Mar 1, 2023 | Collaboration, Lean, Operations
Our supply chains are suddenly under great scrutiny given the frailties surfaced by Covid. Calls for a greater proportion of domestic procurement are now more common than ever, but is domestic availability the only answer?
Most supply chains are actually run by procurement and logistics people. While there is senior management oversight, the actual purchase choices are routinely made in lower levels of most organisations. To affect change, this is where we need to start, in the bowels of the organisation.
The KPIs of procurement personnel are generally around invoice cost, as it is easy to track. In future, the decision should be more about security of supply, and total procurement cost, which are much harder to measure, and availability which is relatively easy to measure, but in my experience is often ignored.
The huge caveat of course is that the CEO must give ‘permission’ for the procurement people to go off the reservation, and make the necessary changes, and risk buying other than from ‘IBM’.
We also need deep supply chain mapping that captures the dynamics of the chain, and all the transaction costs that apply, as well as the visible financial costs.
The KPI’s of procurement must change if we are to build the resilience of our supply chains.
- Collaborative DIFOT analyses through the chain
- Switch KPI focus from cost savings, usually measured against the invoice cost, to give greater weight to availability.
- Tracking of the drivers of cost, quality and delivery throughout the supply chain.
- Quantifying transaction and opportunity costs, (particularly of management time) at all points through the chain.
- Measures of resilience such as alternative, qualified, and immediately capable suppliers, utilising differing logistics
Together these measures will give you a measure of the resilience of your supply chain, or its ability to recover competitive performance after a failure. The greater the number of nodes in a chain, the greater the risks, which become amplified as you move further way from direct control.
Local suppliers will have to be prepared for the scrutiny of their sourcing. Company A, procuring from Company B, where there are sub-assemblies necessary will want to stress check the suppliers to company B as part of their procurement processes. This will take supply chain transparency to a whole new level. To this point the concerns have been mostly about cost and the time in the chain. In future, it will go much deeper, digging into a range of items that deliver resilience and reliable quality.
The speed of recovery of your supply chain after the inevitable disruption will be key to competitive performance.
Jan 10, 2022 | Lean, Operations, Small business
While contracting as GM of a Federal body some time ago, I used to travel from Canberra to Sydney’s western suburbs on a regular basis.
I had the choice of driving which took a predictable three hours door to door, or catch a cab to Canberra airport, wait, catch the plane to Mascot, then a cab to my Sydney destination. That method took an unpredictable 2 and a half hours to 4 hours depending on all sorts of variables over which I had no control.
My car would happily sit on the speed limit all the way, a far slower speed than the alternative aeroplane.
Clearly, the top speed of one component of a journey will not determine the time for the whole journey, which is what really matters.
This applies to everything in life and business.
Find a way to remove the bottlenecks and the speed of your journey, whatever that is, will increase.
Oct 28, 2021 | Innovation, Lean
Every improvement project at some point refers to the Shewhart cycle: Plan, Do, Check, Act. I have used it extensively myself, but never been fully comfortable with the language of the last two points in the cycle, and the actions that the language implies.
Plan, Do, Check, Act.
Plan. Planning is essential, it is a fundamentally important part of any project, no matter how big, or small. If nothing else, a plan articulates the points of departure as the journey progresses.
Do. Again, doing is essential, without the doing, the planning is just a dream, someone’s illusion of activity.
Check. This is the point where I start to have problems. The word has two unfortunate connotations. The first is to ‘Stop’, not a good idea in a continuous improvement process. The second, its use in the context of checking someone’s ‘homework’, have they done what they said they would do, by the time agreed? Again, this is necessary, but in my experience in a supposedly collaborative group, when the ‘leader’ is doing the checking, the dog gets busy with the homework. It is better for those in the group to self-manage their commitments to each other and let the group dynamics take care of the laggards. It is the leader’s job to encourage the evolution of the ‘group culture’ that enables this to happen. Therefore, I will propose we replace ‘Check’ with ‘Review’. When we review progress in a regular meeting, or by whichever method is used, the review will ensure that the work is done as agreed. However, review has a wider meaning which makes it way more valuable. It implies that not only does the group review the work to date, and review the reasons for variations, it encourages a wider review of the context and causes of those unexpected outcomes, and variations from the planning hypothesis.
