Consulting-The-pyramid-principle-2010-pdf

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Now he can plan his data gathering effort by asking himself, "What do 1 have to find
out in order to answer each question yes or no7" Certainly he will want much of the
information indicated in the originallist shown previously (except for "current sys-
tems and procedures" and "present resources, how used," which will have formed
the basis for drawing the diagram shown in Exhibit 46). But he will know in advance
the relevance to his analysis of each of the other pieces of data he gathers, as well as
whether further data not yet thought of are needed.
Also noteworthy from an administrative poi口t of view is that, before he begins the
work, the consu1tant can identify the source of each piece of data, assign responsibil-
ity for collecting it, work out the schedule for gathering it, and estimate costs. The
entire effort should thus bring him relatively quickly and efficient1y to the causes of
the problem, and allow him to develop suitable, even creative, recommendations to
alleviate them.
Of course, as indicated earlier, the ability to generate creative solutions to problems
will always reside with those people steeped in their subject. Deep knowledge of a
subject often enables a problem命solver to achieve insights and see alternatives well
beyond the realm of strict logical reasoning. Those without that level of insight,
however, may want to use logic trees to help them generate possible solutions.

DEVELOPING LOGIC TREES

Lo咯g…忡h1陀e句时l毕忡扒P呻如伊邸tωback to the st怡e严ps of the seq时ue时nti臼al analysis process we looked 挝ate创ar出l且li盯er优::
1. Is there a problem7
2. Where does it lie7
3. 飞叫Thy does it exist7
4. What could we do about it7
5. What should we do about it7
1n steps two and three, you model what exists, using physical flow diagrams and
cause-effect structures that show how the company's business elements, activities, or

tasks relate as a system. 1n steps four and five, you look the other way, as it were, and

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use a logic tree to generate possible solutions and the likely impact on the company
of implementing those solutions. You can also use logic trees to reveal flaws in
grouped ideas once your document is written.

Generating Possible Solutions

Logic trees allow you to spell out logically possible actions that could be taken to
solve a problem. For example, you recall the Task Structure shown in Exhibit 40 on
page 146. One of the costs identified as too high was indirect labo卫

To determine how the client should go about cutting the cost of his indirect labor,
the consultant used a logic tree to make a systematic and logical breakdown of the
mutually exclusive and collectively exhaustive possibilities for doing so. Exhibit 48
shows a portion of the tree.

Exhibit 48 Show the possíble ωays to cut costs

Primary Minimize
process overtíme
costs
Use
cheaper
labour

Minimize
wage awards

Reduce direct Making
labor costs Oepartment
cost per
clgarette Reduce people
per machine
Packing
Oepartment Increase
costs machine speeds

Increase
machine efficiency

Other
costs

To explain the breakdown in Exhibit 48:

哥 Break direct labor cost into its elements
Primary Preparation Process
Cigarette Making Department
Packing Department
Other

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158

可 Break cost per cigarette into cost per hour and hours per million
cìgarettes, sìnce

Cost Hours Cost
x一一一一一 Cigarette
Hour Cigarettes

可 State the ways cost per hour can be reduced

Reduce overtime

Use cheaper labor

Minimize wage awards

可 State the ways hours per million cigarettes can be cut

Reducing people per machine
Increasing machine speeds

Increasing machine efficiency

可 Continue to the next level

Once the logical possibilities are laid out in this way, the consultant can calculate the

benefit and estimate the risk of taking each action, in order to arrive at the recom-
mended final set of actions.

You can use the same logic tree approach to lay out strategic opportunities. Exhibit
49 explores some of the strategic opportu日ities for growth in a small European

country, and what would be required to achieve each. Again, you try to be as collec-

tively exhaustive as possible.

