“Disruption” has become another business buzzword that obviates the need for prudent, careful thought and consideration. If something is “disruptive,” then it must by definition be good. But when it comes to internal operations at least, disruption is often both bad for business and for employees, because it causes unevenness in work.
Last week, I wrote about how sales incentives cause salespeople to stuff the company’s distribution channels with inventory far in excess of consumer demand. Volume discounts have the same effect, by encouraging customers to order more product than they need in order to get a larger discount. Not only do incentives wreak havoc on the supply chain through the “bullwhip effect,” the unevenness stresses employees and creates waste in customer service, distribution, and other functional areas.
This week, I’d like to address batch processing. It may be counterintuitive, but long production runs and large batches create disruptions in the flow of work compared to one-piece flow or small batch sizes. During the batch there’s little disruption, of course. But at the changeover, everything and everyone stops to move machines, change out dies, put different raw materials in place, etc. And it’s not just an issue in manufacturing—large batches create disruption in office and administrative processes as well. Shutting down a warehouse for two days to do physical inventory, for example, is incredibly disruptive, with ripple effects throughout the business, from supplier to customer. Similarly, most finance departments in large companies cut their activities to a bare minimum during the month-end close of the books, which often can take up well over a week.
Toyota, most notably, has demonstrated the financial and quality benefits of one-piece flow over large batch processing in manufacturing. But working in smaller batches and avoiding disruption in office processes yields significant benefits as well. For example, many distribution centers use cycle counting to manage their inventory, avoiding the need to shut down the facility. Boeing’s finance department processes some of their financial information on a daily basis, rather than waiting to process a large batch at the end of the month. They look at what shipped each day, what materials were received every single day, and what bills were paid every single day. As a result of this (and other) changes, they reduced the time required to close the quarterly books from nearly one month to five days.
In HR, too, many companies are getting rid of the annual performance review in favor of shorter, more frequent discussions as often as once per month. This not only provides more timely and effective feedback for employees, but it eliminates the massive time commitment imposed on managers in November and December.
Finally, consider the typical weekly or bi-weekly meeting for a team: the manager is working with a one- or two-week batch of information. Not only is it difficult for the manager to process that much info in a single meeting, for everyone else, it’s about as interesting as reading last week’s newspaper. And by the time the manager gets the update, the information is at least a few days out of date. Far better to use daily huddles and stand-up meetings to exchange information.
Batch processing is rampant in most organizations and most functions. The sooner you can transition to one-piece flow (or at least small batches), the easier it will be for everyone to do their jobs.
Next week: Kaizen Events.