“Managing change” is an oxymoron. And anything with ‘moron’ in it can’t be good for the bottom line!

We can’t manage change because we can’t anticipate and control all the variables that are yet to present themselves. And we can’t make people change because each of us has the inalienable right to decide if and when and how we will react to any situation. But we do know why people do or do not choose to change.

We can help them OPT for change by providing Outcome, Path and Tracking.

OUTCOME

People need to know where they are going if you expect them to get there. The difficulty many managers have when implementing a culture change such as Lean or Six Sigma, is that they don’t really know exactly what the outcome will be. Disciplines of engineering and accounting neither attract nor reward people who are [...]]]> Guest author Carmen Brickner of CLEARbrick, Inc.

“Managing change” is an oxymoron. And anything with ‘moron’ in it can’t be good for the bottom line!

We can’t manage change because we can’t anticipate and control all the variables that are yet to present themselves. And we can’t make people change because each of us has the inalienable right to decide if and when and how we will react to any situation. But we do know why people do or do not choose to change.

We can help them OPT for change by providing Outcome, Path and Tracking.

OUTCOME

People need to know where they are going if you expect them to get there. The difficulty many managers have when implementing a culture change such as Lean or Six Sigma, is that they don’t really know exactly what the outcome will be. Disciplines of engineering and accounting neither attract nor reward people who are comfortable with approximations.

Yet there are principles, models and resources to help you imagine what your organization’s desired future will embody. Most managers share just the results such as bottom line or delivery impacts. That is great, but too high level and does not reduce the fear of the personal impact on them. In order to create an image in which people can see themselves participating, you have to describe what it will actually look like, how you will all work together, how your own job will change along with theirs, and why it is important.

PATH

Once the destination has been defined, you need to build the path for them to get there. This is the tactical level of change. Eisenhower said “Plans are nothing; planning is everything.” Plans can be helpful, but they must be flexible. I agree that the real power is in the process of planning. We refine our vision, we are forced to come up with answers for questions we had overlooked, and we have to face contingencies and risks.

You need to define:

• Where you are now
• How quickly you want to move and what is required at each level
• Who will do what, when and where
• What the scope of authority and boundaries will be for teams and individuals
• How you will create the infrastructure – teams, systems, communications
• What people will need to know and how you will educate them.

TRACKING

Just as an airplane or ship constantly measures its position against plan to make small continuous adjustments, you need to have metrics and milestones to ensure desired progress and timely interventions.

The key metrics for change are all easily tracked in simple logs. Again, I use an acronym to aid memory – KITE:

• Knowledge – who knows what, can teach what, is certified in what
• Ideas – how many submitted, how many implemented, originating person/area
• Teams – participation and roles, leadership, facilitation, what areas are and are not ‘in the game’
• Events – areas, types of events, dates, results, lessons learned.

Tracking progress allows you to provide feedback, coaching, training, and plan changes. The real payoff, however, comes when this information is used by future teams or if it helps you identify areas and leadership that are rich in talent or resistant to change.

It is hard to succeed if you don’t know the rules of the game. They feel unsafe, lack trust in you and become resentful if they think you will be evaluating their performance on some unspoken and fuzzy target. They feel sandbagged!

If you let people know what a successful OUTCOME will look like, the PATH to get there and support them by TRACKING their progress and sharing constructive feedback, you greatly increase the chances of achieving change.

©CLEARbrick, Inc. Carmen Brickner is an expert in culture change, specializing in organizations undertaking continuous improvement and team-based approaches.

So, we’ve all disparaged Waterfall software development as overly cumbersome and simply undoable in today’s go-go world. Agile came along and promised to tighten everything up, but in reality most people just say the words ‘agile’ and they really mean ‘cram waterfall methods into 2 week segments’. (”Manifesto“? Really? The last guys to use that word didn’t do so well.) Here is my new proposal for software and project management: The Fractal Method.

