D. R. Rice Company

Helping You Manage Your Supply Chain More Effectively!

Identifying the Critical Issues

By Don Rice

During a recent discussion with a CEO, an interesting question came up. What are the critical issues standing between our company and success with reducing costs, improving customer service and becoming faster and more flexible in manufacturing?

After a bit of thought, I came up with a list of common traps or missteps companies have made as they have attempted to make improvements and changes in their business processes.

In order to get those world class results, there must be a very effective process to make supply equal to demand. The first critical issue is being able to answer yes to 90% of the questions in the Supply/Demand Audit. This includes items like data quality; have sales, manufacturing, and finance work off the same game plan; having only one scheduling system on the shop floor, etc. If you're not familiar with the Supply/Demand Audit, you can get a copy by calling 615-221-2196.

The most important issues to guarantee success?

Surprisingly, there are only a few.

The other issues encountered fall within two categories: internal commitments and external distractions. The internal commitments represent issues that are controllable by the company, but are difficult to resist. The external distractions are issues that the operating managers have little or no control over. Let's step through both sets of issues.

Internal Commitments

Core Team Leader: The selection of the core team leader, the person who will guide and direct the planning and execution of improvements activities, is the most frequent misstep. The individual needed for this is, typically, the most indispensable person in the company and, typically, they are off-limits. But that actually makes this person the most needed, because they usually have a track record of success and bring with them the trust and respect of their peers. In other words, many companies are unwilling or unable to get the very person they need the most assigned to the project.

Single, Common Focus: This reminds me of standing in front of the Sunday brunch buffet line-everything looks so good that you take some of everything as you go down the line but you end up filling your plate before you get to the really good stuff. The buffet line syndrome is a symptom of the lack of a single common vision and direction. In many cases, several independent visions exist and are fighting for the same scarce resources (people's, creates internal conflicts and prevents hard-working people from accomplishing what they believe is in the best interest of the company.

Education is action oriented: An education program must be action-oriented. People should not be sent to class just because the class looks good or seems interesting. The substantial investment is needed when the knowledge gained can be turned into plans of action and improved business results. Those plans of action must yield results for the company that support the single , common vision. A critical measurement of the effectiveness of education is whether you have measurable business results in 90 days after attending the class. If not, then this isn't the right time or maybe not the right class or the right something. When the class doesn't yield results, people's frustration levels soar.

Overcome the We're Unique Syndrome: Many companies fall into the trap of believing that because their combination or collection of products, manufacturing processes, people, equipment, suppliers, customers, etc. are different from the companies down the street, then all of the problems and root causes must be unique to them. If the problems and root causes are unique then the solutions must be unique, too. Consequently, they must invent the solutions to their problems. Inventing is not necessary; in most cases it is really reinventing something many other companies have already created. Building on other companies experiences is where the true leverage is. That's one reason bench marking business processes has become so critical.

Focus on process improvements, not software implementation: Very few customers offer congratulations because a new software package has been turned on. Lots of customers get excited when on-time delivery performance, response to changes happen faster and are more consistent, and prices remain stable-or even reduced. But a lot of companies continue to pursue software implementation as the answer to a ll their process problems. The software is an enabler; that is, you get the same results as before, except processed faster or printed better.

External Distractions

Sometimes, we're distracted by things that we have very little or no control over like:

Changes in executive management: When a new executive joins the company, that executive probably has a new and different perspective. Current projects have a way of getting put on the back burner or on indefinite hold, and momentum is lost.

Major new products: Some companies have been short-changing this area in the past, or the competition has taken an aggressive position with introducing new products. The company, therefore, may need to make significant investment in a short period of time to correct or offset the shortfall. This could be a major drain on internal resources and create conflicts for those resources.

Major new markets: Expanding into new markets is a very positive activity. Because the new markets are new, an element of the unknown is introduced into the business processes. This brings with it the possibility of processes getting out of control and/or having a lot of variability in the process. Correcting the process and managing this variability will consume people's time and the company's resources. Once again, the potential for conflicts for scarce resources exists.

Buy a company/product line: Once-in-a-lifetime opportunities are difficult or impossible to pass up. When a chance to buy a complementary company or product line arises, the right thing to do is to grab it then. But this could have a dramatic impact on internal improvement activities, because the people involved in the acquisition were also probably involved in the internal improvement activities.

Company swallowed up in a merger or acquisition: All bets are off! Head for the bunkers! Who knows what can or will happen here.

Push for current period financial results: This is a way of life in some companies, where half of the office staff is sent to the warehouse during the last week of the quarter and everything must be shipped regardless. The fact that virtually the entire manufacturing process is shutdown during the first two weeks of the following month because there is nothing to work on isn't critical, because the end of that quarter is 11 weeks away.

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D. R. Rice Company

9326 Lake Shore Drive Brentwood, TN 37027 615-221-2196 riceco@riceco.us