Tag Archives: Fire Fighting

Stop Fighting Emergency Fires in Five Steps

Whenever I find myself spending most of my day fighting fires, I try to step back and understand why. A great framework that I like to use comes from the Malcolm Baldrige Performance Excellence Program. The firefighting example takes a process through five steps, going from “emergency crisis mode” to “no problem mode.”

The Malcolm Baldrige Performance Excellence program is a government sponsored award that focuses on promoting quality in US organizations. You can see the images below and other great resources on their graphics page.

Step One – Running and Reacting

1The first stage is where most of us start when we think of fighting fires. We react to emergencies that pop up by dropping everything and running to what’s urgent. If this only happens once or twice, then it might not be worth the effort to improve the response. However, the problems that occur frequently or have large impacts are the ones that need to move beyond step one. Focus on those problems for moving them through steps two through five.

Step Two – Running Less and Reacting Quicker

2If fires pop up in the same places frequently, then installing extra hoses in that area can really help. Likewise, if you repeatedly face the same emergency, making additional resources available in those areas can cut down the size or length of an emergency. Taking a few minutes to create simple, small countermeasures makes reacting easier.

Step Three – Response Game Plan

3Once countermeasures are in place, how can we get everyone on the same page? When the next emergency strikes, who contacts whom? Addressing these issues by making a game plan can make the response much more effective. More importantly, getting others involved makes the emergency less dependent on you. If you can’t ever leave the office because you’re the only one that knows how to handle certain problems, then this step can free you from that burden.

Step Four – Automated Response System

4Just like a sprinkler system automatically dousing flames, you can build a system that handles emergencies automatically. Basic computer automation or alerts can take care of many problems that frequently pop up. Emergencies that are more complex may require some IT investment, but many of those solutions are worth the price tag. Conversely, significant investment may not be necessary if a manual response system will work just as well.

Step Five – Innovate Emergencies Away

5This final step is not “brainstorm how this emergency doesn’t happen again.” That type of thought should happen at any stage. Instead, this is a systematic change in the design of work flows, products, and systems so that unexpected problems are less common and less damaging. A product’s cost can often be reduced by 70% when the designers’ goal is to make the product easier for manufacturing. Similarly, perhaps 70% of your emergencies could be avoided by focusing on internal customers and avoiding downstream emergencies. Of course, balancing the needs of internal customers with those of external customers is difficult. Nevertheless, keeping the needs of both customers in mind will help reduce emergencies for which you can’t plan.

How to Use the Five Steps of Firefighting

Whenever a problem arises, I look at where in the five steps my response to the emergency is. Based on the size and frequency of the problem, I can then look at options for moving the response to the next level. Few fires need all five steps; such investment would be overkill. However, simply knowing at what stage each of my problems is helps me prioritize my improvement efforts. Soon the categorization becomes second nature, and process improvement becomes easier, quicker, and more effective.

Best of all, there’s less fires to fight. And the fires I still have to fight are easier to put out.

At what stages are the recent emergency responses you’ve initiated?

[Images Source]

6 Proven Ways to Stop Burning Money on Customer Fines

If you’re shipping to a large customer, especially a big-box retailer, then you’ve likely encountered chargebacks or fines. Many large companies fine their vendors when they encounter a deviation from purchase order or vendor requirements. Viewing these vendor fines as an easy way to boost their bottom line, large companies have recently increased their emphasis on chargebacks. Some companies have even created “Profit Recovery” departments with the directive of finding methods to reduce payables to vendors. While some of these fines are necessary motivators for supply chain compliance, many of these deviations are the result of problems on the receiver’s end of operations.

Chargebacks and Fines Burning Money

For those who don’t enjoy paying their customers, here’s five tools to fight chargebacks and reduce the number of fines you receive. Of course, no one strategy can solve all of your problems, but my company was able to reduce chargeback expenses by over 60% with these methods.

1 – Fight Every Single Chargeback

As much as you dislike filing disputes, a clerk somewhere dislikes processing them just as much. Many companies (such as Walmart) will reduce unofficially the number of fines if they know you will dispute them. Paperwork piles up on their end and suddenly charging you for every small discrepancy doesn’t cover the cost of hiring an additional clerk to handle your disputes. Even if you know you’ll lose the dispute, file it anyway.

