider National, Inc.
 IU International, Inc.
 U.S. Dept. of Transportation (Economist)

The firm has the flexibility to bring in other, experienced consulting

resources as required

Relationships with other consulting firms and individuals

Partnerships with software developers as appropriate
The
The assignment
assignment is
is not
not complete
complete until
until the
the client
client has
has become
become more
more capable
capable

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 3

The Consultant’s Role is Defined by the Project Needs

Typical
Typical Roles
Roles

Engagement Manager Analyst and Subject Matter Expert

Project design and management
Strategy

Detailed planning and reporting
Innovation

Program integration
Extended Enterprise Management

Supply chain structure

Operations
Process Facilitator

Best practices in logistics and

Workgroup facilitation transportation

Issues documentation
Capability assessment

Process design
Process design

Process mapping
Functional requirements

Performance evaluation
Organization of resources and

Gap analysis infrastructure

Pilot demonstration
Information Technology

Information mapping and gap analysis

Coaching

Business intelligence

Capabilities of vendors and
applications

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 4

Clients and Employers
Food & Beverage Companies Other Manufacturing, Retail Health Care

American Home Products and Printing
Bristol-Myers Squibb

Anheuser-Busch
Allison Engine
BlueCross/BlueShield unit

Applebee’s
Caterpillar
Eli Lilly

Basic American Foods
Ciba-Geigy
Rapidly growing HMO

Barilla
Colgate-Palmolive
Wyeth

Coca-Cola
Elmer’s Products

E&J Gallo
ExxonMobil Transportation, Fulfillment
Harris-Moran Seed Co and Utilities

Kellogg

La-Z-Boy
Banta

McDonald’s

Luna
Bell Canada

Naya

Pactiv
Federal Express

Parmalat

Party City
IU International, Inc.

Pepsi General Bottlers

Sears
Schneider National, Inc.

Pillsbury

Quaker Oats
Softsoap

SuperValu Consulting and Other Services

Southern Wine & Spirits

Target
AT Kearney/EDS

Starbucks

WMS Gaming
Bank of America

YUM Brands!


Zenith
Capgemini/Kanbay/
Government and Education Adjoined Consulting

US Dept. of Transportation
Cleveland Consulting/CSC

Eastern Michigan University
TSC

Concordia College
9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 5
 Representative Engagements

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 6

Summary of Representative Engagements Developed and Managed by
JP Farrell
Client Issue
Global Air Freight Excess inventory of aircraft
Carrier parts; high cost of
maintenance
Global Food Brand Needed to increase utilization
of manufacturing and
distribution capacity
Top Beverage Brand Cost of shipping from bottlers
to distributors
Literature Wanted to offer turnkey print
Management Division and fulfillment services
of Print Company
Rapidly Growing High cost of shipping
Coffee Retailer materials to stores; poor
inbound controls
Major Grocery Declining market share due to
Manufacturer inflexible customer service
Consumer Products Opportunity to rationalize
Manufacturer distribution networks
following merger of CPG
companies
9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved.
Consultant’s Role
Facilitated development of
strategy for improving aircraft
availability
Developed Integrated Business
Planning Process for Marketing,
Sales and Operations (new S&OP)
Evaluated transport operations
Provided “strategic selling”
services, expanding the client’s
footprint with its customers
Designed inbound shipping
operation
Defined materials management
requirements
Facilitated adoption of new
customer service strategy
Evaluated cost and service
implications of alternative
distribution network plans
Results
Reduced total inventory and
improved service by changing
inventory, maintenance, flight
routes and purchasing policies
Process was adopted worldwide
for cross-functional, monthly,
tactical planning
Confirmed opportunities to
reduce spend by $70 mm
annually
Positioned client as the
preferred provider with broader
service array for key customers
Reduced inbound transport costs
by $72 mm annually
Built business case for order
management system
Introduced customer-specific
service approaches and regained
category leadership
Developed plan to reduce
distribution cost by 15% while
improving service to W. Coast
7
Reducing Excess Inventory of Aircraft Parts Client Success Story

Global Air Freight Carrier

By repositioning responsibility for inventory, client improved focus on fleet uptime

Situation Approach Key Accomplishments

•Client had nearly $1 billion
in spare parts inventory
stored in more than 100
warehouses and depots
worldwide
•High emphasis on parts
availability
•Wide range of aircraft types
and ages supported
•Parts ranged in value from a
few cents to $1 million
•Users of inventory, the
maintenance organization,
did not have responsibility
for managing it
•Immature processes for
establishing alternative
sources of supply
• Convened steering committee to
reconsider role of spare parts inventory
• Interviewed management to better
understand requirements and processes
for maintaining aircraft and deploying
spare parts
• Segmented inventory by purpose, value
and urgency and benchmarked
performance
• Identified excess inventory for
disposition
• Proposed alternative operating models,
including outsourcing some types of
inventory and amending service
requirements for parts suppliers
• Modeled impact of aircraft route
assignments on inventory requirements.
• Rewrote stocking policies,
establishing that some classes of
inventory should be managed by
suppliers and that others should
be pooled with non-competing
carriers
• Recommended that some aircraft
types be rerouted
• Developed plan for strategically
sourcing parts from low cost
suppliers
• Eliminated some classes of
inventory from many stocking
locations

