Risk Management - A Shift in Thinking: The Shift in Thinking: Part Three
Buffers Dictate Priorities
The focus on expediting late jobs is replaced with expediting jobs based on two responses according to the time gap penetration (in-control risk)
Status Quo
People often work ‘off’ the board. Managers regularly reprioritise the queue of work. Everything becomes urgent. Jobs exceed the time buffers, and the buffer does not protect the flow.
New Paradigm
The buffer dictates the priorities and employees work on jobs in the order they are released. All work in progress is ‘on the board.’ The system becomes a two response system.
Fastest Money First
The focus on using margins as a negotiating tool is replaced with shifting the mix of jobs sold towards higher throughput velocity jobs
Status Quo
Focus is on high margin / high profit jobs, these jobs commonly take longer (slow money) and use more resources. Staff get overloaded if there are a lot of these jobs scheduled. Overall profit decreases. Cash flow is unsteady.
New Paradigm
Focus is on product mix that determines overall profit and steady cash flow. Focus is on ‘fast money’ jobs.
Focus on Control Points, The Rest is Noise
The focus on trying to manage everything is replaced with measuring overall flow at the key control points
Status Quo
Some people try to assign meaning to the ‘noise’ (the unrelated results) and fail in trying to replicate it; some people make up KPIs (Key Points of Interest) thinking that we are measuring things, but we are assigning meaning where there is none.
New Paradigm
Focus is shifted to measures that we can leverage. Focus is on those main KPI’s, other measurements are noise. Focus is on executing the new paradigm behaviours that impact the control points to bring a fast and immediate change; the behaviours are then measured to reveal if they make the system better or worse.
