What are your Business Imperatives? The importance of Speed, Reliability & Flexibility
How do you know if your business is improving, becoming more competitive?
How do you know if your business is improving, becoming more competitive? Obviously growing market share, positive customer reviews, and growing profits would be examples of measures of a business that is improving. However, those are result metrics and are lagging. Sometimes they trail significantly behind the actions that drove them. How can we get quicker feedback as to whether we are doing the right things? How can we determine if the actions we are taking are having the desired impact before the end-of-month reporting?
I submit that, in most enterprises, Speed, Reliability and Flexibility are the imperatives that drive success. If we understand how those imperatives relate to our unique situation, we may identify leading indicators that will tell us whether we are taking the right actions, or we need to make adjustments on an hour by hour basis. Let’s explore each of them, in no particular order.
Speed is important in many ways. Speed to market for new product or service development processes. Cycle times for manufacturing, process, or services. Lead times from order to delivery for products or services. Wait times while on hold with a call center. Changeover times to change a production line or an operation room.
A business would be truly unique if it possessed unlimited resources. Given that we have limited resources, those resources must be allocated to meeting customer demand for either goods, services, or a combination of the two. Customers demand products or services at a certain rate (and that rate changes with the market and our share and mix of it at any given point in time). A business must be able to allocate its limited resources to accomplish any number of the following things as quickly as possible to meet customer demand: take orders, design, configure, procure material, schedule, manufacture, contract to 3rd parties, deliver, install, project-manage, debug, service, etc. Speed is important for execution of individual tasks as well as for overall lead-time. Customers do not like to wait. Customers like simple and fast. Therefore, speed is important. Quicken Loan changed their name to Rocket Mortgage. They recognized that their market wants fast and easy and they adjusted their process, their branding, and their advertising accordingly.
The trick to achieving Speed in a sustainable manner is to do it while respecting our People...We can only do it by making everyone’s job easier.
The trick to achieving Speed in a sustainable manner is to do it while respecting your People. This means you must get faster by working with your People, not by doing things to our People. We can’t do things that work against the laws of physics or physiology (ergonomics). We can’t do it by asking people to work increasingly harder. We can only do it by making everyone’s job easier. The best way I know to do that is by identifying and eliminating Waste. The good news is that, even in the best companies in the world, like Toyota (who has been focused intently on waste-elimination for over 70 years), over 95% of the time spent in any enterprise is Waste; therefore, there is ample opportunity. Once you know where you need to go faster it is easy to figure out how to measure whether you are getting better or not.
Reliability has many facets. There is Reliability of Process, Reliability of People, Reliability of Equipment, Reliability of Product, Reliability of Services are some that come to mind. There is a powerful physical law working against every business’ quest for Reliability: Entropy. This law simply states that the universe tends to disorder. If you do nothing to sustain your Process, it will tend to disorder. If you do nothing to sustain your People, they will tend toward disorder. If you do nothing to sustain your Equipment, it will tend to disorder…you get the point.
There is a powerful physical law working against every business’ quest for Reliability: Entropy.
There are things we can do to improve Reliability in all these areas. Process reliability can be improved with tools such as Failure Modes & Effects analysis, Statistical Process Control, and Control Plans. There are a great number of things that can be done to improve People reliability, but some of the most effective are Training Within Industry, Standardized Work, Managing Daily Improvement, and Problem-Solving. Total Preventive Maintenance (TPM) and Reliability Centered Maintenance (RCM) are examples of methodologies that can help with Equipment Reliability. There are many techniques to improve and maintain Product and Service Reliability in the realm of Quality Management. Once we know what needs to be Reliable, it is easy to figure out how to measure whether we are improving or not.
Flexibility is the ability to adapt to changing business conditions without sacrificing Speed or Reliability.
Flexibility is the ability to adapt to changing business conditions without sacrificing Speed or Reliability. Flexibility is somewhat hard for some to grasp because it is often confused with Variability. An example would be a discussion I have had with many manufacturing leaders when I have advocated for a standardized production sequence. The objection I often get is, “I don’t want a standard sequence because I want the flexibility to produce in any sequence at any time.” However, producing in any sequence at any time produces variation for upstream processes, and the bullwhip effect (increasing variation the further upstream you go) amplifies the problem. So, what is perceived as flexibility (and beneficial) is really variation (and highly detrimental).
Flexibility, then is being able to adjust to change in the form of customer demand volume and/or mix. Typical “dials” that can be used to “adjust” are capacity, lead time, inventory, cross-training, and changeover time. In general, a reduction in changeover time may be used to either avoid investment in capacity, to reduce lead time, or to reduce inventory (or a combination of all those things). Using production leveling, resources may be leveled to meet demand and it can be understood what the achievable lead time and inventory level is with current demand variation, capacity, and changeover time. Decisions can then be made regarding approaches to improve changeover time or whether to add capacity (and, if so how). Once this is understood, determining how to measure (and improve) flexibility is very straight-forward.
Understanding how Speed, Reliability and Flexibility are important to your business, how to improve each of them, and how to identify leading indicators to measure them, then (most importantly) act upon those measures to improve them, will dramatically improve the competitiveness and success of any business.
If you have never looked at your business this way it can be difficult to determine where to start. Pathfinder can help! Contact us for a free, no-risk, no-obligation initial consultation. We will help you identify where Speed, Reliability and Flexibility are most important for your organization and where the right mix of Coaching and Consulting can help you improve.