Kill the Queue!
In my long career there was one book that inspired me, helped me tremendously, and haunts me wherever I go. The book by Eliyahu M. Goldratt is “The Goal: A Process of Ongoing Improvement”. It is about the “theory of constraints” which leads me to what I call “throughput management”.
I say that this book haunts me because it forces me to see “bottlenecks” everywhere I go. I see them in businesses I’ve been involved in professionally, in businesses where I am a customer, and I even see them in my day-to-day personal life. I am sure that you see them as well, but until you read on, the title of this blog may seem unclear. I use the word “queue” to identify a line or sequence within a process.
Now a bottleneck is usually something that slows down a process and can easily be identified by a large queue or huge pile of work waiting to be processed. It is easy to see it in a manufacturing situation when “work-in-process” is stacked up in front of a machine or assembly step, and indeed that is the running example in the book. However, we see them everywhere.
Let me digress a little and explain two things:
- The goal of any process is to complete the whole process. This is what we call throughput.
- Everything you do is or should be a process. Plan the steps, execute those steps, and enjoy the results of the completed process.
- When we have a bottleneck in the process, it costs time and money because:
- We are not shipping or selling products or services, which can cost us in lost earnings, and wasted inventory and space.
- We are not meeting customer demand, and therefore losing future customers after spending marketing money to get them.
In short, we ALWAYS want our supply to match the demand. Not less than demand and not more than demand, the ideal and the goal is to match demand exactly. With businesses that have fluctuating demand this may be difficult, but it is the job. It can be managed by creative scheduling of employees, and/or leveling customer demand with special pricing or incentives. And when the job is done properly you run efficiently and have multiple advantages over your competition.
As said earlier, it is pretty easy to see bottlenecks on a production floor but sometimes a little more obscure in other places. Let’s look at a few:
- You are a contractor and have long waiting lists for future jobs.
- This may sound like job security to you, but customers will look elsewhere to find someone who can solve their problem immediately, and perhaps even willing to pay more for it.
- Long lines at any type of business are a sure sign of a bottleneck where demand is greater than supply. This ruins the experience for your customers and makes them resent doing business with you.
- Think about how fun it is to go to the DMV.
- Accounts Payable and Accounts Receivable are behind what is reasonable is another bottleneck that affects your business.
- This can apply to other types of paperwork and administrative duties as well.
- Restaurants that have a long seating time, a long waiting list, and/or the time from ordering to receiving their food is unrealistically long.
- If your restaurant is outstanding you may gain some patience on busy nights. But you have already started them being critical of the restaurant before they have the first bite, and this makes the experience easily go downhill.
- Parking lots that take a long time to find a space.
- It’s great that you have a busy retail business, but you are not prepared for the demand. If you can’t find more parking, perhaps faster service will fix the bottleneck nicely.
- Finished Goods or Retail Inventory higher than is prudent is a good sign that your supply is greater than demand.
- Inventory is expensive and holding more than you should is verboten. Seasons and customer preferences change frequently and you will likely be stuck with unsalable, expensive inventory.
- It also takes up space that you are likely paying for and could probably put to better use.
- Customer Service call lines. What is your average wait time, and would you wait that long to talk to you?
- Worse yet is at the end of that call was the problem solved? If not, they are surely looking for anyone else to do business with rather than you.
- Delivery times too long.
- You spent a lot of time and effort to get a customer excited about a product, how long will they wait before that excitement goes away?
- Grocery Store lines. We have all been in the checkout line that wind around the corner and up the aisle.
- And we all ask “why don’t they open another line?” Well, effective throughput management would be on top of this.
Think of your business like a rowing crew. Everyone needs to stroke in unison from Marketing, to Sales, to purchasing, to production and service, and the coxswain’s pace is dictated by the demand. Every part of your business process(es) is a point of potential failure. Look for the signs, and fix the bottleneck issues.
I recommend the book, even though it may force you look at everything in your daily life. There is a lot more to throughput management than just this, but managing bottlenecks are crucial to the smoothing out your processes and gaining throughput and efficiency.
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