While working with our clients, we frequently discover that they are chasing the same undesirable effects around their enterprises and across their supply chains again and again. We know this, because they freely admit that they find themselves putting out the same fires again and again.
So, the goal of this article is—hopefully—to get some folks to reconsider their thinking as we take on the challenges of a brand new year.
What we think today has created our current reality
I am not sure why, but executives and managers frequently believe that the world in which they live and work in the daily operation of the business and supply chain has been created by forces entirely beyond their control.
This, of course, cannot be the case. For, if it were, it would be impossible for two companies in the same industry to produce so vastly different results.
If forces beyond management’s control shaped the outcomes (read: profits and results) of a business, then it would be utterly impossible for a company in Oregon, for example, to simply change the way it managed inventory, production and its supply chain and end up with results like these:
- DIVISION A
- Increase in sales – 20%
- Customer fill rate – improved from 79% to 99.6%
- Inventory reduction – 60%
- DIVISION B
- Order lead time reduction – 60%
- On-time delivery – improved to 100%
- Reduction in inventory – 20%
- COMBINED OPERATIONS
- Stock-outs on raw materials – ZERO
- Inventory reduction > $2.5 million
Of course, to change the way it managed inventory, production and its supply chain first required that this company change the way it thought about managing its inventory, production and supply chain. If it had continued to use the same thinking, it would not have changed the way it managed.
This seems like an indisputable axiom, yet many, many companies—perhaps, yours is one—continue to repeat applying the same methods over and over, somehow expecting to obtain different results. This, of course, is one of the definitions of insanity.
Insanity is doing the same thing over and over, while expecting different results.
No need to change
As W. Edwards Deming proclaimed, “It is not necessary to change. Survival is not mandatory.”
There are plenty of businesses that have failed over the years. A great many of them have blamed “circumstances beyond our control”—at least in their minds, if not publicly.
Survival is not mandatory.
But, if what managers and executives have been doing for in efforts to “improve” over the last two, three, five or ten years—or, perhaps even longer—has proven to be only marginally effective, perhaps it is time to consider thinking in a new way.
It is not enough to do your best. You must know what to do, and then do your best. – W. Edwards Deming
The really big problems
The big problems are where people don’t realize they have a problem in the first place. – W. Edwards Deming
Chances are, if executives and managers in your business are convinced that they are wrestling with “circumstances beyond their control,” you may not realize that you, your company and your supply chain has a problem. You might have several problems and not be fully aware.
Rational behavior requires theory. Reactive behavior requires only reflex action. – W. Edwards Deming
Our observation is that, when we first meet many clients, their inventory, production and supply chains are managed only semi-rationally. That is to say: they have no settled theory that they can articulate about how inventory levels are set, managed, adjusted. They have no settled theory that drives priorities for production, either. In fact, when they find themselves in a jam, different members of their management team may not even be able to agree on exactly what the production priorities should be to make the most money. Should the priorities be based on costs analyses? Sales figures? Customer satisfaction? Efficiencies?
From time to time, they may use any one of these priorities, but there is not even any settled theory about when and in which circumstances these various priorities should be applied.
Too much happens as “reactive behavior” driven by “reflex actions” driven by in-the-moment exigencies. That is reactive, not rational, and it leads frequently to merely compounding the amount of firefighting that must be done next week or next month.
Am I right? Does this describe your experience?
If so, we would like to hear about your experiences and what you’ve done to try new ways of thinking about the challenges you face. Leave your comments below.
Here’s to your successful new thinking in 2016!
We have the new thinking tools, if you’ve got the desire to change and improve. Wouldn’t you like to liberate more than $2.5 million in cash from your inventory while growing your business by 20 percent, like that Oregon company?