2 – Perfect Paperwork

Perfect Shipping Documentation

From the disputes I’ve dealt with, approximately half of them are a result of a problem on the receiving (customer) side. However, we can still ended up paying for many of the shortages or other problems if our shipping documentation is not detailed enough. To avoid this problem, over-document when you ship. Absolutely be sure to include carton count, weight, pallet count, and other basic information. If possible, seal the trailer and record the seal number. Having the driver count and sign the bill of lading is also essential.

When shipping by FedEx, we often strapped boxes together to save on freight costs. However, when a customer claims a shortage, this prevents us from proving our carton count because of the banded boxes. We therefore changed our process to not strapping together boxes. This change gives us an exact FedEx paper trail for each carton to help us win future disputes.

Almost as important as perfect shipping documentation is a filing system that will help you find the necessary paperwork when you need it months later. Clearly marked, well-organized folders or paperless filing systems are well worth the time they take. They’ll simplify your life by making the dispute-filing process quick and easy. For chronic-problem customers, we maintain spreadsheets to track pertinent information that we can quickly access later. This few minutes of data entry saves hours of searching when disputes arise.

Perfect Dispute Paperwork

Another place where it helps to be exact is in the dispute paperwork you’ll send to contest the fine. Ensure every field is complete and legible if handwritten (typed is better). Be descriptive and make it very easy to understand. Remember, a clerk who reviews disputes all day will handle your claims. Anything you can do with your dispute to make the clerk’s job easier will result in more fines being rescinded.

3 – Never Pay the Same Fine Twice

When acquiring a new customer, always read their routing instruction guide so you can build a process that follows their requirements. However, if you miss something and are fined for it, improve your processes so you never pay the same fine twice.

For each chargeback we receive, we assemble everyone who interacts with the customer into a quick huddle and agree on changes to avoid future chargebacks. If necessary, we institute a two-person sign off system or other techniques outlined in my previous article, Strategies to Fulfill Customer-specific Requirements. For our very difficult customers, we record every piece of data and take pictures of every piece we ship out. Then when the inevitable chargebacks come, we can easily dispute them by replying with our detailed paperwork and pictures.

For example, one of our more complex customers required slip sheets (40×48 inch pieces of flat cardboard) between different SKUs on a pallet. Since most of our other customers will accept mixed pallets, we missed this requirement. However, after receiving a significant fine, we reviewed and changed our process. The pick sheets that print for that customer now have the instructions clearly outlined. We also take pictures of the pallets and require two authorized signatures before anything for that customer leaves our warehouse.

4 – Collaborate with the DC

Many complicated issues can be quickly solved by going to the gemba, or source, of the problem. Usually, that means visiting your customer’s distribution center and talking with their team. Seeing how they handle your products can spur creative collaboration that saves both companies time, money, and headaches.

We had constant product damage issues with one of our major customers. We were following their routing requirements exactly, but their requirements were often the cause of damages for our unique products. We brought the issue up in a visit and several follow-up conversations with the receiving lead at the primary DC we shipped to. After explaining the problem and brainstorming together, we were able to tweak the routing rules to a solution that both reduced damages and made receipts easier for the their team.

5 – Share Feedback with Buyer

If despite your best efforts, you’re still swimming in fines from a specific customer, it may be time to elevate the issue to the buyer. While this depends heavily on your relationship, we were recently pleasantly surprised with how helpful a buyer from a national US retailer was in helping us to solve dispute problems. We were contacted by someone from the “Profit Recovery” department claiming we owed money for product damages from several years prior. Unsure how to respond, we raised the issue with the buyer on our next sales meeting later that month. She was happy to help, and detailed exactly who we should contact and what we should say to have the disputes dropped. This method is especially useful if the charges seem obviously unjustified.

6 – Budget, Minimize, and Improve

Problems and variations are still a reality for most supply chains, especially growing small businesses. While doing our best to standardize and automate, variations still exist, and some will result in fines. A wise course of action at the executive level would be to set a target maximum for customer chargebacks and support improvements that reduce that budgeted allowance. Supply chains are full of different companies and people working together to create value for the end customer. Anything you can do to collaborate and make the jobs of partner companies easier will often reduce fines and chargebacks – and make your offering to the end customer more valuable and competitive.

