Archive for August, 2010

Hey, Watch Where You’re Going

August 8, 2010

David Edwards . Operations Professionals

As the pace of business change and adaptation continues to accelerate, it becomes more critical to have clear visibility of key performance metrics that tell you where your business is, and where it is going. We solved this problem decades ago in speeding automobiles with the development of the dashboard. Analog gauges and critical warning lights keep us up to the second with our automobiles operating performance without unduly distracting our attention from the critical task of operating the vehicle.

Unfortunately, keeping up with key operational performance feedback in most organizations isn’t as simple. Reports are run, spreadsheets are consolidated, charts and graphs are produced, and by the time the process is complete, the situation has changed. Can you imagine having to stop and print a report to see how much gas you have left? Add to that the potential for inaccurate transposition of information during the more manual consolidation processes, and you get a sometimes suspect picture of where you were some time ago in the past.

Get up to speed. There are dozens of business intelligence and dashboard tools on the market that you can use to get a clear and accurate picture of your business every day. The solution you choose and how much you spend is totally dependent on the size and complexity of your business and how extensive your usage will be. It can be as complex as a full blown data warehouse providing extensive detail to the entire organization, or as simple as a stand-alone dashboard tool (this includes Excel) pulling data directly from an ERP system for a specific process.

While the tools you use are important, it is more important to understand your specific needs first. What critical operating performance information do you need to see every minute, day, week, or month in order to manage your business effectively? Of that information, which is the least timely and the most likely to be inaccurate? Where does that information come from – is it all from your ERP system, or is there additional information managed outside the ERP system on spreadsheets like performance goals? Building a clear picture of where key operational feedback originates is the critical first step to building clear reliable key performance indicators.

Start small. Before you sign up for the full blown data warehouse solution, build some simple dashboards using Excel or other stand-alone tools and evaluate their effectiveness. There are some good stand-alone tools on the market with trial demos you can download and use for a limited time or with some limited functionality in order to get a good hands-on feel for how effective they can be. A good place to start might be a shipping performance dashboard:

One click of the “Update” button and you have an up-to-the-minute picture of your current shipping performance. This makes it quick and easy to see areas you need to pay attention to, and this is where the power of a good dashboard tool becomes apparent. So what happened in fiscal month 9 this year? Click on it and see:

It looks like we had major problems with lines 21 and 31. We click on 21 and switch to the line detail screen to see all of the orders that shipped late:

Just that simply, the dashboard provides a quick and clear picture of exactly what happened. Imagine how much more effectively you could manage an operation with such clear, easy-to-analyze feedback about every aspect of your business.

Get started today. Again, what critical operating performance information do you need in order to manage your business effectively? Of that information, which is the least timely and the most likely to be inaccurate? Where does that information come from? Build a clear picture of where key operational feedback originates and how to access it directly. Then determine the best way to process and present it for clear, reliable, and actionable information.

I’ve been helping companies implement and use dashboards like this for years, and it’s a good place to start. But, it really depends on your organization’s needs – there’s no “one-size-fits-all” solution for operational effectiveness. If you think your organization could benefit from learning about some of the dashboard and analytics options available today, give me a call. I’m not tied to any specific vendor, as always my commitment is to giving you the best information possible about all of the products on the market.

You can reach me at 877.647.4141 or

DavidEdwards@OperationsProfessionals.Com

Advertisements

It’s Simple, Really!

August 8, 2010

David Edwards . Operations Professionals

Buy stuff, make stuff, sell stuff – or – sell stuff, make stuff, buy stuff. Either way, it’s a simple process at its core, yet it is amazing how complex it can become. Every day your organization makes thousands of operational decisions that all combine to determine the success or failure of your business. These decisions are made based on organizational information, information that must flow accurately from source to use point in order to drive the right decision.

Over time, inaccurate or inappropriate information drives bad decisions, leading to work-arounds used to circumvent bad information sources. And while that’s effective in the short term, it means that information used to drive one area of the operation is different than the “same” information that drives another area – the operation is not in sync. Fire fighters become valued champions and the constant blazes distract organizational attention from the simple solution.