Reduced total
inventory and
cost of
managing it

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 8

Integrated Business Planning Client Success Story

Client: Global Food Brand

Developed tactical planning process for 100-year old brand, focusing management on “making the plan”

Situation Approach Key Accomplishments

• Facing pricing pressure, the
company was in the midst of a
major cost reduction initiative
involving both sourcing and
manufacturing.
• Plans were being developed to
remove substantial excess
capacity from manufacturing
• Marketing and Sales managed
promotions separately causing
substantial variability and
uncertainty in demand
• Business functions could not
reconcile volume forecasts
• Communication among sales,
promotion management and
operations were conducted at
low levels of the organization,
and were limited to remedies
for near term issues, such as
expedited shipping
• Product shortages occurred
too frequently, despite
relatively high inventory
levels
• An integrated business planning (IBP) process
was designed using a facilitated approach
• Functional leaders from marketing, sales,
production, distribution, customer service
and information technology met in
workshops 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 their
roles were formally defined
• A consulting team worked with marketing,
finance and sales to develop a single, unified
monthly 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 from
from a two-month to a nine-month outlook
• Monthly functional and cross-functional
meetings were designed
• Standard preparation and inputs
• Monthly cross-functional recommendations
• Using the new process, tactical
plans developed at the functional
level were reviewed cross-
functionally and updated as
required
• By updating capacity plans more
frequently and using constrained
production planning, operations was
able to remove excess production
capacity
• Profit improvement opportunities
valued at $12 million were
identified over the first 6 months
•The design of a marketing
promotion was changed to
improve sales performance
•Excess inventory of fast-moving
goods was identified and
removed
• Business Unit management became
actively involved in tactical
planning every month
• The IBP process was adopted by all
business units and implemented
world-wide

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Shaving $70 Million from Distribution Costs
Client: Leading Beverage Brand
Identified changes in policies that streamlined operations and reduced spending on carriers
Situation
•The client, one of the
world’s largest beverage
brands, faced significant
cost reduction targets
•The Transportation
Department managed a
spend of some $500 million
to deliver finished goods
among company-owned
subsidiaries and from
bottling plants to
wholesalers
•The Procurement
Department negotiated
contracts for materials
(including bottles and cans),
F.O.B. Destination, freight
prepaid
•Procurement, Plant
Operations and
Transportation operated
independently
9/29/2009
Client Success Story
Approach Key Accomplishments
• Interviewed each department to • Identified actionable, verifiable
understand policies for production tactics for reducing distribution
scheduling, plant warehousing and costs and transport-related
distribution, wholesaler order materials costs by >$70 million
management and transportation annually. For example:
• Analyzed wholesaler orders at the brand • Direct ship full truckloads of
and wholesaler level to identify fast-selling product to high
opportunities for cross-docking and volume distributors
direct shipping • Arrange for low-weight
• Identified major logical flaw in the trailers and fill them to
model used to estimate truckload costs capacity
• Identified opportunities to substitute • Locate bottle supply closer
• Determined that certain high volume to bottling plants
inbound lanes for materials could be • Institute dedicated contract
combined with outbound lanes to form carriage program and multi-
continuous moves, including round trips stop truckload deliveries
• Found other lanes where lower-cost
modes could be substituted
• Determined that outbound equipment
was not optimally loaded and that Most savings
opportunities to fill excess trailer came from
capacity were not being recognized operational
changes
© JP Farrell & Associates, Inc. 2009. All rights reserved. 10
Helping a Literature Management Company Become Client Success Story

the Preferred Solution for Key Accounts

Restructured a supplier’s relationships and spans of responsibility with major customers

Situation Approach Key Accomplishments

•The client, a printer, wished
to inaugurate turnkey
literature management
solutions for key customers
•Originally a multi-media
printer
•Redefining service
offering to include
•Printed materials
design and production
•Inventory stocking and
management
•Print on demand
•Distribution
management
•The consultant was engaged
to help the client increase
its share of the print and
fulfillment volume at two of
its key customers
• Worked with the client’s business • In one case, recommended that
development teams and senior client’s customer outsource all
management to structure deals and printed material management to
project plans client in sole-source arrangement
• Through two different, concurrent • Estimated annual cost advantage
projects, audited the supply chain and detailed how service
structures, policies and performance of advantages would improve
two of the client’s key customers, one a customers’ value proposition
retailer, the other a managed health while avoiding investment in
care provider systems
• Managed project teams composed of • In second case, recommended
consultants and key representatives of restructuring of supplier
the client and its customers responsibilities, increasing total
• Analyzed impacts of alternative supply efficiency
chain approaches to devise new
strategies
• Considered industry dynamics, client
and customer capabilities and costs
Positioned
Client as
Preferred
Provider

