One of my least favorite things in business are fires, those unexpected problems that seemingly come out of nowhere.
It’s morning, I have my perfectly-crafted cup of coffee and my list of tasks in front of me. Planning to stay focused, and finally get home to spend some time with my wife and kids, I diligently get to work.
Then it happens.
The email, the call, or even worse… the co-worker barge-in.
However it starts, it creates the same feeling of frustration and anxiety instantly. Internally I am thinking “Why can’t one day go by without some surprise problem that we didn’t see coming!”
This is quite common, specifically in supply chain and procurement. There are many moving pieces with various vendors, customers, and internal departments. The complexity means that managers and leaders must delegate more rather than rely only on themselves. This can be hard for some for leaders and works. As time goes by, cracks show themselves as quality issues, missed deadlines, wrong shipments, stock outs, and a myriad of other ways.
Before you know it, you’ve gone from organized to problems and fires. You time has disappeared, and another frustrating day ends with working on old mistakes instead of making new progress.
As this compounds over weeks and months, it can give the feeling of running in place.
Constantly working, never moving.
The Stressed Out Boss
Often the first reaction is to become frustrated with the people working for you and around you. The first glance reason for the issue is usually that they:
- Missed something
- Forgot something
- Ignored something
- Waiting too long on something
- Didn’t know something
The truth is though, these are just the immediately visible issues. To eliminate these, you must understand their root cause and look at cause rather than the symptom.
A few years ago, tired of getting side-swiped on a near daily basis, I started tracking every issue no matter how small. After hours, I would do deep root cause analysis and trace back conversations, paperwork, and material flow.
What I found changed the way we run the entire organization.
Prevention Instead Of Prescription
By understanding the root causes, and addressing them, you can eliminate the many issues that arise from that single source.
Most business owners, because they are pinched for time, use a prescriptive approach to problem solving. They address the immediate concern because they are pressed for time and don’t have the luxury of problem solving.
Do you find yourself doing things just to get by today, telling yourself at some point you’ll come back around solve the “actual” issue?
We did too.
Yet, the fires kept increasing in frequency and severity… and that time to “fix the actual issue” became a dream. Finally, we were faced with either fixing it, or losing customers.
Once we found and addressed the core issues, it was amazing how quickly over 80% of our fires vanished.
Similar to medicine, prescriptive is the much more expensive way to go. While less sexy to talk about and boring to carry out, if you want a fire-less company rising in sales and profitability, you’ll want to move to preventive.
So how did we move from prescriptive to preventive?
The Sources Of Fires
We started by documenting and tagging every problem that caused frustration, costed money, or wasted time. Everything from customer’s asking for the same information twice, to bad parts that passed through our quality lab. By documenting and tagging/grouping these issues, we were able to start finding patterns and locating the source of the many symptoms.
This brings us to our main finding when looking at the root cause of over 80% of our side-swiping fires that would come out of nowhere, sucking up our day and halting all forward progress.
The majority of problems were not isolated to a mistake on the part of some person such as forgetting, missing, or waiting. The cause almost always at root of the problem could be categorized into three groups
In any business, there are volumes of data created each day. There are shipping details, product details, events, times, dollar amount, decisions to move forward or undo, etc.
Every action creates data including what was done, why it was done, what time it happened, who did it, who approved it, and all the associated information along with it.
The amount of information being created today is astronomical… literally. Volume, Velocity, and Variety are all increasing daily.
In the generation of all of this data, we as owners and managers attempt to capture portions of it to help us better understand our business, its strengths and weaknesses, and even to make improvements. However, there are often errors in recording this data. There are may be breakages, transcription errors, glitches, or mistakes.
Decisions made on wrong or bad data was one of the largest causes of problems I found from my internal study. Beyond that not having access to the right piece of information at exactly the time needed for a decision often left less than optimal decisions, and the setup for an eventual surprise issue.
In order for a business of any size greater than one to operate, there must be communication. It is how we share what needs to be done, divide tasks, inform of decisions, and alert of incoming/outgoing flows. Where there is communication, there is also miscommunication and lack of communication.
The problem of poor communication is enormous today, specifically in business. Debra Hamilton estimated that miscommunication can cause 100-employee sized companies an average of $420,000 per year! Just by improving communication you can add hundreds of thousands of dollars to your bottom line. And yes, we experienced this as well. How can this be the case?
Much of the work done in business today is what is known as “rework”. This includes: • Re-ordering • Re-shipping • Re-finding information in an old email • Re-working a part • Re-inspecting material • Re-sending an invoice, quote, or other piece of information • Etc.
In fact, a recent study shows that as much as 20 - 30% for large organizations and 15 - 25% for small organizations resources of time and money is tied up in re-work… today the same thing you already did! Most of this re-work stems from poor communication.
For us, communication was the largest cause of surprise problems and fires we experienced. Specifically, decision makers not having the correct or proper information shared with them before a decision was made. This can happen as decisions are made while not being shared or recorded and can cause understanding gaps. This means other decisions makers lack the information they need to make correct decisions.
Another example is changes being processed but unknown to others in the company. This might be a process change, order change, supplier change, or even item revision change. Without others knowing, it can cause problems in shipping and receiving, quality analysis, invoicing, etc.
The effects of poor communication, or more clearly put, not communicating with your team, customers, and vendors all of the information can compound and cause major problems down the line After correctly capturing data, sharing it with others is essential to smoother operations.
Often the problems can originate with us, the owners and managers. We make decisions, we know they are the best, and being busy we move on. However, we can forget that others need that info. A supplier calls up two weeks later and our quality department not knowing we made a change to an order, reverts back to the previous order. We then find out 8 weeks later when the wrong parts come in.
Oh the headaches.
The last major category of issues relates to relationships. These can be between intra-company teams, and extend to vendors, customers, and other stakeholders. Creating and managing good relationships opens up the flow of information essential in providing value and service. The more we know from our customers and vendors the better we can do our job. The more secure our employees feel in their positions, the more freely they will communicate and innovate rather than protect their turfs and power.
People are at the core of business, and understanding this is essential in creating a smooth running organization. Fostering positive and trusting relationships is often the different between success and failure. Having the supplier who shares industry information to help you land a large contract, or a customer who shares about upcoming projects to help you prepare can be the difference between a great or horrible year.
While communication is the largest category for those surprise calls and emails, relationships are the most important.
By doing this multi-year root cause analysis on hundreds of issues with varying degrees of importance, we can see that they mostly fall into issues in Information, Communication, and Relationships. Having shared this insight with a number of firms and working with them through their own corporate development, I have see this corroborated again and again.
Strong Relationships & Communication
Looking at these three categories, we can see how they are all connected as well.
Information is communicated based relationships. With great relationships, communication is opened, and with great communication, information is shared.
And with information centrally collected and available to the right person and the right time, most fires are prevented.
I am happy to report that we have changed many processes and instituted a centrally located, freely available method for our company, our customers, and our suppliers to communicate on all types of actions. This has lowered our fires by over 80%.
I can now enjoy my morning cup of coffee and push this company forward rather then continually looking back.