“So, you think when I have this conversation about their mistakes, they are ignoring me because I lecture them?” Daniele asked.

“No, they are not ignoring you. They are ignoring your entire control system. Your control system is finding the mistakes, but the mistakes are continuing. Is the purpose of your control system to find mistakes or to find the causes for the mistakes and repair the cause?”

“I know. But I have to find the mistakes. And I have a great audit team. They are very thorough. I don’t know what I would do without them. They keep us in compliance,” Daniele stated flatly.

“How does your production team feel about your audit team?”

Daniele visibly changed, sat back and pulled away from her desk. “Well, they are not supposed to like the audit team. I don’t run a popularity contest around here. There is some friction, but I think it is good friction. My production team knows if they make a mistake, my audit team will find it. I think there is respect in that way.”

“Daniele, here are some things I know based on what you describe.

• There are mistakes in your files that your audit team is NOT finding, that will put you out of compliance with the Feds.
• Your production team has no respect for your audit team and is ignoring the results of your audits.
• Some mistakes are being found, but the causes of the mistakes are not being identified.
• Your situation is getting worse.

“You have a control system. Let me list the elements.

• Your team works on a file.
• Someone from another team audits the file and finds a mistake.
• You, as the manager, get the results of the audit.
• You, as the manager yell at the team member for making a mistake on the file.

Did I get that right?” I asked.

“Yes, well, I don’t really yell at them,” Daniele replied. “I mean, I talk calmly, I don’t raise my voice.”

“You don’t have to raise your voice to be yelling,” I chuckled.

“Okay, but let’s call it a lecture, not yelling,” she insisted.

“Why do you think they are ignoring you, when you have this little talk with them? I know they are nodding their heads, but trust me, the results from the audit team and you, as the manager, are being ignored in this control system. Why do you think that happens?”

“We are subject to both state and federal compliance. There are important standards that we have to observe. No getting around them. So, I don’t see what all the fuss is about from my team when I try to enforce those standards,” Daniele explained.

“What happens?” I asked.

“We have to maintain files. They have to be up-to-date and complete. Each person is responsible for the files on the clients assigned to them. Once a week, I go and pull five files, at random, give them to someone on my audit staff. They go through the file and find all the mistakes.”

“What happens, then?”

“I bring in the person responsible for the file and we have a very serious discussion. During the discussion, I seem to get my point across. Everyone always agrees with me. But then, they go back and make the same mistakes, again.” Daniele sat back.

“They make the same mistakes, again?” I prompted.

“Yes, and then they get all huffy about it. They walk around the office all day with a rain cloud over their head. I can look over the cubicle farm and see all the little rain clouds. I am just trying to do my job and keep us in compliance with the feds.”

“When you look at this inventory problem, where should you be spending your time?” I asked.

Bruce looked down. “You’re right. I walk around the store barking orders about removing this display or re-working that shelf arrangement. I have team members to do that, and I have supervisors to make sure it happens.”

“What should you focus on?” I repeated.

“I need to focus on the system. I mean, I can still walk around the store. It gives me a better sense of reality, but I need to focus on the system. It’s the system that provides the predictability in our inventory management. Everything else is simply rearranging deck chairs.”

“If I had to reduce my inventory by 30 percent by the end of May,” Bruce continued, “I would be able to spend more time analyzing which inventory I wanted to get rid of, adjusting my min/max and re-order points. I would look at inventory turns, lead times and ship frequencies.”

“So, what’s the difference in blowing out 30 percent of your inventory by the end of next week and reducing it by the end of May? You still get your inventory down?” I asked.

Bruce smiled. “If I just blow out my inventory in one week, I will guarantee that within two weeks, my levels would all be back. I might even have more inventory then, because people will be ordering stock outs without any rhyme or reason. In the short term it works, but in the long term, it all comes back.

“By working systematically, I can make permanent changes in stock levels. I will have much more control. We will have the profitable inventory we need, that turns, that makes us money. It gives us more predictability and consistency. It all gets back to the system.”