Category Archives: Systems

Where’s the Problem?

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“I don’t understand,” Abby lamented. “I have been working with the sales team for the past six months. We had an increase in sales volume almost immediately. But, after three months, sales began to trail off. I have all the data, here in front of me. The team is making the calls, following the process, but we aren’t getting the orders we expected.”

“What feedback do you get from the sales team? What are their reasons?” I asked.

“That’s the worst part, they just want to blame someone else,” Abby was mildly irritated. “They are blaming the shipping department, of all things.”

“What about the shipping department?” I pressed.

“The sales team says the shipping department isn’t doing their job according to the delivery schedules.”

“And what does the shipping department say?”

“Seems like everyone is in blame-mode. The shipping department says they can’t get orders out of the production department. And the production department is blaming everything on a machine,” Abby replied.

“Tell me about the machine.”

“It’s old and only goes so fast. Work stacks up in front of it, but we can only get so-much output, and it’s running three (8) hour shifts. We would buy another machine, but we have no place to put one and it costs $250,000.”

“Let’s look at the sales orders placed in the first couple of months of your program. What is this list of back-orders?”

“That’s what the sales people are talking about. Their sales orders turned into back orders and their back orders turned into cancelled orders. Now they can’t seem to get new orders.”

“Tell me Abby, how might you be able to connect a slow machine to orders, back-orders and cancelled orders over a six month period? Think about how one system impacts another system.”

Documenting Work Flow Issues

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“I don’t understand why we are going to meet with the team about the new floor layout,” Shannon pushed back. “I mean, it’s a bunch of good guys, but they don’t understand the big picture of work flow and why we need to rearrange things.”

“And, you do?” I asked.

“Well, yes. I watch the unnecessary steps. I watch us move material around four or five times in the storage area before it finally moves to staging a couple of months later. I watch people searching for raw materials in unnumbered bins. I watch people pull unmarked boxes down to see what is inside.”

“Do you think you missed anything? That checklist inside your head, is that all the workflow issues we have? Are you sure you noticed everything?” I pressed.

“Well, not everything. There will always be something,” Shannon shrugged.

“So, let’s turn your single set of eyes and ears into twenty sets of eyes and ears and ask some simple questions of your team.”

Not a What, But a Who

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“Do you really think it’s luck?” I asked.

“I know, it’s not luck,” Vicki replied. “But it seems that every project is different. And the reason that a project goes south, seems to be different every time.”

“So, when projects are predictable, they are more likely to be profitable?”

“Yes, but there is always some variable on the project that drains the schedule, or adds cost,” Vicki pondered.

“So, if you could remove the variability, anticipate the variability or at least have a well planned contingency when things don’t go right, profit might not be as affected?” I pressed.

“But there is always that unanticipated wingnut that comes in sideways and screws things up. If we could just do a better job, seeing into the future, imagining what could go wrong. If we could just figure out what the problems might be.”

“So, you think the problem is a what? You are going about this asking, what’s the problem?”

Vicki stopped talking, so she could think. “Are you suggesting the problem may not be a what, that the problem might be a who?”

Spinning Wheels

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From the Ask Tom mailbag –

Question:
In your Time Span workshop, you describe the friction between various departments, Ops-Sales-Customer Service-Accounting. You suggest this is a structural issue. In my company, we absolutely see this friction, but to me, it looks more like a personality conflict.

Response:
Most managerial issues look like a symptom, that’s why they are so difficult to resolve. The two most often cited problems (symptoms) are communication breakdowns and personality conflicts. You can have all the communication seminars you can afford, you can give everyone a personality test, the problems will remain.

The friction you describe between your departments is structural. Each department works from an internally focused agenda, with little consideration for other agendas in other departments. The exterior looks like a breakdown in communication. Not so.

Why is the agenda in each department internally focused? Simple. We, executive management, told them they had to be internally focused. We told each department they had to be efficient, profitable, no waste, no scrap, high utilization rates of internal resources, we told them they had to be internally focused.

In the heady days of growth, as these departments were emerging and developing, this internal focus was necessary, to gain those efficiencies, to make the output predictable. Absolutely normal. But now, that internal focus works against us. For the organization to move to the next level, those departments have to work together, support each other, cooperate, trade inside information, share planning, cross-train personnel.

You can spin your wheels with personality tests, but the fix is Integration. We have to integrate our systems and sub-systems together into a Whole System.

Getting By and Paying the Price

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“I know we are missing a couple of Managers,” admitted Derrick. “We intentionally allowed these positions to be open. We thought we could get by, save some salaries. We thought other people could cover for a short time.”

“And now you are paying the price,” I responded.

“I guess we thought our systems were solid,” Derrick hopefully floated.