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Three Silver Bullets to Solve (and Raise Red Flags on) Nearly Every Supply Chain Fire

This past Wednesday, I was presented with a problem. “Alex, your team needs to unpackage, relabel, and repackaged 10,000 of these items by noon Friday.” The product needed a warning label that we just barely learned was required by law. Running on our smallest possible staff, my team suddenly had a mountainous challenge before us that years ago would have kept me up at night worrying. However, I slept just fine because I knew we could handle the challenge with one of my three secret weapons. In fact, I’ve learned that I can solve nearly any supply chain fire with one or more of three things:

  1. Air Freight
  2. Temporary Workers
  3. A Rotary Drill

I initially put together this list as a joke. Executives would approach me with a problem, to which I would reply, “it’s nothing air freight, temps, or a rotary drill can’t solve,” and suddenly the stress of the problem decreased. I still don’t completely rely on these three silver bullets as the solution to any problem. However, with these three tools, my team has conquered surprisingly large amounts of fires that our small supply chain faces.

Perhaps more importantly than taking the stress out of emergencies, these three silver bullets also serve as a signal that our processes have room for improvement. Throwing money at a fire through expedited freight and increased payroll is a sign of deeper problems. Nevertheless, when 10,000 items need to relabeled in the next 36 hours, I need to solve the immediate blaze with whatever I can before backing up to prevent future sparks.

Silver Bullet One – Air or Expedited Freight

Silver Bullet One - Air Freight

Air freight is a needed miracle in modern supply chains. When problems arise, switching to faster shipping can save the day by cutting lead times from distant suppliers significantly. Those precious extra days can help capture last minute sales opportunities and help avoid expensive stock outs. Recently my company learned that one of our products was scheduled to ship to twice as many retail stores than originally planned. We had purchased inventory according to the original forecast, which would be insufficient to meet the new demand. However, by air freighting in product that was just finishing production in China, we were able to fulfill the order and capture the extra revenue. The higher shipping costs took some margin, but the ability to prevent three or four weeks of stock outs was well worth the cost. Realizing that I have an expedited restocking option has helped me reduce my safety stock and keep my company’s inventory investments smaller.

Another problem I often face is large customers needing product before we have it. We’ll tell customers that the launch date for a product is May 15, but then the customer will send a purchase order for an April 25 delivery. We often push back, but sometimes the customer will simply cancel the order if we cannot meet the date. Enter air freight again to save the day.

Although air freight can help your company get through a variety of tight spots, it’s not a good habit to constantly use it. Each time we’re forced to use air freight, it’s an expensive red flag telling us that we need to improve our systems, vendor performance, or customer relations. Nevertheless, expedited freight is an excellent tool to combat supply chain uncertainty.

Silver Bullet Two – Temporary Workers

Temporary Workers

When emergencies blaze out of control, we instinctively call in reinforcements. Dealing in consumer products, I’ve had countless experiences of relabeling, repackaging, and reworking product days or hours before it needs to ship. Often the rework could have been easily avoided months ago from simple communication or error proofing. However, problems slip through insufficient safety nets, and suddenly I’m flying to an offsite warehouse to oversee emergency rework for an urgent order.

Some time back, we had a large promotion ready to ship to one of our top customers. It was in our offsite warehouse prepared to ship the next day. As I reviewed the pictures of the product to confirm everything was good to go, I noticed some unfamiliar labels on the carton. I inquired for more detail and found that although the outside carton labels were correct, the inside product had incorrect barcodes. Over 70,000 products needed new barcode stickers put on them – and they still needed to ship within the next day or two. I jumped on the next flight and assembled a team of 18 temporary workers to help. We quickly created a system to move through the pallets and relabel the products. It was August, and the heat made me sweat almost as much as our looming deadline. However, thanks to my 18 new friends and my assistant who made sure I ate and took breaks, we were able to complete the project in less than 24 hours and ship the entire order on time.

Using temporary workers for unexpected fires is a clear red flag that upstream processes need help. However, as stated at the beginning of this article, knowing that calling in a few extra people can easily solve the problem takes much of the stress out of supply chain firefighting. Using temporary workers consistently may also be a sign that you may need more permanent additions to your staff.

