The Opinion Page
News and comments about the issues facing today's SCM and Inventory Management professionals.
Back in June of this year, I was preparing to write an article about fear and frustration in the workplace. As I was driving along a road close to my home, I had my radio tuned in, as usual, to Q107 in Toronto. I must have been aligned with the Tao that morning, because they played "Maggie's Farm" by Bob Dylan - what a fabulous expression of the ultimate toxic workplace. Here are the lyrics, but you should research the audio for a big kick (it has also been done by The Grateful Dead, among others, but Dylan's original is the best!):
Maggie’s Farm By Bob Dylan I ain't gonna work on Maggie's farm no more. No, I ain't gonna work on Maggie's farm no more. Well, I wake in the morning, Fold my hands and pray for rain. I got a head full of ideas That are drivin' me insane. It's a shame the way she makes me scrub the floor. I ain't gonna work on Maggie's farm no more. I ain't gonna work for Maggie's brother no more. No, I ain't gonna work for Maggie's brother no more. Well, he hands you a nickel, He hands you a dime, He asks you with a grin If you're havin' a good time, Then he fines you every time you slam the door. I ain't gonna work for Maggie's brother no more. I ain't gonna work for Maggie's pa no more. No, I ain't gonna work for Maggie's pa no more. Well, he puts his cigar out In your face just for kicks. His bedroom window It is made out of bricks. The National Guard stands around his door. Ah, I ain't gonna work for Maggie's pa no more. I ain't gonna work for Maggie's ma no more. No, I ain't gonna work for Maggie's ma no more. Well, she talks to all the servants About man and God and law. Everybody says She's the brains behind pa. She's sixty-eight, but she says she's twenty-four. I ain't gonna work for Maggie's ma no more. I ain't gonna work on Maggie's farm no more. No, I ain't gonna work on Maggie's farm no more. Well, I try my best To be just like I am, But everybody wants you To be just like them. They sing while you slave and I just get bored. I ain't gonna work on Maggie's farm no more
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Even the wind is controversial.
Advances in technology combined with environmental advocacy have presented Canadians with an array of solutions in pursuit of clean, renewable energy sources. Efforts to harness the power of sun, wind, and waves are well-intentioned, although each energy production option must be weighed in terms of its true costs and benefits. Electricity derived from the kinetic energy of wind using turbines provides one such alternative with considerable potential. On May 14 2009, the Ontario Green Energy Act (GEA) became law, with facilitation of wind energy as a centrepiece. The interaction of this legislation with communities, industry, and political interests has precipitated heated debate. The Empire Club of Canada hosted two keynote speakers in separate events this year. On April 8, Ms. Adarsh Mehta, Chair of the Canadian Wind Energy Association (CanWEA) delivered a speech titled “Wind Energy: Powering Canada’s Future.” An energetic rebuttal was delivered on June 2, by Mr. John Laforet, President of Wind Concerns Ontario. His speech, titled “Wind Generated Controversy: Ontario’s Green Energy Act,” challenged many of the notions advanced by CanWEA, the industry, and the GEA. Ms. Mehta’s mandate is to help formulate and guide wind energy growth in Canada. CanWEA represents the interests of over 460 members, including wind energy turbine manufacturers, service providers, component suppliers, contractors, and developers. Today, wind energy services about 2% of Canada’s electricity demand. CanWEA’s goal is to grow this contribution to 20% by 2025. This, Mehta contends, will translate to $100 billion in total private sector investment, half of which will remain in Canada, will create 50,000 jobs, generate $125 million in lease payments to landowners, and $125 million in annual tax and community benefit revenues. Governments need to provide stable, sustained, long-term policies to support wind energy deployment, argued Mehta, to enable Canada to attract global investment. Three key benefits of wind energy were outlined: more clean energy production, increased green employment opportunities, and economic benefits to communities through lease payments and tax revenues. John Laforet became involved in a grass roots movement that challenged the GEA from human health, environmental, financial, legal, and political perspectives. Learning that Ontario Hydro had planned to install 60 to 100 wind turbines 2 to 4 kilometres off the Scarborough Bluffs, Laforet joined a local residents’ group called “Save the Scarborough Bluffs,” opposing the plan. Subsequently, Wind Concerns Ontario was formed. “The Government of Ontario has yet to do any form of legitimate scientific assessment into the negative impacts of industrial wind development on human health or the environment,” stated