“Perhaps they were, but things change. Your systems have to be constantly monitored, constantly tweaked. Other people can cover some of the daily work in your manager roles, but they are not going to look at your systems. Not only did you lose the predictability of your momentum, but glitches in your system cost you backtracking to re-locate the source of the problem. That’s why you felt, at times, that you were playing Whack-a-mole.”

“So, what’s the next step?” asked Derrick.

“Two-fold. You have to keep a handle on the Whack-a-mole and you also need to find a new manager.”

Problem Fixed, System Broken

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“You have two out of five manager positions in place on a daily basis, so when you have a problem, you fix the problem, but not the system,” I offered.

“So, the problem is fixed,” Derrick insisted.

“Yes, the problem is fixed, but the system is still broken. You are missing three of five Managers, so you are not paying proper attention to your systems.

“You see, Derrick, when you have a problem, everyone scrambles to fix the problem. Even experienced Managers put on their superhero cape and leap in front of their biggest customer to save the day.

“What your managers need to focus on,” I continued, “is the system. Why didn’t the system prevent that problem? Or at least mitigate the damage from the problem? Their role is to fix the system.”

Not a What, But a Who

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Derrick located a copy of the org chart. “A little out of date,” he remarked.

“It’s time stamped only three weeks ago,” I said.

“Yeah, well, it’s still out of date.”

“So, if I think you have a system problem, where should I look on the org chart?” I asked.

“All these people are doing production, and the supervisors make sure production gets done. You have to be looking at our managers, they create our systems, monitor and improve our systems,” Derrick observed.

“Yes, and I see you have five manager positions. These are the roles accountable for your systems.”

“That’s why it’s a little out of date. One manager got promoted to Vice President and we figured he could still cover his old position. This manager, here, got an offer from another company, and we decided that we might be able to do without for a while. And our controller wanted to move to the northern part of the state. And with the internet, she does her work from home.”

“Let me get this straight. You have five manager positions, monitoring your systems, yet only two out of five actually show up for work here?”

Detail Thinking at Stratum IV

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From the Ask Tom mailbag –

Question:
At what Strata levels do details disappear, if they do?

Response:
Strata levels, as elements of Elliott Jaques model, create a visual representation of the Level of Work. Your question appears to ask about the behavioral traits of person, completing a task assignment, specifically curious about attention-to-detail as the task is completed.

Strata levels are descriptive about specific behaviors only as they relate to effectiveness in the completion of task assignments. Details never disappear. Even in longer Time Span task assignments, the devil is always in the details.

This is still an interesting question and may lend insight in describing the Level of Work in each Stratum. My answers, in the form of questions?

Level of Work – Stratum I
What details exist that will impact decision making on the pace and quality of the work?

Level of Work – Stratum II
What details exist that will impact decision making on the coordination of multiple elements, materials, equipment, people in the completion of the work, on time, within spec?

Level of Work – Stratum III
What details exist that will impact decision making in the creation of a system, so that tasks assignments are completed with predictable, consistent results, every time?

Level of Work – Stratum IV
What details exist that will impact decision making in the integration of multiple systems and sub-systems?

You see, there was an exercise described by Peter Senge in the Fifth Discipline (Stratum IV-systems thinking) called the Beer Game. The set-up of the game creates a brewery (system), two-step distribution (system) and a retail store (system). Because these systems in the simulation were not integrated, the end result typically produces the construction of an entire second brewery system. The detail, the retail store put beer on sale for one week during the simulation. The construction of the second brewery occurs NOT from market demand, but from a series of backorders put through the system in a non-integrated attempt to cover the sell-out of beer during a one-week retail sale period.

Yes, the devil is in the details, even at Stratum IV.

High Productivity Can Create Excess Inventory

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“I need you to make a phone call,” I told Corina. She looked puzzled, feeling guilty about something she wasn’t sure of.

“There’s a lesson in this,” I continued. “It’s a counter-intuitive lesson that most people and organizations don’t learn until it’s too late.”

“So, you are talking about the difference between the company’s goal and my goal for the plant?” she asked.

I nodded, “Yes, the difference. There shouldn’t be a difference. But no one sat down and punched through all this, so there could be agreement. In fact, I would bet that you never sat in a meeting to truly clarify the goal for the plant. I would bet you assumed, by all manner of policies and directives, to produce as much as you could as efficiently as you could.”

I was nodding. Corina was nodding. “How much excess inventory is now hiding in that warehouse?” I asked.

Corina smiled, but quickly realized what had seemed to be good news wasn’t after all. “I would have to pull the reports, but I think we have about four weeks of production built up in the warehouse. I mean, we were building to forecast, but we weren’t selling to forecast.”

“Okay, let’s make that phone call.”

Focus on the System

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“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.”