Eight Erroneous Paradigms for Operations Management

Courtesy of Theory of Constraints guru Martin Powell, here's the list:

1.    A resource standing idle is a major waste

2.    Efficiencies are the best guide of performance and profitability

3.    Leads times are a given

4.    Reducing set ups reduces costs

5.    Process batch = transfer batch

6.    Everybody needs to be an expeditor

7.    Flow depends mainly on physical layout

8.    Taking orders within the normal lead time increases profitability (i.e. expedited orders are worth it)

 For anyone familiar with Theory of Constraints, first developed by Eli Goldratt, most of this list will be obvious. Perhaps the last one needs a bit more discussion. We can charge more for those 'rush' orders. We think the costs are the same because no more labor time is incurred for that order as a rush than it would have been as a regular order. Maybe some costs are higher if overtime is incurred, but that's part of the expedite fee, right? However, what we fail to consider is the disruption to the flow of the other orders, the extra confusion and the 'traffic jams' created when the rush order jumps ahead of line creating a pile of WIP in front of a bottleneck. To understand this, think about traffic in a big city. If everyone is traveling along at a steady pace, traffic moves smoothly like it does outside of 'rush' hour. Through some more cars in the mix, going at different speeds, especially one car changing lanes frequently, running up on someone else and putting on the brakes. The brake lights cause others to put their lights on, back off the speeder's bumper and now we have a jam. Expedited orders do the same. They cause a pile-up and cause other orders to slow down.


The effect is that some orders are late. Doesn't that cost you something as some customers are disappointed, frustrated, angry, less likely to have repeat business with you, etc.?

Engagement Drivers? Part 2

In contrast to the Aon Hewitt survey, Towers Watson in their global study said that two-thirds of US workers are not fully engaged. Towers Watson did get their information from employees, not just employers.

They define 3 types of engagement:

• traditional--willingness to expend discretionary effort
• enablement--feeling that you've got all the tools needed to be effective
• energy--an atmosphere that supports physical, emotional and interpersonal well-being.

Now, I'm not sure those last two have much to do with engagement except where an absence becomes a demotivator (i.e. much like pay and bonuses are a demotivator with a lack of adequacy). 

Their survey has this breakdown. Over a third of employees are highly engaged. A fourth feel engaged but are not supported (enablement). So far, this mimics the Aon Hewitt data. Here's where we get a bit more information.

Besides the fourth that aren't supported to put in extra effort, another one in seven employees are "detached"; they could put in extra effort (their supported and the atmosphere is right) but they don't want to. Another fourth of the employees don't want to go the extra mile, nor would there be any enablement or energy to help them; they're "totally disengaged." We have nearly a third of the employees who don't care about their organization and would easily jump ship. 

Of those third of the totally disengaged, more than half haven't had obstacles removed to make their efforts more effective. About three-quarters of them haven't been involved in decisions that affect them. (Contrast that to one human services company's motto: Nothing about me without me.) More than half feel they're asked to do an unreasonable amount of work. Sixty percent feel the organization is staffed adequately to do a good job.

So what can you do to improve engagement? Look at some of the information above. Also, consider this: Towers Watson found that operating margins in highly engaged organizations were triple of those with a largely disengaged workforce. And the whole thing may be boiled down to a simple question I ask during every performance appraisal: How can I help you or hinder you less?

Notice that it has nothing to do with communication, HR policies, parties and fun events or some of the other things that Aon Hewitt measures.