Fix it!

Make it a priority. While fixing an information management process may sound like an “IT” project, it should be an operations priority. While IT may play a critical role in providing information technology resources required to solve a problem, operations must drive the transformation of the information management process as a whole. The information management process drives operational activity, so operations must lead the change.

Build a team, set a goal, and make someone responsible. Get on with it.

What’s the strategy here?

Start at the beginning and walk through the processes (buy, make, sell) from start to finish at a high level. Understand your key operational strategies. Who are you selling to, and what are their expectations? Are you shipping next day from stock, or next quarter after a complex engineered build? Are you making product based on forecast, history, orders, or all of the above? What drives material planning and procurement? Once you have a firm grasp on how it should be working at a high level, start mapping what is actually taking place.

Make it visible!

Process or Value Stream Mapping isn’t rocket science. Start at the end of a critical process (ex: Shipment Completed) and track backwards. What is the purpose and end result of the step, what activities must be performed to complete it, what resources are required to perform those activities? Back up to the steps that supply the required resources (human, capital, and information) and repeat the mapping process until you have tracked back to a key beginning (like a monthly S&OP meeting).

In the end you will have a complete picture of how things currently work. Once you have it documented (Visio, Brown Paper, Post It Notes, Crayon, whatever) it will be very clear how simple or complex it is, and if the complexity can be reduced or eliminated.

Rationalize it!

Get the biggest bang for your buck. Don’t get bogged down trying to create Utopia; the great white elephant will storm in and trample you to an agonizing death. Focus on the big picture and identify holistic changes that will have the greatest impact, and then prioritize them based on impact, interdependence and resource requirements. Set clear expectations for the results of each change and document current performance.

Plan to build momentum. Start out with some relatively simple changes that have visible impact. Early success is organizationally motivating and will build confidence in future changes.

Build it!

How should it work? Start at the high level. What strategies aren’t being executed properly or need to be changed? Review the selected strategies and reconfigure the high-level process flows required to achieve those strategies. That’s actually the easy part.

The more challenging part (it’s simple, but it takes time) is to back-track through all of the newly configured process steps and ensure that each step has the most efficient access available to the resources required for that step. If major strategic changes are required (ex: moving from forecast-driven to KanBan pull-driven manufacturing) a larger effort will be required to completely restructure the existing process. But once all of the detail is collected and mapped out, you have a complete model of how your operation should be working.

Just do it!

Plan to succeed. Change is just like any other process: identify the expected result of the change (ex: manufacturing driven by S&OP demand forecast), what resources will be required to make the change (VP Supply Chain, Planners, Manufacturing Managers, IT, etc. ), and how the change will be executed. Build a plan of what will be done by who and when, and get to work.

A clear plan and constant communication are critical. All resources involved in the change should have broad access to the plan, current status, and expected results. Milestones made should be celebrated and milestones missed must be made up for. If the plan isn’t working, change it and communicate the change. The objective is to achieve the expected result, not to work a bad plan and miss the mark.

Measure it!

The proof is in the pudding. What was the expected result of this change: shorter lead times, improved on time delivery, better manufacturing efficiency, lower inventory, increased ROI? What was it before the change, what impact did you expect from the change, and what impact did you get? If you’re not keeping score, you’re just practicing.

Don’t stop!

Your business is constantly changing – key operational strategies must change to keep up, and those changes must be implemented holistically throughout the organization to ensure success. You can’t stand still while the world around you is racing ahead; you have to keep moving to keep up.

Get Started!

Effective information management processes should be an integral part of every operational activity, not an afterthought. Properly designed processes produce all of the physical and informational outputs required to drive the organization in a single holistic flow. Improperly designed processes generate erratic outputs in an ill-designed web of complexity. Measurable operational variance is driven by improperly designed processes every day, so don’t just stand there and watch – get started!

Please email questions or comments to:
DavidEdwards@OperationsProfessionals.Com