Laforet. “When industrial turbines have been installed in a community, some people always get sick.” At least 135 Ontarians have reported a variety of illnesses thought to be linked to nearby wind turbines. Symptoms include sleeplessness, migraine headaches, and ringing in the ears. Laforet asserted that the GEA seeks to remove local democratic control from the planning process. Once a project has received Ontario government approval, he argued, the municipality is powerless to act. As such, roughly 80 municipal councils representing 2 million Ontarians have allied themselves with Wind Concerns Ontario. Laforet cited examples of ecological damage that follow installation of turbines. Evidence included clear cutting and blasting at the Norwester Escarpment and in Dorion near Thunder Bay, the plight of the endangered Blanding’s Turtle at Ostrander Point in Prince Edward County, and troublesome bird and bat mortality at Wolfe Island. Ontario’s feed-in tariff program (FIT), developed with the GEA to offer stable prices under long term contracts for green energy, requires the province to purchase electricity from industrial wind developers when generated. “Electricity must be purchased regardless of demand,” said Laforet, “at rates that are often 300% higher than those available on the open market.” He attributes much of the recent increases in electricity prices to the GEA, even in the face of decreasing demand. Pointing to a report from the CD Howe Institute that estimates the rate of subsidy for each “green” job to be $179,000, Laforet challenged claims to economic benefits. His position is that wind energy fails to enhance local economies as emigration of households and businesses erodes property values and the tax base. True social, ecological and economic costs and benefits remain unclear. Objective third-party analysis is required to move beyond rhetoric, and to determine whether the solution justifies the cost. I came across this article today - interesting perspective. I have often wondered why corporations frequently talk the good talk about hiring caring and ethical managers, then reward and promote the sociopaths. (I have my opinions, of course). Enjoy!
http://hbr.org/2011/07/why-fair-bosses-fall-behind/ar/1 On June 17, I posted an article about the toxic workplace. Here is a follow-up, to provide a few ideas about tools that might help to combat the fear that might be leading to suffering in your business.
Value Statement: Publish a Statement of Values as an integral part of the firm’s Strategic Plan. This provides moral clarity to the firm’s management team. The Value Statement holds managers to account when toxic practices creep into the business’ landscape. Employee awareness is critical. New Hires: Due diligence with respect to potential new employees should include an assessment of the person’s ability to exemplify company values. Orientation should clearly articulate expectations and responsibilities. The Employee Engagement Survey: A well-considered employee engagement survey, governed by strict confidentiality rules, allows employees to express attitudes and fears honestly. Results must be reviewed with equanimity. Develop and execute an action plan to address difficulties. For larger companies, a third party administrator helps ensure objectivity. The Human Resources Manager: The professional HR Manager can act as a strong facilitator, advocate, ombudsman and broker to resolve issues of fear. The HR Manager may act as an unbiased and thoughtful representative of the company who will seriously consider concerns of both employee and manager. The HR Manager can diffuse many small concerns before they become unmanageable. The Employee Assistance Program: Fear can provoke reactions that range from counterproductive to dangerous. It can manifest itself in afflictions such as depression, substance abuse, absenteeism, and antisocial behaviour. The company-sponsored EAP provides concerned employees with an outlet to express problems, and take positive steps toward resolution. An Employee Hotline: A company-sponsored 1-800 hotline allows employees and managers to report problematic behaviour and to express a wide range of concerns safely and anonymously. Issues revealed via the hotline must be acted upon with great urgency. The Joint Health and Safety Committee: The Ontario Ministry of Labour mandates the establishment of a Health and Safety Committee for workplaces employing twenty or more persons. An engaged and empowered H&S team does not focus simply on hardhats and forklifts – it can act upon a variety of counterproductive behaviours. The economic loss created by fear in the workplace is immeasurable. Employees who labour within a command-and-control management hierarchy are frequently motivated by threat and coercion. Not only does fear destroy any sense of team spirit and pride, but it also shuts down important communication channels, inhibiting the flow of creative, constructive, and corrective ideas upstream.
