As Captain Kirk demands more power, Chief Engineer Montgomery Scott, in his classic Scottish brogue, delivers the iconic line, “I’m givin’ her all she’s got captain!”. Facing the impending doom of a Klingon Death Ray is not a good time to discover a capacity constraint, but fortunately for Captain Kirk and the rest of the Starship crew, crisis is miraculously averted and the crew lives on for another episode.
For mid-market manufacturing firms, when customer fulfillment problems and past due order issues arise, a CEO may act like Kirk and “ask for more power”. New equipment, a bigger facility, new technology systems, a new production line, etc. are all natural requests when these problems occur and capacity appears constrained. While these are viable solutions, increasing capacity is costly, takes a long time to implement and may not be necessary. Before committing to more capital expenditures, look for other ways to fix the problem.
In Part 2 of this month’s Hidden Value Series on Past Due Orders, we will dive deeper into the root causes of persistent fulfillment and past due order problems … what to look for and how to devise creative solutions.
Part 2: Getting to root causes
Start with culture: If your corporate culture is built on a company-wide commitment to continuous improvement, then you are poised to successfully deal with any past due order problem that might occur. Corporate cultures focused on continuous improvement start by asking “What happened? How do we fix it? And how do we ensure it never happens again?”.Asking these questions – without placing blame – should be the first step in getting to the root cause.
The process: In addition to a great corporate culture, here are some techniques to employ when searching for root causes:
Cross-departmental Working Group. Don’t look at systems and processes in isolation. Bring your leadership team together and get them focused on creative ways to address the issue. A dedicated, cross functional working group is a powerful force in driving organizational change.
Data Analysis. Use data, not opinion. Bring your IT team into the working group to bring real data into the discussion. Using data to drive decision making is critical.
Workflow Analysis. Mapping the order/product journey through the facility can often show bottlenecks, inefficiencies and sources of delay.
Third Party Review. No matter how great your team, it’s easy to get focused on the trees and not the forest. Neutral, third party experts can shine a light on overlooked areas of opportunity.
Where to look: Before committing to more capital expenditures, look for other ways to fix the problem. Here are some places to look for efficiency gains BEFORE approving that capex spend:
On-time Delivery and Schedule Attainment: Are we measuring these accurately? Are we monitoring them closely? Are we course correcting regularly?
Variations: Does performance, quality or output vary across different shifts, supervisors, lines, facilities, etc.? If so, this is a big opportunity to improve throughput.
Performance degradation: Has operational throughput declined over time? If so, what has changed (e.g. management, staff, product mix, etc.)?
Labor Issues: Has employee turnover increased recently? Do we have the right staff on the floor with the right training and the right skillset at the right time?
True Production Capacity: Are we accurately capturing the true maximum capacity of current operations? What factors are constraining our ability to reach maximum capacity?
Data Accuracy and Integrity: Are the BOMs, routings and inventory levels accurate? If the perpetual inventory, BOM’s and routings are inaccurate, then the MRP system will fail … period.
Inventory Planning: Stockouts, inventory delays, quality issues and supplier challenges can lead to Past Due Orders. Focus on inventory planning processes and supplier management techniques to minimize inventory issues.
Documented Processes and Procedures: Reliance on tribal knowledge leads to the company being vulnerable to tight labor markets. Improve consistency and minimize the impact of employee turnover by clearly documenting processes and procedures and reducing tribal knowledge.
Key Takeaways:
Start with corporate culture. A customer-centric culture built on a commitment to continuous improvement is critical.
Find answers … don’t assign blame. Instead of getting mired in the details of who caused what, concentrate on teamwork and permanently fixing the problem.
Creativity before capital. Root cause analysis often highlights internal processes ripe for change that require no capex and yield huge returns.
Experience matters. Leverage your internal experts and senior leaders, but consider outside experts to take a neutral, third party view of the situation. The combination is powerful.
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