By: Henry F. Camp
How come work gets stalled? And why doesn’t it get going again?
Stagnated flow is natural in a world without humans but unnatural in work flow, since the people at the office have an affinity for order.
In every company, there is flow. We take advantage of the flow to get work accomplished. The analogy I came up with is that of a river. You throw a stick in the river and can reasonably expect it to be carried on downstream by the flow. However, we all notice that flotsam and jetsam accumulate along the banks, sometimes stuck or just caught in an eddy.
Our jobs, as managers, are to get the work that is stuck going again – to keep the banks of the river beautifully tidy. You will agree that it wastes our time managing the sticks that float down the middle of the river. We make things better by cleaning the bank, seeing that it is obstruction free and that eddies are minimized. Once complete, we are able to get more accomplished with less work.
But the river analogy is passive. Shouldn’t we expect that in our companies that the people we pay to aid the flow would keep work flowing? I know that that expectation in my own company is not met.
Our employees love a clean bank too, just like the one we envision. However, they live in filth. In our case, the work we flow is inventory. I went looking for inventory stuck in our system this month. It was literally everywhere I looked, without exception. In the returns from customers location, in the return to supplier location, in the temporary location from which we bill goods shipped directly from our suppliers to customers, in the receiving staging area, in dead inventory without customer demand, in slow moving inventory where there is only slight demand, in consigned locations, in demonstrator stock, in never invoiced deliveries, in paid for goods never received … everywhere.
What happened? A few of these discoveries were revelations but most were known by one or more people. Not only that, but the stock had been stranded for many months or years!
Now, like many, my business is tough. Competitors seldom account for the losses that stagnant inventory represent. After all, they are losses, aren’t they? Money is paid for inventory but no money ever comes back – common sense. Using GAAP, they calculate their gross margins on sales but the only cost that is subtracted from sales is the cost of what IS sold. Commissions and taxes are paid on profits which are not reduced by stagnant inventory. In other words, my competitors think they make more money than they really do. Consequently, they sell at too low prices. They are struggling to attract customers in the highly competitive arena where customers choose on price. To stay in the game, we charge the same “too low”prices. But if our investments in so called “assets” too often turn into losses, we are all fighting a losing battle.
Why haven’t our employees already handled these exceptions? Why aren’t our banks clean? When the regular process fails to work, people simply avert their gaze. They have learned not to take chances. They are horribly frightened of taking an action that might be labeled “wrong” by managers. They know something has gone awry, yet acting outside the normal course is the last thing they are willing to do.
Did we do this to them or did they come to us this way? Regardless of the answer, what do we do now? Here are a smart guy’s take on it in two different talks.