Failure Work: The Black Hole of Business

A black hole is a place in space where gravity’s force is so strong that even light can’t get out. Because there’s no light, people can’t see black holes, yet they exist and gather matter from the surrounding area.

Failure work in business – the process of correcting things that are wrong; taking contingent action or putting out fires – is much the same. It exists, though it may go unnoticed. Failure work sucks up time, profit, cash flow and capacity, and can include:

  • Rework
  • Mis-shipments
  • Bad quality
  • Scrap
  • Obsolete inventory
  • Inspection

On a recent company tour I saw two inspectors making sure orders were correct before they shipped. Since there were two order packers, the inspectors doubled the head count in that area. Reacting to potential problems is known as contingent action. It would be like having fire extinguishers on the walls, overhead sprinklers and exit plans (contingent actions), but no inspection or safety programs (preventative actions).

The term, “Do it right the first time” was common in the early days of Total Quality Management and Six Sigma, but seems to have diminished with the advent of Kaisen and continuous improvement. Companies now focus on problem solving and corrective action rather than on designing systems to failure-proof (Poka-yoke is the Japanese term) their processes.

Strong Operations Discipline dramatically reduces failure work, thereby improving quality, cost, delivery and customer satisfaction. While customers appreciate your ability to solve their problems, they prefer to remain unaffected by your company’s problems. The same is true internally in production, the warehouse, the office and throughout the product or service delivery process.

Process

There are three ways to failure proof, or Poka-yoke, your processes. First, you have to have a process, a defined way of doing things that’s been tested to avoid mistakes. This creates a preventive action, known as standard work in Lean companies. Well-designed processes help prevent failure work.

Accountability

Next, you need a culture of accountability that supports doing things right the first time, including training and clear instructions. Things need to be measured to let people know how they are doing, and those measures should focus on outcomes, not activity.

Rules and Constructs

Finally, rules and constructs need to be in place to ensure that processes are completed on time. In many warehouses, received items can sit on the dock or in a receiving location for several days before they’re checked in and put away. Not only can that delay customer shipments, but since the system can’t “see” the items, Purchasing might order more thinking they are almost out of materials, causing overstock and low inventory turns.

One practice many of my clients use is “A Day’s Work In a Day,” which applies not only to stocking materials, but to any processing step such as order entry, invoicing, payroll processing, returned goods processing, etc. A day’s work in a day says that you don’t go home until the day’s work is done, including paperwork. It’s amazing how much more productive people can be with this rule in place.

From the Flight Deck

Do you have black holes in your company that are sucking up profit, cash flow and capacity? Can you see them? You may have significant opportunities to accelerate profit and growth, by eliminating black holes by taking preventive action through process, accountability and rules.

© 2016 – Rick Pay – All Rights Reserved