Act. The final step. Act can sometimes feel disconnected from the previous step of Check. It is even more distant if we alter the naming of the previous step to ‘Review’. I would therefore propose we change the ‘Act’ to ‘Adjust’. This change implies that based on the outcomes of the ‘review’ process, we have now ‘Adjusted’ our actions appropriately. We can then repeat the process, starting again at plan, as we now have a more robust set of data to work with as we evolve more informed hypotheses to test.
Plan, Do, Review, Adjust.
Replace the PDCA cycle with the PDRA cycle?
Perhaps a bit presumptuous of me to suggest such heresy, but working with those SME’s that make up the bulk of my client base, it makes sense both to me, and more importantly, to them.
It is a little thing, just two words, but little things are cumulative, and do eventually can make a significant contribution.
Aug 16, 2021 | Lean, Management, Operations
Anyone who has read ‘The Goal’ by Eli Goldratt, the original brain behind the theory of constraints, will remember the story in the book about Herbie, the slowest walker in a scout group in a cross-country walk. Herbie was the bottleneck, in that he set the pace of the others, as the group did not want to leave Herbie behind in the woods.
One solution would have been to just get Herbie to walk faster, but that would have moved the ‘bottleneck’ position previously held by Herbie to the next slowest walker.
Whatever they did, the line of walking scouts would spread out, particularly going uphill, and then squeeze back in, going downhill. A walking accordion.
How do you prevent such a hard to manage outcome?
You get everybody to walk at the same cadence, with the same step length.
Standardisation of all aspects of the stride of each scout and the distance between each, would ensure that they stayed exactly together, in unison.
Armies call it ‘marching’.
I call it ‘Standardisation’ when applied to any context other than ‘walking’.
Marching enables groups of soldiers to arrive at a destination at the same time, in unison, that both gives the soldiers a sense of ‘belonging’ and looks intimidating to any opposition who might turn up to fight. Remember the opening scenes of the movie ‘Gladiator’? The Romans were in their ‘Centuria’ operating as one, but in coordination with the Centuria around them. The ‘barbarians’ who substantially outnumbered the Romans fought as individuals. You know who won. (I know it was a movie, but the lesson remains)
Standardisation to a cadence is the best way to finish the most work in any given time, as the variation and resulting shortages and backlogs are eliminated. ‘Flow’ through the system is optimised.
When you want to evaluate something new, you have a standardised system to test it on, and can therefore see the results of the change of one variable to the outcome. If favourable, you can then apply the single change to the entire system to improve it.
Going back to marching. The US army marching cadence is a standardised 30 inches for each step. Every soldier steps 30 inches every time. If the standard step was 31 inches, and the cadence of the march remained unchanged, it would represent a 3.3% increase in the distance marched in any given time.
Standardisation and continuous improvement, an essential element in optimising the performance of your business.
PS. 24 hours after publishing, I stumbled across this article by Brian Potter which goes into a heap of detail on exactly the topic of this post. For those who want a deep dive, I recommend it.
Jun 17, 2021 | Lean, Management, Operations
Chasing improvements in an enterprise comes down to doing the small things well, every time, and continuously improving, generating a compounding effect.
The best way to achieve this is for everyone involved to be engaged in the process, have a stake in outcomes, and understand how they impact on others.
At every level, this is achieved, not by memo, or strategic planning, but by consistent, focussed verbal communication backed by facts.
Best way to do this is to communicate often.
Not a lot at one time, but small bite-sized chunks regularly.
Daily, weekly, monthly, and so on.
At the ‘coalface’, it should be daily, which leads us to the daily stand-up, huddle, group chat, or as one of my clients call it, ‘toolbox’. Whatever you choose to call it in your workplace, it plays a crucial role in performance management.
This is a daily meeting at the beginning of a day, shift, or whatever the work cycle is, that reviews the day to come, in the light of what happened yesterday, with some acknowledgement of what will be coming tomorrow, and perhaps the next day.
Why it works
- Daily communication keeps everyone on the same page, enables problems to be surfaced and addressed before they really hurt, escalated as necessary, and contributes enormously to a culture of communication and collaboration.
- They replace the one-to-one conversations that need to happen many times, with a one-to-many conversation. This saves time and energy, while ensuring the communication is the same to all parties.
- It enables focus on the priority activities, removing some of the day-to-day firefighting and craziness that always occurs.
- It also enables quick updates to larger objectives and relevant projects to be delivered, which removes the always present rumour mill. This works equally well for the positive things as it does for the negative.
- They lead to significantly engaged employees, as not only are they heard, but they can see the outcomes of their ideas and suggestions.