Just how might the front-line employee fall victim to fear at the workplace? In the 1992 classic movie Glengarry Glen Ross, Alec Baldwin masterfully portrays the character Blake, who motivates a small real estate sales staff through fear and intimidation. The results of Blake’s sales contest, where salesmen placing below second place get fired, are tragic. Indeed, failure is guaranteed and engineered into the process. The characters endure humiliation, desperation, deceit, theft, and scandal as they grasp at dignity and struggle to salvage their jobs, by any means necessary. Workplace fear and intimidation might not play out as dramatically as it did in Glengarry Glen Ross. Nevertheless, it is real and equally menacing. The weapons of fear include threats, harassment, exclusion, and unattainable goals. The fearful employee worries that he will lose his job, be demoted, be denied salary increases, be assigned menial tasks, or otherwise be constructively dismissed. Working in a constant backdrop of a fearful environment, the employee may become withdrawn, vengeful, depressed, abusive, or even violent. Quality Management guru, the late Dr. W. Edwards Deming, included “Drive Out Fear” as one of his famous “Fourteen Points” for achieving total quality in business. Deming was concerned mostly about the kind of fear that prevents the average worker from finding out how to do the job correctly. He worried about the fear that prevents employees from asking questions, from rocking the boat, from suggesting new ideas, and from challenging the status quo. "Fear takes a horrible toll,” said Dr. Deming. “Fear is all around, robbing people of their pride, hurting them, and denying them a chance to contribute to the company." In the 1960’s, Douglas McGregor of MIT’s Sloan School of Management developed what came to be known as “Theory X” of organizational behaviour. The Theory X manager has little respect for employees. He considers them to be lazy, work-averse, and motivated only by self-interest. He feels threatened by the employee who asks too many questions. As such, the Theory X manager institutes a system of close supervision and tight controls, bolstered by a culture of blame. Within this punitive environment, employees learn to mistrust management. They keep quiet. Such a tyrannical manager may be successful in the short term, but fails dismally in the long haul, leaving behind him a trail of destruction and shattered lives. McGregor found that this approach is a major cause of diseconomies of scale in large businesses, and proved it to be counter-effective. Valuable employees may simply leave the toxic workplace. This is terribly costly to any enterprise. Human Resources expert Susan M. Heathfield of Michigan State University offers advice in her “Top Ten Ways to Retain Your Great Employees”. Gathering data from exit interviews, Heathfield proposes antidotes. She has concludes that in order to retain great employees, firms should:
The enlightened manager encourages participation and input. She fosters an environment of learning and interaction. She is self-confident, but not narcissistic. She puts the welfare of the company ahead of her personal aspirations. She is a team leader. She treats her staff’s opinions with respect. She entrenches processes that allow suggestions for continuous improvement initiative. She knows how to answer questions about methods and procedures, or knows how to get the answers. She takes great joy in seeing her employees grow, get promoted, and get raises in pay. She builds enduring teams of people who love their work. She will succeed. Recently on Linkedin, the following question was asked:
Team, any suggestions on how to error proof the pick / ship process manually or with RF. To ensure the customers always gets what he has ordered. This was my response this morning, for your interest and amusement: An appropriate answer depends very much upon the nature of the product(s) being distributed, as well as outbound shipment volumes and frequency. This submission will talk about a process that has a heavy manual component. I agree that verification of outbound shipments is a very important step. I used to manage (as Operations Manager) a small (40,000 sq foot) warehouse that stored and distributed finished goods of very high per unit value. The goods were fragile as well. We had a high sku-count (about 7,500 sku's), large customer data base, and our WMS was a combination of manual pick/pack/ship with a bespoke computerized customer service system that generated the picking documents. It was very "1980's", but we succeeded in achieving over 99.5% inventory record accuracy, high labour productivity, and virtually no customer complaints regarding mis-shipped sku's. One of my warehouse manager's key responsibilities was performing a visual verification of case contents