The Opinion Page
News and comments about the issues facing today's SCM and Inventory Management professionals.
Dr. Deming very much opposed management's habit of setting arbitrary production quotas for workers. One form of such quotas is often referred to as "piecework" - where the worker is paid by the piece that is turned out or produced.
Deming argued, of course, that pursuit of arbitrary quantity goals had nothing whatsoever to do with the quality of output. Indeed, in the pursuit of quantity, the worker would routinely sacrifice quality, taking short-cuts along the way. This would in turn lead to rework, rejects, and demoralization. He talks, for example, about the airline reservations clerk who has a quota of 25 customer calls per hour to process. What happens if her customers on a given day have some difficult problems? What happens if customers are slow in providing information? Her job then becomes taking 25 calls per day rather than satisfying the customer. Risky stuff.
While it may be true that piecwork and its relatives are less common in western manufacturing processes than they were in the mid-20th century (we tend to rely more on technology to perform the mundane tasks than we did 50 years ago), the practice remains ubiquitous in SE Asia and other low labour cost jurisdictions. Further, it still permeates many North American businesses within the business processes themselves.
I once worked as a Manager for a large retailer and distributor. Candidates had to pass an intelligence test (top 5% of the general population) to be considered for a position in this firm. This was because their distribution and procurement systems were exceedingly complex, and only the very intelligent, they argued, could hope to understand them.
It turned out that the procurement system was based upon a broad network of Excel and Access databases and tools, which attempted to articulate the myriad rules and regulations required to run the business. The Director was one of the authors of the "system", and was its fiercest defender.
One such tool was called the "buyout". A supplier would come to us with a price reduction proposal (limited time offer) or an announcement that the supplier's prices were about to rise. The buyout was an Excel-based tool which allowed us to quantify the appropriate purchase.
I could go on for hours about my philosophical opposition to the concept of forward-buys, but I will leave that for another day. Suffice it to say that it violated every principle that I have come to hold dear in the field of inventory management. I underline the word management purposefully. Nevertheless, it became our task as a team of inventory analysts, to churn out as many buyout spreadsheets as possible. Believe me, the buyout opportunities flowed like water over Niagara Falls.
Analysts were prohibited from challenging the credibility of the process.
Considering metrics like inventory turns was a waste of time.
Flowing products through the supply chain was never a consideration.
The process was deemed to be infallible.
Constraints such as warehouse capacity were ignored.
Speed was essential. Speed trumped quality every time.
All energies were directed at inputting the parameters correctly, forwarding the spreadsheet for approval, and doing these tasks quickly.
What a waste if human talent. The analysts effectively became pieceworkers where the rate of output was of paramount importance, where critical thought was of little value, and where suggestions for improvement were discouraged on the strongest terms.
Search not only within your production operations, but also within your business processes for examples of piecework. Are your employees producing great work? Or are they churning out numbers for their own sake?
John Skelton is the Principal Consultant and founder of Strategic Inventory Management.