A number of companies in our industry are reporting a modest increase in volume. To their surprise, many of them struggle with the volume, which was not a problem years ago. What happened?
Over the last few years these companies have scaled down. They’ve had to reduce staff in the plant and in the office. They’ve reduced, or even eliminated, some of the support functions. Employees had to wear multiple hats and cover different functions. These companies have also reduced inventory and so did their suppliers. The entire supply chain was slimmed down but it still worked.
Now, with a little upswing, this system seems to have difficulty coping.
The companies realize that, along with some of the people they’ve lost, some of the talent, skills and experience were lost as well. As companies get busier, they are realizing that some of the process redundancy they had previously, prevented some of the mistakes that are being made now. The mistakes compound on the additional volume, which needs to be dealt with. These processes include production processes, but more so, the office processes.
These companies are not alone. The slimming down of the supply chain has had a similar effect on all companies. Supply companies reduced their inventory levels, reduced variety in stock and consolidated the distribution network. What was a purchase item for next day delivery from a distributor may no longer be carried and needs to be ordered from the manufacturer, which could take several days/weeks. Some of the suppliers were not ready for the upswing and are running out of stock. The 'bull-whip effect' shows its ugly side as each step in the supply chain orders more from their suppliers. This effect is not only felt on the material and inventory side, it could also affect the service and attention the suppliers provide you with. The additional workload of your increased volume is compounded by a less-responsive supplier base.
Most companies do not have documented processes. They just know!
They believe everybody knows the process. If employees are not sure of process details and the volume of complex orders increases, you will have your challenges. If you are under time pressure and add new untrained employees to the equation, you get closer to the perfect storm.
Now, what can the companies do about this?
The first thing they need to verify is that they have a problem or that they might run into this problem in the near future. It is important that you understand the interconnections.
A simple but effective exercise is to map the processes.
Ask the questions: How is it done now? Who is doing what? What information is received from where? What decisions need to be made? What is the output and where is the next step?
This gets interesting when you ask different people about the same process. The managers and the employees who are actually performing the tasks might have a substantially different version in their mind. If there is more than one person performing the same task, you also might get different versions. When you find these discrepancies you realize the benefit of this exercise.
In the first round, you focus on the current process. As you draw the current process you start to question why the processes are designed that way.
Sometimes you will find process steps, which no one can explain. You might find
ingrained processes where the reason for doing it a particular way has long disappeared. In the past there might have been a reason based on the old software, systems batch processing, or individuals, but the current process does not require this step.
In round two, you start to modify the process.
You eliminate obsolete steps and streamline the others. Target the easily achievable improvements and implement them first. For a successful implementation you need good communication with all process holders. The process map is a great tool for teaching a new process to existing and new employees.
Now that the employees have a current and improved map they can be challenged to use this methodology for other processes. Ask for the ‘broken’ processes, the processes where mistakes happen way too often, or processes too complex to teach new employees. Put the revised processes on a review schedule. Reviewing them every year or every second year will drive the improvement process forward.
Especially when implementing/upgrading software, companies should know their processes well. And unless it is documented, you usually cannot claim that you know the processes.
The amount of resources and efforts required to map and improve processes will differ with each company. When it becomes too difficult to get all the work done, when too many errors happen, when errors peak during the holiday season because the usual process holder is replaced by the vacation substitute, then you have indicators that you are not spending enough resources to stabilize your processes.
Sepp Gmeiner is a partner with Lignum Consulting.
For feedback, questions and/or suggestions he can be contacted at email@example.com