before the cases were sealed and manifested for shipping. Two of our best full-time staff assisted him in this process, when required. He was on the floor a lot (over 75% of his day, typically - no hiding in his office) and he was obsessed with accuracy. But, inspection does not ensure Total Quality, and Dr. Deming's Point #3 of his Fourteen Points is "Cease Dependence on Mass Inspection." I agree with Dr. Deming wholeheartedly, and even he granted that some exceptions do exist to this rule. In the spirit of Point #3 we succeeded in building quality of processes upsteam. If we had failed to do this, my warehouse manager would have been overwhelmed with mistakes at the verification stage. I believe that it is important to have a clear and unambiguous product numbering hierarchy. We dealt with all manner of colours, shapes, and sizes. The product's UPC code, or other numerical identifiers, had to describe the item precisely. It was not good enough to describe a product as being "blue". Was it "sky blue" or "turquoise" or "teal" or "royal blue" or "midnight blue"? We had a code for each. Everyone from customer service to order entry to warehouse operative had to understand the importance of the product codes. Our order entry staff were well-trained, so that errors at this stage were minimal. If an error did occur, we could easily trace it back to the order-entry operative and take corrective action in that area (was it human error? Did the customer make a mistake? Is some re-training required?). Warehouse picking staff were well-trained and cross-trained in other areas (e.g. packing and shipping). We favoured full-time employees, and literacy (read, write, speak) in English was a prerequisite. We found it difficult to train part-time and temporary employees to a sufficiently high state of knowledge to ensure quality. If any ambiguity existed, the order pickers were unafraid to ask questions. While we did not embrace a formal cycle counting routine in our warehouse (I very much recommend it, though) we did use some of the corrective actions suggested by cycle counting. We investigated, for example, any instance where a customer order had passed through the order entry predisposition stage onto the warehouse floor, but the picker could not locate any stock. This would trigger a root cause investigation. So, I suggest that verification in combination with sound upstream processes will lead to success in shipping accuracy. As a quick follow up to my immediately previous posting, here is a very short glossary of terms.
Carbon Footprint: The total set of greenhouse gas (GHG) emissions caused by an organization, event, or product, measured using this formula: carbon footprint = CO2e (GHG released x potency) x volume. Carbon Dioxide Equivalent: CO2e is a common measure of greenhouse gases which takes into account each gas’ potency relative to carbon dioxide. Methane, for example, is 25 times more potent, nitrous oxide is 300 times more potent, and hydro fluorocarbons are several thousand times more potent than CO2. The Daly Rules: Three rules of sustainability attributed to Herman E. Daly, former Chief Economist for the World Bank: 1. that renewable resources must not be used at a rate faster than they can regenerate; 2. that non-renewable resources must be used no faster than renewable substitutes can be put into place; 3. pollution and wastes must be emitted no faster than natural systems can absorb them, recycle them, or render them harmless. Enterprise Carbon Accounting (ECA): A life cycle assessment focused on carbon emissions. A product’s or process’ carbon footprint is aggregated throughout the supply chain. Greenhouse Gases: The most impactful GHG’s include carbon dioxide, methane, nitrous oxide, and the group which includes hydro chlorofluorocarbon, hydro fluorocarbon, and per fluorocarbon. Kaizen: The Japanese term for improvement; continuing improvement involving everyone from managers to front-line workers. In manufacturing, kaizen relates to finding and eliminating waste in labour, machinery, materials and production methods. Lean Manufacturing: A philosophy of production emphasizing the minimization of the amount of all resources used in various activities in an enterprise. Costs are reduced through relentless removal of waste and through simplification of all manufacturing and support processes. Muda: Muda is waste. In lean manufacturing, there are seven categories of waste: overproduction, waiting, transportation, processing, motion, inventory, and scrap. Waste Hierarchy: The ranking of various waste management options from most favourable to least favourable vis-à-vis sustainability. The ranked options are as follows: prevention, minimization, reuse, recycling, energy recovery, and disposal. Often profound answers may be found by examining the simplest of business models.