The Fractal Method will take 3-5 core principles and apply them at all levels. Just as a fractal equation takes 3-5 variables in some algorithm and applies them at any scale (kilometer or millimeter level), the Fractal Method for project method will take 3-5 core principals and apply them at large application development as well as small tasks. This seems stupidly simple, but that’s one of my first suggestions for ‘Core Principles’: keep things [...]]]> by Dave Jenkins

So, we’ve all disparaged Waterfall software development as overly cumbersome and simply undoable in today’s go-go world. Agile came along and promised to tighten everything up, but in reality most people just say the words ‘agile’ and they really mean ‘cram waterfall methods into 2 week segments’. (”Manifesto“? Really? The last guys to use that word didn’t do so well.) Here is my new proposal for software and project management: The Fractal Method.

The Fractal Method will take 3-5 core principles and apply them at all levels. Just as a fractal equation takes 3-5 variables in some algorithm and applies them at any scale (kilometer or millimeter level), the Fractal Method for project method will take 3-5 core principals and apply them at large application development as well as small tasks. This seems stupidly simple, but that’s one of my first suggestions for ‘Core Principles’: keep things stupidly simple.

To implement The Fractal Method, make sure of the following:

1. Get all the business people and developers in a room and tell them that we’re all going to follow the Fractal Method.
2. Explain that the method means that we’re all signing on to 5 core principles, and we’re going to decide them right now.
3. Make sure the Core Principles are short and simple enough to be memorized by EVERYONE
4. Play a game so that everyone begins to memorize them.
5. Go sing some Karaoke together, because everything will be great from now on

Anything beyond this, in my opinion, is hand-waving and/or bullshit project management fluff. PMs make decent money, and for some reason it’s all too tempting for a PM to schmooze the bosses with fancy methods and drawings and charts to show that they’re worth all that money, when I would much rather pay them to actually get shit done.

With that, here are my Core Principles (if we were to deploy the Fractal Method):

1. Keep things stupidly simple. Call bullshit on complex proposals and passive-voice responses
2. Write everything down in a common area. Wikis are nice. So are white boards in the hallway
3. Divide by 3. Divide each task into 3 subtasks until each item is less than 1 day’s worth of work
4. 20 Minutes. Meetings are never longer than 20 minutes. If you didn’t decide everything, that’s okay, because you can meet again later, but 20 minutes was enough to give people things to do between now and the next meeting.
5. Results win. Results are worth more than estimations or plans

There ya go. I think I’ll start writing a book.

OptiSlot allows a multitude of user defined hierarchical rules in addition to a standard set of priority settings.  What-if scenarios with alternate comparisons looked good as well as building the stock relocation plans based on resources available and calendar window, a [...]]]> Met with Dan Basmajian, Chuck Grissom, Tim Riehl, Sheila Benny of Optricity today for a software demo and discussion on their OptiSlot functionality.  OptiSlot is one of a number of warehouse item slotting packages on the market.  Most (all?) current WMS packages can do slotting, the question is how well.   OptiSlot addresses the complexities of slotting by utilizing proprietary deterministic optimization algorithms using product’s dimensions, weight, velocity, physical characteristics of  the storage environment including slot configurations, pick path and material handling equipment, and operational goals like pallet building, seasonality requirements and retail groupings.  Facility set up and configuration isn’t trivial, although integration via XML API will make ongoing slot monitoring reliable and repeatable.

OptiSlot allows a multitude of user defined hierarchical rules in addition to a standard set of priority settings.  What-if scenarios with alternate comparisons looked good as well as building the stock relocation plans based on resources available and calendar window, a nice touch for the busy warehouse supervisor.

