Post Lockdown: How to Survive?
Employees an Asset
Post lockdown, the singular aim of every organization will be SURVIVAL. Large, big, and small. In manufacturing and services. In other words, will we be able to service our fixed costs?
At an individual level (assuming you have a job), the burning concern will be job security. And rightly so.
Organizations claim that their employees are their biggest asset. At such testing times, would you discard your biggest asset?
I wish to add that employees are the only asset that appreciate in value. All others depreciate. Yet we see employees as a fixed cost!
Save the employees. Instead, address your chronic waste that is factored as fixed costs.
Solution
Our budgeting process has neatly legitimized chronic waste as a fixed cost.
Let’s start with purchasing as a hatchery for chronic waste. How do we purchase? Lowest cost.
Next, why do we have raw materials / components / sub-assemblies inventory? And a materials department to care for all this? The irony is that the materials department exists because we have suppliers who deliver from incapable processes - poor quality as well as delays in delivery. Inventory absorbs these shocks. A sort of assurance.
Do you relate to this chronic problem? Does it generate wasteful costs? Are these fixed costs?
The remedy: Work with A-Category suppliers to reduce their chronic process waste and thereby improve their process performance. Share the consequential gains as partners. Maruti does it.
Undoubtedly, the materials department will shrink, leading to a substantial reduction in fixed costs.
So what becomes of the redundant employees in the materials department? Simple. Train them on process capability and park them with B-Category suppliers, while on your payroll. Each such employee should deliver 1000 % ROI ….Return on Individual.
There are several more processes that guarantee wasteful costs: maintenance; recruitment; invoicing; etc.
Dr J M Juran referred to these wasteful costs as Costs Of Poor Quality (COPQ).
For post lockdown survival, organizations must halve their COPQ, in 12 months. COPQ is at least 30 % of total costs.
Random Thoughts
- Purchasing is a much revered department. Even top management keeps an eagle-eye on what we are purchasing, and how?
- We live in a cost-push world. Ultimately, our customer pays for the supply-chain incapability.
- 80 % of wasteful costs are generated by 20 % problems.
- Are we the richest nation in the world? We live with chronic waste in our private and public processes.
- Hospitals must address their wasteful costs.
- 2020 - India can make it. And make it better.
Director at HPGC Pvt Ltd , Associate consultant with Arete Solutions Pte Ltd & Arete Solutions Sdn Bhd.
4 年Very well said Dr Lulla. I remember Bajaj auto adopting the strategy of reducing their incoming inspection to minimum and deploying their QA engineers at suppliers premises to improve their processes. If u remember correctly, their TPM initiative was largely successful due to this initiative. Both, costs and quality improved, and it was a win-win.
Advisor Corp Compliance
4 年Man made machines but God made Man. So we know whose creation has got to be superior. It is so true that employees are the most valuable assets of any organisation. It is sad that humans lack respect for other humans in this world of self-serving humans. Organisations need to consciously encourage and develop the culture of empathy and appreciation for their employees.?
Senior Quality & Safety Assurance Specialist (Asia)
4 年ROI - Return On Individual , really worth. Need to put faith on your team, develope them, mentor & more importantly take care of them. There is no dout that organisation will get return more than expected. Value your biggest Asset ..employee??
Consultant and Trainer (TQM implementation, Six Sigma, Process Improvements, Lean, TPM, 5S, Kaizen)
4 年Thank you sir for such an article in favour of people/ employees who are assets and who appreciate. Appreciation should be measured by their learning and application in continuous improvement, not by number of years. In such a situation where permission is to operate with 50 % strength, identifying the multiskilked and real appreciated employee is also a challenge for leadership. Example of purchase process 's? COPQ and utilizing identified person to work with A category suppliers and remaining people start their real job of developing B category to A is with considering. Deploying similar approach in other processes rapidly is real survival task for leadership team . This? task is challenging for all the Quality practiceners also.
Content is KING!
4 年Every company says that Employees are their biggest assets. But still pay the CFO twice more than their HR Head. ??