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 11

Creating the Inbound Distribution Network for a
Rapidly Growing Coffee Retailer
Developed store distribution plan for rapidly growing coffee retailer
Situation
• Company was expanding
rapidly, both adding new
stores and developing new
channels of trade
• Having little distribution
infrastructure, the company
was receiving some thirty
deliveries per week at each
of its operations, with high
embedded transportation
costs
• Multiple order processing
systems confused
procurement processes and
prevented store operators
from having supply chain
visibility
• Network expansion was
generating decreasing
returns to scale, despite
increasing network density
9/29/2009
Client Success Story
Approach Key Accomplishments
• Segmented restaurant supply chains by • Management agreed to
type of product, recognizing differing undertake multi-year effort to
service requirements and logistics create distribution infrastructure
characteristics • Store deliveries were reduced to
• Developed common fact base for volume, no more than one per day
activities, costs and locations • New flow paths for products
• Interviewed senior management as well were defined, based on product
as store operators, logistics service and customer segments
providers, suppliers and staff departments • A network of third party
to understand growth plans, service providers was selected to
requirements, operating constraints and operate distribution
cost drivers • Ordering processes were
• Modeled costs of alternative distribution simplified and consolidated
scenarios • Metrics for controlling customer
• Working closely with both functional and service were put in place
executive management teams developed
distribution strategy
• Identified operating changes required by
new strategy
• Developed systems plan to support new
strategy, estimating costs of $72 million
implementation operating cost
• Created time-phased implementation plan savings
identified
© JP Farrell & Associates, Inc. 2009. All rights reserved. 12
Helping a Top Consumer Products Company Regain Client Success Story

Category Leadership by Reorienting its Service Approach

Redefined policies, permitting account-specific integrated service and promotion policies

Situation Approach Key Accomplishments

•The client was concerned
that its ability to maintain
its margins with retail
customers was eroding as it
lost market share
•Why were customers
unhappy in spite of the
client’s acknowledged
strengths?
•Strong consumer
preference for the
client’s product line
•Competitive spending on
trade promotions
•High order fill rates
•Efficient logistics
operations
•Ethical business practices
•Experienced customer
service representatives
•Attentive sales force
• Developed customer experience • Convinced management that
framework, describing interactions with several areas needed attention:
customers at each stage of the service • Rigid logistics practices
lifecycle, from product development to • Overly complex, insufficiently
service after the sale documented promotions
• Conducted (1) in-person top-to-top • Inflexible invoicing procedures
interviews and (2) telephone surveys with • Packaging, bundling and
middle managers at major retail accounts logistics offerings not well
to determine: matched to channels
• What do customers consider important • Developed process for tailoring
aspects of service? service offerings to channels and
• How did the client measure up relative accounts
to competitors at each stage in the • Introduced display-ready pallets
lifecycle? for promotion, customer-specific
• How did customers’ requirements vary unit loads, customized invoices
by channel of trade and business • Improved metrics
strategy? • Added service metrics to
• Assessed current performance relative to customer scorecards
customers’ stated expectations to find
areas requiring improvement
• Met bi-weekly with cross-functional team Regained
of client vice presidents to review Category
approach, hypotheses and findings Leadership

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 13

Streamlining Distribution for a
Consumer Products Manufacturer
Developed post-merger distribution plan for CPG Manufacturer
Situation
• Conglomerate purchased CPG
manufacturer and wanted to
merge its operations with those of
a previous acquisition to form a
category leader
• Companies had substantial, but
not complete overlap in customers
• Each company had different
service policies, even for common
customers
• Neither company had sufficient
distribution capacity to serve the
needs of the other
• Both companies were in the
process of outsourcing much
production to Asia
• Companies were in the early
stages of integrating supply chain
and financial systems
9/29/2009
Client Success Story
Approach Key Accomplishments
• Interviewed senior management to understand • Significant disparities were
goals for growth, cost and performance; customer discovered between operating
service policies; and perceptions of current practices and performance of
performance the two companies
• Assessed operating performance at current • A common set of customer
facilities service policies were
• Developed extensive fact base to model costs and developed, recognizing that
service implications of alternative network orders would be consolidated
structures at the customer level
• Volumes, orders and shipments by customer • Emerging customer
and/or SKU requirements for service and
• Detailed costs of transportation and information were identified
distribution • Recommendations were made
• Alternative costs associated with new to add a west coast DC,
network elements remove a suboptimal
• Inventory levels and policies by location and distribution facility and improve
SKU systems and operating
• Current and expected sourcing plans practices
• Modeled cost and service implications of
alternative paths for each SKU
Costs reduced
by 15% and
service
improved
© JP Farrell & Associates, Inc. 2009. All rights reserved. 14
 For More Information

Commentary and Resources

Contact Information

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 15

For More Information
Commentary and Resources

http://jpfarrell.blogspot.com

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 16

Contact
JP Farrell & Associates, Inc.

JP Farrell & Associates, Inc.

436 N Grove Ave James P Farrell

Oak Park, IL 60302

Management Consultant

Phone: (312) 545-3452

Fax: (708) 386-5844
E-mail: jamespfarrell@sbcglobal.net
Website: http://jpfarrell.blogspot.com
Profile: http://tinyurl.com/kvnhld

Re-orchestrating the Extended Enterprise

9/29/2009 © JP Farrell & Associates, Inc. 2009. All rights reserved. 17