“So how’s business?” said  the supply chain CEO fishing around for a sense of where I thought the economy and consulting world is headed.  In the past I would have said consultants get real busy during a down turn when leadership still needs to deliver but hasn’t the staff they once had.  This cycle seems different.  I’m seeing a new dicotomy; either my clients ask “What are you doing tomorrow? When can you get here?”, or they stall and posture and delay, hording their cash, uncertain what the trends are.  It’s either desperation to act on something immediately or fear of the unknown.  Where’s the vision?  In the past three or four weeks a new theme seems to be coming across the radar screen – This too shall pass. So when the current economic malaise starts to turn will you be at the head of the pack or a follower? And now [...]]]>

“So how’s business?” said  the supply chain CEO fishing around for a sense of where I thought the economy and consulting world is headed.  In the past I would have said consultants get real busy during a down turn when leadership still needs to deliver but hasn’t the staff they once had.  This cycle seems different.  I’m seeing a new dicotomy; either my clients ask “What are you doing tomorrow? When can you get here?”, or they stall and posture and delay, hording their cash, uncertain what the trends are.  It’s either desperation to act on something immediately or fear of the unknown.  Where’s the vision?  In the past three or four weeks a new theme seems to be coming across the radar screen – This too shall pass. So when the current economic malaise starts to turn will you be at the head of the pack or a follower? And now the CEO is asking for ideas.  I offer a few:

1. Forget about order fulfillment and start thinking about how you can offer alternate bills of material.
2. Shift focus from moving product to managing services.
3. Reverse logistics is going to either bite your ass or put you out of business.
4. Real-time data up and down the chains (not a new idea, but OK, let’s get on with it…).
5. Reduce commodity costs by creating consolidated demand and supply pools.

In most warehouses the material handlers travel empty more than 60% of the time.  Long pick paths and poor product placement can make labor even more inefficient.  Slotting your warehouse based on travel distance and customer demand can save 5-10% on labor.  When handling issues, product groups, order patterns are factored in an additional 3-5% labor productivity can be had.  Also increasing storage density can create free space for additional opportunities; more efficient put away, right sizing bins, promotions and new product roll outs.

Finding the warehouse ‘squatters’, the slow moving stock that’s sitting in the wrong place, isn’t too difficult.  Squatters force the pickers to travel further to get to the active product locations.  Over time squatters increase and migrate forward forcing longer and longer hunting trips.  A quick and dirty way to find the squatters is to take your picking transactions and count the number of transactions and sort by location.  A [...]]]>

In most warehouses the material handlers travel empty more than 60% of the time.  Long pick paths and poor product placement can make labor even more inefficient.  Slotting your warehouse based on travel distance and customer demand can save 5-10% on labor.  When handling issues, product groups, order patterns are factored in an additional 3-5% labor productivity can be had.  Also increasing storage density can create free space for additional opportunities; more efficient put away, right sizing bins, promotions and new product roll outs.

Finding the warehouse ‘squatters’, the slow moving stock that’s sitting in the wrong place, isn’t too difficult.  Squatters force the pickers to travel further to get to the active product locations.  Over time squatters increase and migrate forward forcing longer and longer hunting trips.  A quick and dirty way to find the squatters is to take your picking transactions and count the number of transactions and sort by location.  A low number of picks in a location right next to one with high picks is a clue.  Depending on your location address naming scheme this sorting can be confusing.  Also, unfortunately spreadsheet slicing and dicing can only take you so far, typically only to making one pass on the product velocity.  When you add other factors besides distance and velocity you need a better tool than Excel.

Slot3D by IDS Engineering is a warehouse slotting tool that combines AutoCAD with an economic algorithm that is highly visual, flexible, and powerful.  Slot3D translates business rules into configuration parameters and along with SKU and order history calculates  the picking, replenishment, and storage costs for each item and slot in the warehouse.  The system recognizes different material handling equipment capabilities and location sizes and characteristics.  Rules and restrictions provide mechanisms to prioritize areas of the facility to produce golden zones, bulls eyes, and hot zones.  By allowing the user to structure the rules the software is flexible and not locked into a set of preconfigured algorithms. 

The 3D capabilities of AutoCAD allow you to see the overall slotting optimization by providing a heat map of the facility.

Supply Chain design studies often target understanding the impact of new sourcing options such as switching suppliers, opening or closing facilities, new product line introductions, or business acquisition integration.  Each opportunity has potentially great financial advantage, but also carries risks as well.  The task then is to understand and quantify the risk – reward trade offs of operating cost vs customer lead time, inventory vs. service, fixed vs. variable cost.  Unfortunately the various business goals need to be balanced and the complexities managed of customer demand, product dimensions, geography, shipping modes and rates.  Sometimes a spreadsheet will do, often you need a more robust tool.