Silver Bullet Three – A Rotary Drill

Rotary Drill

Originally not part of the silver bullet arsenal, a rotary drill in the right hands can solve major problems or inefficiencies in just minutes. It’s my weapon of choice with hands-on problem solving because of its versatility. With a rotary drill (and other tools), my team has built holders, pegs, product paths, and jigs that have often quadrupled production speed. Rather than accepting a process as just slow, a few minutes or hours of building additional tools, holders, or aids can skyrocket efficiency.

For example, as we manufactured one of our products, we needed somewhere to put the small raw materials before they were processed. Laying them next to the worker often resulted in a slight breeze blowing the very light material off the table. Additionally, the worker spent more time aligning the pieces on the machine than actually using the machine. Enter the rotary tool.

By creating a board with nails to put each piece on, we could drastically reduce the time it took to align the raw material on the machine. Putting it on a nail would allow it to stay aligned the entire time. The problem was that the nails were rough and would often snag the materials to create defects. Rather than complain and brainstorm different solutions, we just grabbed the rotary tool and smoothed down the nails. Suddenly, the entire operation was running smoothly, and much quicker than before.. Building small, creative tools – even if they’re not perfect at first – can save loads of dollars and hours.

Think While You Reload

As you remove the spent cartridges from your silver bullet six shooter, think about what could have prevented you from pulling the trigger. Every good Western movie needs a shootout, but the best supply chain cowboys I know avoid pulling the trigger altogether. Each time you resort to air freight or temporary workers think about how you could have solved the problem further upstream. The rotary tool may not raise the same number of red flags since it often helps create better processes, but sometimes I also use it as a last-resort solution that could have been solved earlier on.

A good way to improve is to hold a quick meeting each time you fire a silver bullet solutions. Five minutes addressing three questions could prevent future shots:

  1. Why were we forced to us a silver bullet solution to solve this fire?
  2. What could we have done to prevent this fire?
  3. What will we do differently next time?

A quick meeting with answers to these questions, combined with action items, will improve your processes and help you build up fire prevention measures.

What other silver bullet solutions do you have in your arsenal? Please share yours in a comment below, and don’t forget to subscribe to future articles.

Three Ways to Minimize Weather Disruptions in Your Company’s Supply Chain

Hurricanes, floods, fires, and blizzards are a few supply chain problems that most small businesses aren’t prepared for when they happen. Surviving weather disruptions is essential to growing your company and building trust with your customers. Although major weather disruptions may still cause delays, here are three methods to minimize their impact and continue to deliver on time.

Multiple Sourcing in Separate Demographic Locations

Toyota is famous for investing in its vendors. It understands the importance of having multiple sources for each part that goes into its cars. If one of its vendors has a problem, then it has another supplier to provide the part needed to keep production going. However, until the 1995 Kobe earthquake, most of Toyota’s multiple vendors were in the same geographic location. That earthquake paralyzed the entire region, including many Toyota vendors that were backup suppliers in the same region. Interestingly, after the 2011 earthquake and tsunami, the same problem occurred with the suppliers that sold to Toyota’s suppliers. Since then, Toyota has expanded its network of first and second tier suppliers to avoid problems caused by weather disruptions in particular areas. Geographic diversification, even at slightly higher prices, is essential to avoid supply chain disruptions in the wake of extreme weather or natural disasters. Even small businesses can follow Toyota’s example and diversify where they obtain their key parts.

Anticipate Upcoming Weather Disruptions

Unlike natural disasters, extreme weather usually has some advance notice. Whether it’s a couple days or just a couple hours, that short time before the weather hits is essential. Contact your customers and see if there is anything they recommend you do. Chances are your customers have plans on how to respond to the weather, but in the middle of other preparations, they may have neglected to inform you. Contacting them and coordinating your strategy can build trust and understanding. Expedited shipping, postponing orders, or changing quantities may be enough to avoid supply chain disruptions. Despite your best efforts, extreme weather may make delays or stockouts inevitable. However, if your customers know you are fighting alongside them, then you can alleviate many of their frustrations that would normally exist if you do not communicate well with them.

Apologize and Delight

Despite your best efforts, chances are that any major weather event will still delay some shipments. The key to minimizing problems is to communicate clearly what is delayed, when it will realistically arrive, and your regret for the problem – even if it’s not your fault. These actions will calm most frustration, but this is also an opportunity to shine. Consider sending your customers a small extra with their order as a “thank you” for their patience. Turning a frustrating experience into a good impression can go a long way in creating fans in your customer base. Your customers may not have complained to their friends about your product’s delay, but they will likely share what little extra you did for them because of it.

