In this five part series we will examine the

common areas of slack in most businesses

The Slack in

Your Value

Chain Part One

DAVID HILCHER

The Slack in Your Value Chain – Part One

The elimination of slack has gotten a bad name. Primarily the fault of a few brown-noser consultants

and some managerial folk who instead of delivering efficiency deliver symbolism. We see examples

of this everywhere, empty reception desks, people on $200 an hour doing their own photocopying

because some a cost/benefit was not calculated for the reduction. So now people turn up to empty

reception desks and the inefficiency of the organisation is passed onto them.

Figure: Porter’s Value Chain (source: Wikipedia)

Using Porter’s value chain, this and the next five posts will examine the common areas in which

there is unharvested value in most organisations. Let us drink to uncovering the slack.

Figure: Slack Alice Abrahalls Cider (http://www.celticmarches.com)

Core:

Inbound logistics is not just inbound warehouse. Consultants and business improvement

professionals alike focus on a business warehouse because it looks like easy pickings. Sometimes it

is, but most times it affects the entire inbound delivery aspects of a business. It is alarming to see the

level of inbound inefficiencies, tradespeople waiting for someone to help them (charging by the

hour), carriers dropping off to the wrong depot because nobody could help them anywhere else. It’s

expensive slackness.

These are some common gems, some affecting warehouses:

Poor inbound logistics scheduling creating idle time for labour force

Poor inbound logistics scheduling creating storage issues

Poor inbound logistics creating duplication for machine hire across sites (cranes, lift trucks etc.)

Poor inbound logistics creating inefficiencies in storage areas

Poor inbound logistics with carriers waiting and charging penalties

Unexpected deliveries and no staff with knowledge of what to do

Loss of credibility with logistics suppliers leading to higher charges

Poor management of goods receipting process preventing invoice matching

Lack of use of recipient created invoicing

Business has a 'warehouse mentality' storing just in case

Clutter

Time is money. Wages being paid to people engaged in unproductive pursuits accounts much more

than people slacking off by themselves. Poorly managing people produces systematic cultural issues.

Employees see waste and do not see management leading by example. The business slack in

supervision, training, and people planning is unacceptable.

Poorly created KPIs driving the wrong behaviours

Poor labour planning creating supply / undersupply of labour issues

Poor supervision of floor staff causing utilisation issues

Poorly created job statements and training creating utilisation issues

Lack of reliable processes to guide staff

Poor allocation of skills against role

Poor management skills amongst supervisors and managers

Bureaucratic recruitment processes

No HR oversight into training budget. Poor staff allocation of training budget

No career management of inbound logistics staff

Figure: J.R. “Bob” Dobbs is the figurehead of the parody ‘Church of the SubGenius’. The church advocates ‘slackness’. Are some managers members?

Image source: Wikipedia

Technology is the next area of slack. Few technology programs deliver a benefit, most a driven by the insane and appear on their resumes as a badge of honour. The reality is they were poorly scoped because of the lack of experience understanding business requirements, and now they are just a pain the butt.

Business processes not reflecting technology constraints

System design does not reflect business requirements

B2B opportunities missed

Systems not delivering benefits

System use creating inefficiencies Last of all is the bane of most consultants: procurement. It causes a backlog in accounts payable and

the universal misunderstanding of procurement creates extra costs throughout the business.

Non standardised freight contracts

Freight contracts with cheaper suppliers who cause backlogs in accounts payable from hand written invoices

Poor supplier management

Staff creating procurement issues with key suppliers risking cost rises

Contracted suppliers missing freight jobs because of ad-hoc one-off cheaper prices with competitor

Poor tolerances set on freight contracts creating invoice manual checking

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© Copyright 2014 David Hilcher