One complaint of modeling and simulation often heard is that the only one who understands the model is the modeler.  Fair enough when the math is dense and the model a bunch of programming code.

Supply Chain Guru by LLamasoft is one of the best of the many logistic network [...]]]>

Supply Chain design studies often target understanding the impact of new sourcing options such as switching suppliers, opening or closing facilities, new product line introductions, or business acquisition integration.  Each opportunity has potentially great financial advantage, but also carries risks as well.  The task then is to understand and quantify the risk – reward trade offs of operating cost vs customer lead time, inventory vs. service, fixed vs. variable cost.  Unfortunately the various business goals need to be balanced and the complexities managed of customer demand, product dimensions, geography, shipping modes and rates.  Sometimes a spreadsheet will do, often you need a more robust tool.

One complaint of modeling and simulation often heard is that the only one who understands the model is the modeler.  Fair enough when the math is dense and the model a bunch of programming code.

Supply Chain Guru by LLamasoft is one of the best of the many logistic network optimization and simulation software packages on the market today.  With SC Guru model building is very visual.  Sure there is a ton of data to manage; addresses, sales orders, shipment details, product dimensions, sourcing, inventory, and transportation policies.  With the visual modeling native to the package you can display and interact with your data easily.  As a user you can quickly create views of the supply network based on product or customer groups, geography, shipping lanes.  Building the network diagram is as easy as with Visio or any other flow charting tool.  Geo maps are easy to populate with built in longitude and latitude lookups.  Distances come easily through the PC*Miler functionality.

Making the analysis more visual opens up the network study to greater team participation and leadership comprehension, and hopefully a better business result. 

In warehouses, distribution centers, or even stores the placement of each item can be a science, sometimes it’s an art, often it just is what it is.  Stuff goes wherever it will fit, entropy kicks in and randomness takes over.  Then before you know it there’s little rhyme or reason as to which items go where.

Product Slotting is defined as finding the optimal location of product in a warehouse or distribution center for the purpose of improving material handling efficiency. Sometimes called inventory slotting, profiling, or warehouse optimization slotting identifies the most efficient placement for each item. Product slotting depends on a variety of factors such as picking volume and frequency, receiving and put-away volume and frequency, package dimensions and weight, picked package size, storage package size, material handling equipment used, layout of the facility, labor rates, etc.

Benefits from good product slotting include:

 If the proposed Employee Free Choice Act becomes law, I suspect that many smaller business owners have assumed that they won’t be a target. Under the old logic, if you employ around 50 people or less, you are probably right. But the problem is that the old logic no longer holds true. Unions earn “revenue” in only one way, through dues. The only way they earn dues is through increased membership. Naturally, they will want to target the bigger employers first (more bodies = more members = more dues), but it won’t take them long to get to you, especially since EFCA makes it so much easier to organize. So to deny you are a target is risky and naive.

Acting as if you are at risk, on the other hand, provides the “burning platform” for change inside your company. If it takes the unions a little time to make their way to [...]]]>

 If the proposed Employee Free Choice Act becomes law, I suspect that many smaller business owners have assumed that they won’t be a target. Under the old logic, if you employ around 50 people or less, you are probably right. But the problem is that the old logic no longer holds true. Unions earn “revenue” in only one way, through dues. The only way they earn dues is through increased membership. Naturally, they will want to target the bigger employers first (more bodies = more members = more dues), but it won’t take them long to get to you, especially since EFCA makes it so much easier to organize. So to deny you are a target is risky and naive.

Acting as if you are at risk, on the other hand, provides the “burning platform” for change inside your company. If it takes the unions a little time to make their way to you, be sure to use the time to build engagement with your employees and the best way I know how is by utilizing Lean methodologies. In the event that EFCA doesn’t pass (don’t bet on it) you will be that much further ahead of the game by engaging your employees in improving their jobs and in direct correlation, your business.

