For businesses of all kinds, most operational problems fall into one of three main areas:
#1 – Inefficiency in your operational processes.
#2 – Inconsistent execution of your operational processes.
#3 – Excess or underused capacity.
Operational problems are especially impactful in manufacturing and distribution businesses, which is where we’ll focus our examples. The five steps outlined below offer a high level framework that enable you to identify and address your operational issues:
Before you can decide what to do about these problems, first, you need to really know what’s going on. To do that, you must start by reconciling what you think your process is with what it actually is. We all form mental models of the way things work, but those don’t always match up with reality. In this case, you need to be sure that your mental model is pretty close to the real deal.
In an order or fulfillment process, for example, compared to the way you would draw it out on a whiteboard, how does that process actually work from the office into the warehouse?
Sometimes these processes get very complex, and without direct observation and a living map of the process, you’ll be hard-pressed to recognize trouble spots. Once you have a real sense for the process and its operation, you can dig in on step 2.
Create context to understand what’s happening. Once you know the process, you can start to look at the current performance and ask, “is this normal, or not?”
To answer that question, you need to know how your team members are actually performing. What work is being done? How long is it taking? Are they following or not following the prescribed steps for their particular station? Does the process flow smoothly, or are there consistent hangups?
Starting with a high-level pass, and then drilling down into each step, team, and individual within the process, measure the work that’s being done in terms of timing and volume. Ideally, you want to see that performance live. At any given moment, how is that process working? Where does work move along quickly? Where do tasks pile up? What paths, or deviations, lead to problems?
Once you have an idea of what normal looks like, you’ll be able to identify anomalies. Like a doctor diagnosing a patient, or a mechanic isolating a faulty valve, you should be able to quickly identify the source of a problem within your operational processes. For example, if you observe that there are delays in an early step causing underused capacity down the line, you can focus your energy addressing that problem, rather investigating the symptoms.
Yes, the warehouse team is standing around doing nothing, but that’s because orders aren’t coming through to picking/packing. And that’s because everything is backed up in Approvals. And that’s because that team is understaffed today. Looking deeper, the approval process could actually go a lot faster if everyone was using the new system that’s tied in to the warehouse software so that they don’t have to print anything. But they still haven’t been trained on the new system so—guess you found your new priority.
That’s where Step 4 comes in: Take action. You understand the process and you know what’s going on, so get after it. Prioritize the actions that need to be taken, make the assignments, and pitch in.
The last step is to observe and review the adjustments to make sure they’re making a positive impact. Look at the the results coming in from your live measurements, as well as the systems that measure your outcomes, like an ERP. After that, make further adjustments as needed.
If you’re getting the sense that this will be a perpetual, ongoing process—you’re right! But in an ever evolving, increasingly competitive business environment, continual improvement and optimization isn’t optional.