Principles for Avoiding The Optimization Trap

For some months now I have been working through an explanation of The Optimization Trap.

So far, we have covered what the trap is, what it means operationally, and how our explicit and implicit assumptions influence our results.

For those articles please go to earlier editions of this newsletter.

So, how do you make sure that you don’t fall into the optimization trap in the first place and, if you do, how do you climb back out???

Over the next couple of articles I am going to take you through 7 principles for avoiding the optimization trap.??If you have fallen into the optimization trap you can use these principles as a ladder to help you climb back out.??If you want to avoid the trap in the first place use these principles as a check list for your own behavior.

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Principle #1: The Fundamentals Don’t Change

No matter what it is that you are trying to optimize there will be fundamental management processes and guidelines that you should apply.??

Always ensure that you are applying the fundamentals before trying more sophisticated techniques and avoid applying ‘silver bullet’ solutions.??

It is almost human nature that we are always looking for short cuts but just as a farmer cannot sow seed at the last minute and hope for a crop the next week, we cannot ignore the basics and then expect that some sophisticated tools will make up the difference, no matter how much we want them to.??It just doesn’t work that way.??

An example in the field of reliability is when we get too busy with the latest technology or gadgets but haven’t yet got the basics right such as the need to clean, lube, align and balance equipment.

With spare parts management companies often don't codify their spare parts management policies (meaning that decisions are ad hoc) and then expect that software will suddenly help them optimize their holdings on an ongoing basis. As I said, it just doesn't work that way.

Principle #2: Challenge Your Assumptions

The easiest way to fall into the optimization trap is to be ignorant of your own assumptions.??

It is your assumptions that set the boundaries of your thinking and thus the scope of your solution.??By challenging both your implicit and explicit assumptions you will ensure an appropriate scope and better solutions.??

You must ensure that you try to review the implicit assumptions that you are making.??The examples of constraints listed in the previous article are also examples of the implicit assumptions that people make when reviewing inventory.??Another assumption that is limiting in every situation is that improvement means more work, not less, and that there isn’t time for that. Actually, making improvement can cut the workload of future management.

Principle 3: Beware 100% Hindsight

It is very tempting to rely on hard data; after all, facts are hard to argue.??However, there are two problems however with data.??

First, it often doesn’t necessarily show you what you think it does.??

Second, it is all history, it tells us what was, not what could be.??

Relying on data can be like trying to drive the car with just the rear view mirror.??

You need to understand what the data truly represents, not what you think it represents.??For example, in organizations that allow the existence of uncontrolled ‘squirrel stores’ (unofficial storage of spare parts) the removal of parts and materials from the official store room will represent the needs of your team not the needs of your equipment.??In this case your official stores can become overstocked by as much as 100%!

Next time, I will work through Principles four to seven.

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