I would like to share a short story of how I used Lean in a similar situation but the result was 180 degrees from EFCA.

At a point in my not too distant past I had multi-plant manufacturing and operations responsibility for both union and non-union plants.  One of the union plants had a strong plant manager.  Together we established a vision for the plant, put a good team around him to support and help him run the operation.  Additionally we introduced Lean and began to engage the entire operation in both problem identification and problem solution and waste elimination.  We actively listened to those producing the product and sought their input on how to not only improve the operation but to also make their jobs better.  We implemented a new communication process where we frequently updated the workforce on happenings throughout the division as well as the entire company (ie: new customer accounts, financial performance, customer complaints), established lunch feedback meetings with the plant manager, required supervisors to engage their teams in the improvement process and hold face to face performance review sessions.  Our focus was to make sure everyone was treated like valued, contributing team members rather than just an employee making a widget. 

The efforts of this transformation produced numerous financial benefits for the plant and company but also yielded an unexpected result for the team members.  Through this transformation the culture changed which in turn grew an effort, led by union members, to decertify the union at this site.  The vast majority of the membership felt very good about the leadership, the future of the plant and company and did not feel the need to be represented.

At the end of the day, I firmly believe that making sure you have good leadership in place who are truly engaged with the workforce, utilize methodologies like Lean you won’t have to worry about EFCA or anything else like it that may come down the pike.  Instead, you can keep your focus and energies on doing what you want to be doing and that is continuing to grow your business. 

Dan Wachter

Running out of room?  Consolidating operations?  Relocating to a new location?  Need to liberate some cash?  It’s time to purge your warehouse!  When looking at all the stuff that’s accumulated in your warehouse over the years you’ll often find orphans, cripples, mistakes, bad dreams lurking in the far reaches of the racks and tucked away in the back corners.  Where to start?  You can use the white glove test – the thicker the dust on the case the more likely you can do with out it.  Or look to see how many physical inventory tags are on the box – more than two, then throw it out!

Excess and Slow Moving inventory is defined as the quantity above a specific need such as beyond a certain time period of demand or days of supply.  Excess can also be determined as inventory beyond current safety stock level plus lot size (order quantity).  Excess inventory is [...]]]>

Running out of room?  Consolidating operations?  Relocating to a new location?  Need to liberate some cash?  It’s time to purge your warehouse!  When looking at all the stuff that’s accumulated in your warehouse over the years you’ll often find orphans, cripples, mistakes, bad dreams lurking in the far reaches of the racks and tucked away in the back corners.  Where to start?  You can use the white glove test – the thicker the dust on the case the more likely you can do with out it.  Or look to see how many physical inventory tags are on the box – more than two, then throw it out!

Excess and Slow Moving inventory is defined as the quantity above a specific need such as beyond a certain time period of demand or days of supply.  Excess can also be determined as inventory beyond current safety stock level plus lot size (order quantity).  Excess inventory is almost always a result of poor stck demand management.  Excess stock can result from over delivery from a supplier, but morelikely bad ordering and demand management.  It’s easy to blame the buyer, but buyers rarely create the sales forecast, maintain the sales orders, set the performance metrics, or the service policies.

A common analysis is to rank sort the parts by their recent sales as shown in the graph here.  Where to attack?  Head for the Tail is a common approach.  If it’s not selling let’s dump it, goes the conventional thinking.

ABC Analysis can be misleading; some times the tail has pearls, or at least consequences if you blindly purge.

Some things you’ll find in the Tail:

1. Lifetime Buy – part, material, component is going out of production and you need time to find substitutes.  Common these days with RoHS and electronic parts.
2. Brand New parts – don’t have any sales yet obviously.
3. Seasonal "Murphy" Stock – winter is coming and a key supplier is on the other side of the Rocky Mountains.
4. Economic Order Quantity, often abused, but can be a good business decision.
5. Supplier order volume deep Discount – a really sweet deal, see EOQ.
6. Commodity price hedging – if you are a commodity buyer you know what I mean.  Example copper prices in 2006 and 2007: