It's a jungle out there. The elephant in the room. The 800-pound gorilla. Busy as a beaver. There's a reason corporate life is filled with references to the animal kingdom: In both nature and business, it's all about survival of the fittest -- going faster, doing more, being nimble and using fewer resources.
In the animal world, the food chain is the most critical driving force. In the business world, it's the performance chain. Too often in business we cage-off demand (sales and marketing) from supply (operations and distribution) to the point that the impacts of one are lost on the other. How would a food chain work in the wild if the creature that was hungry had no direct visibility or access to its food supply? Not very well. The same is true of the performance chain in business.
When we say performance chain we mean everything -- the things, people, and ideas that have to move from the split second you trigger demand to the time you have cash in the bank. Every organization has a performance chain. In some organizations it is a real zoo.
When you think about your company, what do you see? Maybe a manufacturing plant. A distribution hub. A call center. Maybe a branch office if you are a service provider. If you had to visualize your performance chain from beginning to end, could you? Do you know where it is strong and where it needs some improvement?
Let's take some lessons from the animal kingdom, starting with demand, and explore the four metrics that are critical in assessing the health and strength of any performance chain: speed, flexibility, predictability and leverage. While this is a bird's-eye view, these are the key elements you can apply to begin taming your performance chain.
Meet me down at the watering hole: Demand
A watering hole is the place in the wild where birds and animals come together for the basic sustenance of life. In business, it is the place where demand is triggered and ultimately fulfilled -- it is where your customer experience begins and your performance chain goes into motion. Lack of visibility to demand causes one of two basic problems in the rest of the performance chain: overproduction -- too much water build-up, or underproduction -- not enough water for all the needs you could be fulfilling. Opportunity cost or opportunity lost. To solve this mismatch, you first need to be sure the fluctuations in your demand are visible throughout your operations -- in the manufacturing plant, in the warehouse, in your invoicing and customer support areas. Just a few simple demand signals can reshape the performance chain if everyone is attuned to them.
Understanding what's happening and who's visiting the watering hole today, you can take action accordingly. Then the things, people and ideas that make up the performance chain can:
Run like a cheetah: Speed
Bob Ulrich, former CEO of Target Corp., had a favorite saying: Speed is life. Cheetahs understand this very well, running at speeds of up to 70 miles per hour to find and capture food and as protection from predators. When evaluating speed in a performance chain, look for ways to pull time out of the production cycle and drive product through the system faster.
Start by mapping your value stream and focus in on those areas that are slowing down your speed. Then take corrective actions to break through those constraint areas and reduce your process times.
Be like a monkey: Flexibility
Monkeys adapt depending on their habitat. All monkeys can use their hands and feet and some use their tails too, so that they can grab a tree branch or pick up something as small as a peanut. What creates flexibility in your business? You may need strategic inventory buffers -- or just-in-time fulfillment options so that you can respond quickly to varying demand. Staffing on key pieces of equipment may need to vary from the norm. Using lean and Six Sigma tools, you can diagnose and focus on creating flexibility where you need it most. In a factory or warehouse, cross-training may be far more valuable than one more piece of equipment that adds capacity but no extra flexibility. Monkeys copy humans and each other all the time flexibility means be like a monkey and adapt.
Develop the memory of an elephant: Predictability
In elephants, predictability is driven from memory. In a plant, warehouse or processing center predictability comes from consistent flow across the supply chain -- more routine, less variability. Elephants follow the same paths and even hand down genetic memories of directions and places across generations. Memory, instinct, whatever it is -- it is definitely predictable. If you are seeing cycle times with wide deltas in your operations, or you have significant gaps between engineered or designed process time and reality, predictability is out of reach. Wide swings in your day-to-day output suggest the standards for performance have not been passed through the chain successfully. If you were an elephant, youd have wandered off the trail. To increase predictability, measure the difference or gap between designed process time versus what is actually happening along each section of the performance chain. Then work the issues until predictable routines are planted in institutional memories.
Move that rubber tree plant: Leverage
Who says an ant can't? An ant can lift 20 times its body weight. Too often in business the tendency is to run to the capital store to buy more equipment rather than letting existing investments do the heavy lifting. As the recession has taken its toll, opportunities to add capital have become limited and the need for leverage is more important than ever. Instead of adding (and spending) more, when looking for more leverage from existing assets and operations, turn to OEE: overall equipment effectiveness. OEE is a great method for diagnosing areas for improvement in existing equipment performance and to ensure, particularly in bottleneck areas, that the most essential equipment is fully utilized. Just when you think you can't squeeze another ounce through the performance chain there goes an ant to remind you that you probably can.
Driving speed, flexibility, predictability and leverage lets you control your performance chain in ways that increase the likelihood that you'll successfully fulfill your demand requirements.
Peace at the waterhole tonight.
Chris LaVictoire Mahai and Sue Gillman are partners and co-owners at global strategy and operational change firm Aveus LLC. Learn more about Chris, Sue and Aveus at www.aveus.com/taming.