UNLOCK YOUR RESOURCES WITH THESE TWO CONCEPTS ADDRESSING COSTS & STAFF SHORTAGES

COST ESCALATIONS AND STAFF SHORTAGES HAVE BECOME ALL CONSUMING TOPICS.?With few good answers.

Everyone is busy, stressed and stretched, leading to resignations and departures, resulting in less resourcing, and amplifying things further.?Meanwhile replacement employees, if they can even be found, raise cost even higher.?Many organizations are in a death spiral that seems to have no end in sight. But there are things we can indeed do to change the trajectory.

WE KEEP REACHING THE SAME CONCLUSION - WE NEED MORE RESOURCES BUT EITHER CAN’T AFFORD THEM OR CAN’T GET THEM.

With everyone busy and stretched to the limit, we draw the conclusion that we are giving it all we have.?And as individuals, assigned to our role and function, that is probably true.?What may not be true is that the system or organization is delivering the best that it can.

As managers, executives and leaders we typically see what is happening from two angles.?We see the top level, receive management reports and sanitized information, at a summary level.?And then we see the large failures, the customer complaints, or there are significant variances to objectives and goals.

WE MISS SOME REALLY BIG OPPORTUNITIES BECAUSE WE OFTEN DON’T CHALLENGE THE DETAIL OF HOW RESOURCES ARE APPLIED AND CONSUMED

In other words, there are inefficiencies in how resources are consumed all across the organization, and these inefficiencies are substantial, but they are very deeply hidden.

HOW SURE ARE WE THAT THE RIGHT RESOURCES ARE DOING THE RIGHT THING AT THE RIGHT TIME?

We may have a lot more residual capacity we can make available by rethinking how we work, by better defining who does what when, and yes, by using the technology we already have.?By rethinking how we work using this lens we can unlock capacity we already have and are paying for today.

CONCEPT 1 – PRIORITIZATION AND LOSS FUNCTIONS

There are two ways how work arrives into any process or to a resource:?Either the work flows or it is pulled from inventory.?

Flow is pretty straight forward, work arrives, it is worked, and the next piece of work arrives.?If there is variation in work arrival, or temporarily more work arriving than what can be processed, a queue forms and usually it is managed to FIFO – first in first out.?There is no prioritization, and it is not needed here as long as the queues don’t grow too much, we just process what is in front of us.?This is easy, but unfortunately, most work is and can’t be managed this way.

The second way is based on inventory.?Work stacks up somewhere, and ends up on one or more worklists or in physical stacks.?If you are managing accounts receivables, orders, patient cases, this is how it works.?You work lists.?And this creates a problem , and it is the opportunity:?What do you pick??Which list is worked when, which item is worked next??All too often we leave these choices to the well intended user, or a manager may provide some level of priority or assignment, but this approach guarantees that we are not using resources well.?It is a huge opportunity to do things differently.

The idea of loss functions is based on Newsvendor Analysis, a concept from operations management.?In its original form, and thus named appropriately, it solves an optimization problem for a traditional newsvendor buying a stack of newspapers in the morning, and selling the papers on a street corner throughout the day.?Any paper not sold at the end of the day has to be discarded and a cost is incurred with no revenues.?Any paper that could have been sold, but isn’t, because the newsvendor did not buy it in advance for resale, is a lost profit.?

Newsvendor analysis, through some arithmetic and statistics, calculates the best purchase quantity for the newsvendor to maximize profits.?And no, it is not the average demand for papers, it is usually many less papers.?In effect the algorithm balances the probabilistic cost of having too many papers and the associated loss against the probabilistic gain of selling a paper at a profit.?To solve the problem and get the optimal answer, we have to consider each paper “at the margin”.?We start with no papers and ask, is it worth buying the first paper.?Well, it is pretty much guaranteed that the paper will be sold and that a profit will be made, while the chance of having this paper left over and incurring a loss is negligible.?It makes sense to purchase the first paper for resale.?The same will be true for the second paper, and so forth.?As we add papers, the chance of selling them decreases, the chance of having a paper left over increases, and there is a point at which the expected cost of buying the next paper for resale exceeds the expected gain of selling it and we should not add the paper to our purchased stack.?

What does newsvendor analysis have to do with “right resource, right task, right time”??Everything.

When work is selected from inventory we make a choice, to work that particular item, and not another.?This is essentially the same as making a choice to buy or not buy an additional paper.?If we want to select optimally, we have to, mathematically, calculate a loss function, for each and every item in inventory that we could be selecting from.?There is loss associated with each item we don’t work, and the one to work is the one with the highest expected loss (assuming for a moment working each items costs the same, the concept can account for differing costs of working something also).?

Creating priorities should be based on math, arithmetic and statistics.?All work has an associated loss function that can be determined and applied to make sure we pick the best possible item to work next.?It is determined by figuring out total (not accounting) cost associated with a lack of work effort and applying that to the selection process.?

Just imagine the gains made when resources are applied to just the right work at just the right time.?This applies to the resources we already have in place, but now they are hyper focused on what matters most, and resourcing is applied exactly right.?Often times the technology to do this is already in place, it is a matter of tuning the workflows to unlock the resources.

Some quick words of caution:?One, loss functions can extend well beyond financial measures, there are loss functions associated with quality of life, customer responses or loyalty, or emotions and stress.?

There is no one size fits all, however, the discussions alone of how to determine what a loss function may look like will be enlightening and change how everyone works.?Second, there are some additional finer points, like batching and economic order quantity concepts that can also influence how to apply this concept.

CONCEPT 2 – RESPONSIBILITY DESIGN

Responsibility design deals with how we organize resource and create the right intersection of the tasks at hand, and using the correct resource to complete each type of task.?Many times we utilize constrained resources for tasks that other resources, and sometimes automation, can manage.?There are tradeoffs to be made, cultural norms to be overcome, and operating disciplines to be built to enable this.

We will provide a deeper look at CONCEPT 2 in another article.

IF YOU DON'T WANT TO MISS ONE OF OUR ARTILCES OR POSTS, SIGN UP HERE TO HAVE IT EMAILED TO YOU WHEN IT IS RELEASED:?https://reinventwork.com/blog?