With these three simple methods, you’ll be able to keep your supply chain under control even when the weather isn’t.

What experiences do you have with weather impeding your supply chain? Feel free to share your successes or pitfalls with weather in a comment below so that we can all learn. In addition, be sure to subscribe to receive future articles.

The Three-year-old Why Technique

Giant problems often appear to need giant solutions. However, honest analysis and investigation usually points to something small that nobody thought of. This small oversight upstream often results in the fire downstream. For example, thousands of products can have an incorrect barcode because the packaging designer didn’t have a good proofreading process. While the giant solution of relabeling all the products may be needed to fix the immediate problem, a two-minute process upstream could avoid future problems. To find the root cause of an emergency, I often use the 5 Whys technique, which helps get down to the bottom of what caused the current problem by asking “why?” repeatedly. However, I think most companies need another technique to catch problems before they turn into emergencies. I call this method the Three-year-old Why Technique.

Profound Questions by Three-Year-Olds

Girl Asking "Why?"

Whenever I talk with a child age three to five, I usually hear several “Why?” questions. From reading a couple online articles about the subject, I’ve learned that this behavior is most likely children’s method of both learning and capturing attention. However, the part of this behavior that always surprises me is the profound questions that children stumble upon simply by questioning everything. “Why do I have to sleep?” “Why can’t we eat grass?” “Why do we eat with forks?” These questions likely helped neuroscientists, biologists, and anthropologists earn tenure by publishing deep scientific responses. These questions also leave me with a much different question of myself: Why don’t I still ask ‘why?’ question? Most likely, my sense of wonder and curiosity has taken a back seat to the demands of meetings, action items, and everyday operations. Yet, when I am able to take a few minutes to ask, I usually stumble upon an opportunity to improve.

Relearning to Ask Why

One time that many of us ask a great deal of questions is when we start a new job. Trying to learn the duties of a new position is stressful, but the questions I ask often highlight opportunities for the department to improve. Each ‘why?’ question gives my manager an opportunity to reflect on the answer and validate the reasoning. Without fail, I eventually receive an answer that I love to hear: “I’m not sure why. That’s just the way we’ve always done it.” To a process engineer, this is the low hanging fruit to improve the company. But how do we find those golden answers? In order to find improvement opportunities before problems erupt, you must ask questions without a reason to ask. This is hard, especially with a long To-Do list of urgent initiatives. Perhaps stepping back every hour or two and asking, “why am I doing this?” is the easiest way to get started. Eventually, it will become a habit of questioning processes and decisions. As many parents of three-year-olds will warn, the key is to always be optimistic and never become annoying.

The Goal Answer

The goal of your questions should be a response such as “I don’t know. That’s just the way we’ve always done it” or something similar. Alternatively, there may be a logical answer, but the circumstances have changed. For example, “Why do we use this supplier?” “Because when our company started four years ago, they were our neighbors and were willing to give us great credit terms.” Loyalty is important, but if your company has moved across the country and you need better prices, it’s probably worth some analysis.

Examples

The following is a table of questions I’ve asked before that may help you start thinking.

Question

Possible Improvements if Answer Unknown

Why do we use this specific supplier? Opportunity to save money, improve service, or improve quality
Why is our warehouse organized this way? Opportunity to improve efficiency or capacity
Why do we track this data on a spreadsheet and not in our database? Opportunity to improve information sharing
Why do we have our garbage picked up (or another service) so often? Opportunity to save money
Why don’t we look at this data when we make decisions? Opportunity to increase customer service, efficiency, or quality
Why is everyone in this meeting? Opportunity to maximize people’s time

Final Thoughts

Now, I do not recommend just questioning everything all day. Too many questions can sometimes hinder us from moving forward. I certainly don’t advocate questions to stir up commotion. Rather, I believe questions are an underutilized tool in a quest for solutions. Start asking a few unprovoked questions and see where they lead. Reach for quick wins with the limited time you have. The most rewarding questions fireproof processes so they’ll never erupt into emergencies, which will give you more time to improve your processes. If you find you just don’t have time to ask “why”, perhaps you can consider adding a three-year-old to your staff.

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