In these days of increasingly remote workforces, this daily get together takes on a much wider role, in reminding everyone that they are a part of a team, and others are relying on them.
What makes them work
- Same time, same place. Having the huddle, stand-up, whatever you choose to call it at the same time, in the same place, every day creates a cadence that drives activity. Start on time, finish on time.
- Sitting down will elongate the meeting, so stand. It might be in the workplace, often it is just outside the workplace, which adds credibility to the process.
- As short as possible, no more than 15 minutes should be an iron rule.
- Everyone gets a say. Engagement comes with being heard, and the chairman must ensure everyone is explicitly given the chance to have a say.
- This can take many forms and will vary with the level of the huddle. At the coal face, a whiteboard is usually sufficient, with perhaps a photo or copy taken and kept for reference for a short time. At higher levels, the recording will vary.
- Be on time, do not ramble when it is your turn to speak. Take any follow up or extended conversation offline, the huddle is to identify problems, address the molehills, but the mountains are for another place.
- Be respectful of time, others and the process. Be attentive, with no side conversations, or banter.
- Meeting chair. Someone must lead the meeting, have control of the conversations and agenda. That may be the same person every day, or it might rotate, which in my experience is the better way.
Usually very quickly there is a sense of team effort, and even the small wins become evident and can be celebrated. It is an incremental process, which once the ball is rolling, picks up momentum that is very hard to stop, even if you wanted to.
Jul 24, 2020 | Collaboration, Lean
An application of Occam’s Razor to all the fluff and consulting clichés around lean thinking and implementation, brings lean back to its simplest form possible.
It has only 2 elements.
Learn to see waste.
Once you teach yourself to observe the waste in a process, you see it everywhere, from the big things in your work life, to the simple things. Ever lose your car keys at home? It takes some time and frustration as you try and remember where you left them? Waste. Put a hook, or bowl, or have specific place that you deliberately put your keys in every time you walk in the door, and you will not lose them again. After a short time, it becomes an automatic action. Fail to do it one day, and the frustration at the wasted time and effort in finding them comes home big time.
Eliminate waste by continuous improvement.
Once seen, take some action that reduces the waste. In the keys example above, it may be that you try the hook, but from time to time, you come into the house with armfuls of shopping. It is hard to reach a hook with an armful of shopping, so you adjust by putting a bowl on the hall table specifically for the keys, which is waist height, so more accessible. In time, it may be that one set of keys near the front door adds extra walking when you need to go out the back door, so you add a specific back door key to a bowl next to the back door.
Continuous improvement, to everything you do.
Incrementally improving a range of these small things, bit by bit, creates momentum and delivers compounding results.
Everyone knows about the race to the South Pole between Scott and Amundsen. They also know that Amundsen won the race, and lived to talk about it, while Scott and all his party perished. What few know is the manner in which the two parties attacked the challenge. There were significant differences in the logistic tactics used by each party, and many played a role in the eventual outcome, but one is not always quoted in the literature, which may have played a key, but little understood role. ‘Continuous compounding’
Amundsen broke camp each day early, and was travelling by dawn, and every day, he covered 15 nautical miles (28km) sleet, blizzard, or sunshine. At that point he made camp, even if it was still early in the day, preserving the stamina of his men and dogs. This created a rhythm that converted to momentum, every day getting closer to the goal, to win the race and return safely.
Scott did neither.
By contrast he made a choice each day, to hunker down in bad weather, or at the other extreme, travel 30 miles, or more, creating no cadence or momentum to the task of achieving the twin goals. There are many other ‘lean’ lessons in the race that are relevant. For example, Amundsen used dogs, which could eat the abundant penguin and seal meat collected on the way. Scott used ponies, which required much more looking after as they sweat with effort, and eat only the grain that had to be hauled.
Little things removed, add up very quickly to big things, and when combined with organisational cadence, create momentum.
How long would it take for you to change a tyre on your car? 20 minutes? an hour? 2 hours after waiting for the NRMA to turn up?
The F1 record for four tyres is 1.8 seconds. Over the course of a race, often won or lost by hundredths of seconds, a few tenths several times during the race can mean the difference between a podium, and a straggler. All the F1 titleholders have done is remove waste, and work as a team, with a few tools to automate the repetitive actions.
‘Lean thinking’ has been turned into a complex toolbox by many, requiring expensive services to implement. However, in its most basic form, it is really just critical thinking, common sense, and simplicity.
Header photo credit: Tim Chong
