Tags:

The recent frozen traffic jam that shut down Atlanta and stranded hundreds of people for hours was frustrating to those caught in it. The complaints of “how could they let that happen!” rang loudly in social media posts by people stuck in the midst of the nightmare. Those cries sounded amazingly similar to those of folks that lose power during a summer heatwave.

Do the citizens of Greater Atlanta want to pay for snow removal equipment and manpower for the 2-3 years they are not needed so that they are available for the few hours they could be helpful? I doubt it. Just as people who complain about utility prices don’t want to pay for excess capacity the 360 days per year that it is not needed to keep them cool.

Some flights are over booked; others fly with empty seats. Some hotels are overbooked; others have unused rooms. If a storm threatens, grocery stores run out of milk and bread; more often, a percentage of perishable products go unsold as they reach the “best by” date.

We are logical people. We want what we want when we want it at a price we want to pay. Unfortunately, few forms of capacity are inexpensively variable. So we get stranded, we get hot and food spoils, we fear starvation from a storm. Our logic all too often fails to see the inescapable logic of this cycle.

I feel badly for children and the elderly stranded in Atlanta, as their health and safety were at risk. But for the rest of you, consider it an adventure that saved you money the rest of the year and get on with your lives.

The rush to the south, away from labor unions, was followed by the rush to China for its cheap labor. And now that China labor rates have risen (still WAY below US and European rates), the rush to Vietnam, India and Mexico is underway. And reflecting an increased understanding of Total Costs, some are rushing back to the US.

In some products, labor is a major portion of costs. It seems much easier to move operations to a country with labor rates that are 50% lower than to double productivity where you are. But that Silver Bullet quick fix brings its own set of problems with it. The one least recognized is that the impetus to improve productivity is reduced, and with it, the commitment to operational excellence.

In other products, labor is a minor portion of costs. It doesn’t make sense to locate those operations based on labor rates, yet some companies try anyway.

If you look at a Profit & Loss (P&L) statement, you will find many items under the expense category in addition to labor. The challenge is that labor seems to be the easiest to impact. Just get rid of some people or pay them less. Voila! Labor costs are down.

But good leadership understands that low labor rates are not the Holy Grail. There’s no need to move all over the world chasing one line item on the P&L. Good leadership understands customer service, delivery lead times, total costs of ownership, and other items not specifically listed on the P&L but that are crucial to the one number that matters: The bottom one.

The ubiquitous cell phone has created an interesting collection of employer policies.

In many businesses, the cell phone is a valid tool for doing one’s job. Those companies generally don’t have a policy limiting personal cell phone use, as it would be impossible to enforce.

In others, particularly in service industries interacting with the public, the cell phone is a customer service nightmare. Certainly a chunk of those have “allowed only during official breaks” rules, and another chunk forbids them entirely. I certainly don’t know the answer, but I know one unintended consequence I wish businesses would consider.

The ladies room. A limited number of stalls, even in larger businesses. In my experience, which I readily admit is NOT a statistical sample, an incredible percentage of the time at least one stall is taken by an employee sneaking in a phone call and some social media. Their visits aren’t short and the appropriate etiquette for others in the room isn’t clearly defined. I almost feel guilty flushing due to the noise it creates for the rogue employee!

Please service industry leaders! Add more stalls or provide a different place for your employees to handle their personal business while at work!

PS: I will rely on the caring and experience of a man to inform you whether or not the problem doesn’t impact the men’s room.

As twisters hit the Midwest and a typhoon hit the Philippines, innocent people and companies were hurt, losing material possessions and in some cases, lives. Peeking in on the incessant television coverage, I am struck by how many victims say “I didn’t think it would happen to me.” None of us do. Who wants that cloud hanging over us day in and day out?

But almost 75% of large companies interviewed earlier this year said they HAD BEEN IMPACTED BY A SUPPLY CHAIN DISRUPTION SO SIGNIFICANT IT REQUIRED TOP LEVEL MANAGEMENT INVOLVEMENT. I hate all caps as much as the next guy, but I want to get your attention.