Exhibit 49 Show the available strategic opportunities

Fill the gaps in the Provide more loans to under-
current ~b~siness exploited sectors of the market
Take a more active role in

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Capitalize on opportuni- Exploit the increasing Expand lending through
ties arising through financial sophistication Acceptance Credits
the normal growth of the corporate sector
of the economy Finance expansion in {一一一 Increase financial commitment
building and construction to construction industry
Capitalize on increased Finance land banks
EC trade and investment Make financing for new house

」一一一 building schemes totally
comprehensive

Participate in the growing Increase volume of business
number of overseas 一斗 with subsidiaries
projects
in the country Provide trade finance and
foreign exchange services

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159

Revealing Flaws in Grouped Ideas

You can use this same technique of displaying the logical relationships between
groups of activities to question the logic of what you've written. A good example of

how to do so can be seen in analyzing the lists of so-called Key Issues shown in the

box below. These were taken from a proposal to a company in Texas that distributed
pipes and fittings to construction sites around the state.

The company purchased the products from suppliers, and stocked them in a central
warehouse; this warehouse in turn supplied a dozen or so smaller warehouses in
regions throughout the state. The company had just been taken over, and the new
owners thought that an inventory cost of $27 million for the central warehouse was
too high. In addition, because the central warehouse was frequently out of stock of
some items, the outlying warehouses also ordered direct from suppliers, further
increaslng inventory cost.

Key Based on our discussion, several issues emerged that should be addressed since
Issues the answers will affect improvement opportunities and, possibly, future business

strategy. These issues are preliminary only, and we would expect others to emerge.

1. Is the present inventory management system suitable for all elements of
the business? We understand that a computerized "IMPACT" type system is
in use. We are familiar with systems of this type, and find them quite useful
in nonmanufacturing, stocking businesses in which thousands of relatively
stable stockkeeping units are processed. Howeve骂 it may not be as effective a
method as others of determining stock levels and placing orders both
centrally and in the regions.

2. With present systems, procedures, and organizational relationships, what
is the level of inventory investment necessary to meet customer service
objectives? A determination should be made of the investment required to serve
prese口t markets with the current products offered under existing procedures.
This wi1l provide the proper base from which to determine opportunities for
improvements through change as opposed to those that could be realized
through more control or discip1ine in the use of prese时 systems and techniques.

3. Are centralized inventories cost effective for you? In the Piping Group, two
centralized inventory pools are maintained, for tube products and valves and
fittings. These pools were established when the business was small and work-
ing capital extremely limited. The central pool was intended to achieve lower
inventories, lower cost, and better service, particularly for large construction

projects; management is questioning this policy.

4. What are present levels of obsolete and slow-moving inventories?
Excessive inventories are frequent1y a result of problems in this area. A key
part of the analysis should concentrate 0日 determining current inventory

excesses. More importantly, we will determine the root causes so that

recommendations to prevent reoccurrences can be developed.
5. With changes in inventory policies, organization structures, and systems,

how much improvement can be made in inventory turn? This is the key

issue, and could affect long-term business strategy. Management is willing to

consider changes in long-established operating procedures if such changes
can reduce the working capital intensity of the bus

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Here again we have a very wordy, ugly, mediocre expression of a business message.

And again its impenetrability results from the writer's lack of a clear image to be
communicated, itself the result of a confused approach to the problem solving.

The first question to ask ourselves is, does the list really include "key issues"7 And
how do they relate to our definition of the problem7 Strictly speaking, an issue is a
question so phrased as to require a yes-or-no answer. Phrasing it in this form per-
mits us to direct our analysis to a specific end product needed to prove or disprove
our understanding of the causes of the problem.

Accordingly such questions as number two, "What level of inventory investment is
necessary7" are not issues. Stated as an issue, the question would be "Is the present
level of inventory too high7" or "Do we need as much inventory as we now have7"
Given your understanding of the problem-sol飞Ting process from Chapter 8, you will
be able to recognize these rephrasings as attempts to define how we will know when
we have solved the problem.

The problem now is that the cost of the inventory at $27 million is thought to be too
high (R1), and it should be instead some other number (R2). The first thing to estab-
lish is what that other number should be, so that we can judge whether in fact the
present levels are too high.

Situation R1 R2
Opening Scene
Excessive capital Right amount of capital
tied up in inventory devoted to inventory

?

Disturbing Event
New owners think $27m is too high

Assuming that the figure is too high, we can use a tree diagram to identify the pos-
sible causes of its being too high. What does one do to create inventory at high levels7
Perhaps this:

。 rder too much
High cost of inventory

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