IT CAN HAPPEN TO YOU!

Your suppliers, power source, roads, operations, servers and other key resources CAN be interrupted no matter how well you plan. The questions, as with most things, is how you respond.

Have you tested your IT off-site backup and recovery systems to ensure you can be back up and operating electronically within an hour? Have you verified your backup plans for every key supplier becoming incapacitated on short notice? Can your access to credit support immediately all that is required to get you going again? Can you reach all employees, suppliers and customers to let them know what is happening and how to react?

If you have verified backup plans, there’s no need for a doomsday cloud hanging overhead. At least you are prepared for the worst. But if you don’t have verified plans, your should be know it can happen to you. After all, it’s happened to 75% of large companies, and you’re likely no luckier than they.

Download the findings of the AQPC survey referenced here: http://blogs.hbr.org/2013/07/research-why-companies-get-blindsided/

I’ve become accustomed to doing the order entry activities that suppliers used to do. I’ve even become fairly good at it, other than the occasional failure to notice I reserved a hotel room in Abu Dhabi rather than Dubai. Accidents do happen….

But two aspects of “outsourcing” that common travel-related vendors have accomplished really unnerve me. First, and this one is just a pet peeve, is that hotel cleaning staffs seem unable, unwilling, or untrained to make sure all the light bulbs works in a room before considering their job done.

The second, and this one jeopardizes our safety, is that car rental companies fill your return with gas, run it through the wash and consider it ready to hit the road again. No verification of tire pressures, fuel levels, or that the spare is actually in the trunk. And heaven forbid that they clean the inside of the windshield or change the wiper blades! It’s been months since a car I’ve rented (regardless of agency) has been fully functional.

When I responded to the rote question “was every thing alright with the car?” with “no, there was no windshield wiper fluid” or some other observation, only on one occasion did some obvious action occur. A car rental employee marked something on the drivers window in what appeared to be chalk. I’m hoping that was a message about the problem, and not an inside joke about whining customers.

I don’t mind that most of my suppliers have outsourced much of our administrative relationship to me but I am concerned that the auto rental agencies have outsourced my safety to the customer just before me. I’m sure he’s a nice guy, but what if he’s given up reporting problems the same way I have? Or what if he reported a problem but the car was simply filled with fuel, washed, and given to me?

Tags:

In Ohio and Pennsylvania there is great excitement and economic investment in shale oil. The discoveries there have fed debate of ‘a solution to energy dependence’ and ‘environmental impact,’ repeating the off-shore (see BP) and arctic sources arguments.

The recent discovery of massive shale oil supplies in Australia adds an interesting twist. Australia is our friend. Surely they wouldn’t mind sharing with the US at favorable prices. And, heck, there’s hardly anyone in that huge country so environmental impact shouldn’t even enter the conversation, right?

In Ireland and Scotland we are paying the equivalent of $9/gallon while in the US we complain mightily about $3.50 plus. In Europe hotels the room card is used to activate power to the room, with everything automatically turned off when you take your card and leave the room.

In the US we seem to think the answer to energy dependence is ever-increasing supplies. Demand reduction or control is a ‘tree hugger’ wacko idea.

Looking through history every country (including the Holy See) that has been the undisputed dominant society has lost that role because of excess and unwarranted belief in everlasting success. They’ve each been wrong.

There are plenty of energy-producing materials (including the sun) to last a long time. But since we’re not so willing to share it with future generations, what makes us think Australia will share a drop with us? And why should they? We behave totally uninterested in managing our demand, simply arguing about the best ways to increase supply.

The stereotypical Irish are drunkards. In the past 6 days driving Dublin – Galway – Dingle – Belfast I’ve experienced nothing but exceptionally kind and helpful, intelligent, multilingual, and funny Irish. Haven’t experienced a single drunk, although I’m sure there’s one here somewhere. Certainly there is no shortage of pubs, but that is true in my home town as well.

Travel is educational, even for the educated and well-traveled among us. Who knew that driving South to North in Ireland would involve currency and language changes? I should have, but didn’t. The change in measurement systems is most critical when reading speed limit signs! Love the country, but the people even more.

Ireland played a key role in the Industrial Revolution. Despite the recent world-wide recession that hit Ireland as hard as the rest of us, the country continues to add strength in manufacturing operations.

Leave your comfort zone and get out to see how others do it. There’s certainly a few that do it better than you. The belief that “we do it well enough” is just as wrong as “Irish are drunkards” and just as limiting.

Don’t let false rumors get in the way of wonderfully successful visits, introductions to brilliant folks who may do it a bit differently than you, and to your own successful future.

A stereotype is just that, and a lie is just that. The truth you’ve got to get out to discover.

Seems almost like a movie title, doesn’t it? But really the phrase “grow and deliver” is a statement of what most companies want to do, and what it takes to do that. To grow, a company really needs a recognized performance of meeting market and customer needs at a price and profit margin that makes sense for both.

Not all growth is good. Profitable growth compatible with the business strategy for long term success is one thing; growth resulting from price-cutting, serendipity, and desperation is another. Similarly, not all delivery is good. Heroic effort of expediting is hardly the right way to serve customers on a regular basis.

Avis(R) used to claim “we try harder.” They would have had faster more profitable growth if they could have simply anticipated customer needs and had processes in place to effectively deliver them.

If your organization depends on heroes, you’re in trouble. If your growth is haphazard, you’re in trouble.

Grow and Deliver, but do both smartly.

Tags: ,

Have you noticed how people boarding a plane now stow their carry-ons in the front most open overhead? This of course forces subsequent boarders with seats towards the front to stow their carry-ons rows behind their seats. The processes of boarding and unboarding the plane are both slower as a result. Maybe people were always void of common sense, but this myopic behavior seems common since airlines started charging fees to check luggage.

The behavior is really about risk aversion. People in the rear of the plane are concerned that they will not find open space near their seats so they (logically to the risk averse) place their luggage above seats in front. Of course this decision doesn’t impact how much luggage will fit on the plane; only where it is stored, and how much is stored inconveniently.

If we are so clueless in public, are we equally void of common sense when making decisions at work? Do we worry only about our own selfish and short-sighted interest without considering the impact on the “team?” Do we avoid imagined risks?

What policies akin to baggage fees has management implemented that impact decision-making that leads to less optimal results?

The Cuyahoga County (OH) sheriff recently began requiring successful candidates for promotion pass a physical fitness test. The theory is simple: the job requires the ability to chase down and contain criminals — actual and suspected — so pass a basic test of strength and running before attaining the higher position.

This seems a logical requirement for all law enforcement officers, but sadly, that’s not the case. Fear of union complaints from the non-supervisory level apparently outweighs fear of criminals escaping. Ergo, the donut stereotype continues with plenty of evidence to support it.

Why do manufacturers often promote their best engineer into supervision without providing some “fit for duty” test of supervisory skills? Or perhaps some supervisory training prior to a test? By losing a good engineer to the role of poor supervisor, the company and the engineer both lose twice.

Cuyahoga County sheriff officers can eat donuts by the dozen without career repercussions, unless they want promoted. You can ensure that your engineers are led by people who are fit for duty by helping them prepare and then verifying the appropriate skill set exists. And the same for your accountants, your supply chain professionals and all your other teams.

While requiring that the county sheriff officers are fit for duty may be just crazy, there’s no reason why all of us can’t work to ensure that leadership is qualified.

avatar Welcome to the FulcrumCWI BLOG, a conversation with business leaders who recognize Operations as a strategic function that can create profitability, competitive advantage, and brand loyalty in the marketplace. Join in. We look forward to hearing from you.