Hoping to earn some pocket money, siblings Jim and Patty secured a job delivering newspapers to houses in their neighbourhood. Supported by their parents, their new responsibilities educated them about small business management: exposure to customer service, cash management and bookkeeping, logistics, and materials management processes was invaluable. In time, the children gained insight into advanced business virtues such as Lean and Green, learning how a business can benefit by embracing the value of sustainability. Initially, Jim and Patty worried that newspapers provided an example of poor environmental stewardship. They believed that the industry consumes trees and wastes energy, understanding the emergence of the paperless internet as a key source of newsworthy information. While their parents were pleased with Jim and Patty’s environmental acuity, they wanted the children to know that there were many ways for them to help reduce the noble newsprint industry’s carbon footprint. The children’s mother, a foreperson in the automotive industry, explained to the children the basics of a new way of thinking in manufacturing called “Lean”: “Lean aims to reduce or eliminate waste,” she said. “Furthermore, it works to reduce the use of resources, lower the space, handling and energy required to do a job, and to increase output per resource used.” Their father, a developer of solar alternative energy technologies, commented that Lean Thinking is consistent with Green. “The Reduce, Reuse and Recycle mantra is very important and remains relevant. Disposal of materials is a last resort. It is better to prevent waste, rather than handle it once it exists. ‘Lean’ can help us with that.” Jim and Patty got busy listing ways to assemble and deliver newspapers in a Lean/Green manner. Lesson 1: Lean/Green processes can please consumers by catering to their unique needs, while reducing waste, saving materials costs, and protecting the environment. The children surveyed their customers. Does each customer have a mailbox? Does she have a covered porch, protecting newspapers from rain and snow? The analysis helped the children plan their use of assembly materials, such as rubber bands and plastic sleeves. Rubber bands are only needed to wrap papers to protect them from the wind. Customers with covered mailboxes don’t need banded papers. Plastic sleeves are needed only in foul weather, and only for houses with no porch protection. Three flexible assembly processes emerged: flat, banded, and sleeved newspapers. Lesson 2: A Lean/Green approach saves energy, money, and avoids pollution. Jim and Patty deliver papers by walking, rather than by car. They therefore avoid using gasoline unnecessarily. Further, sorting papers properly into the delivery wagon according to route and customers needs saves delivery time. Conflicting goals did arise. Walking the route takes more time than driving. Adding time to a process conflicts with Lean philosophy. The Waste Hierarchy and Daly Rules helped guide the children. They chose to favour pollution prevention over faster delivery time as the predominant objective, appreciating that they had some surplus “slack” time available each day. Opportunity cost of time was minimal. Further, walking introduced no risk of late deliveries. Lesson 3: Embracing Lean/Green avoids unnecessary production and logistics costs, improves public relations and can have beneficial side effects such as improved safety and security. Jim and Patty react quickly to customers who ask that deliveries be stopped, either permanently or for vacations. They dislike losing customers, and they do everything they can to retain clients. Sometimes customers’ tastes and needs change for reasons beyond their control. They stop such deliveries promptly to avoid delivering papers unnecessarily. Household security is enhanced for the family on vacation. They avoid delivering or scrapping unwanted papers. Changes are communicated quickly upstream to the front office, and production is adjusted. Lesson 4: Scrap is often inevitable. Try to eliminate it. If it occurs, re-use it, or recycle it. Any scrap materials, such as newspapers or flyers that have been damaged by rain or snow and that cannot be re-used, are recycled. Contributions to landfill are virtually zero. The Ultimate Lesson: Being Lean/Green is a journey, not an end. In the spirit of continuous improvement, enlightened businesses of all shapes and sizes - from sole proprietorships to multinationals - are constantly searching for ways to realize new efficiencies, to affordably improve customer satisfaction, to gain new customers, and to increase profit. Lean/Green facilitates these pursuits, in sustainable ways. Like many seismic shifts in social priorities, the pursuit of responsible environmental stewardship is vulnerable to exploitation by unethical commercial behaviours. Unscrupulous firms will try to convert demand for green virtuousness into profits, unashamedly using snake oil sales and marketing techniques. The term “green-washing” describes the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.
California-based TerraChoice advocates meticulous ethical standards in environmental marketing. While applauding the emergence of “green products” in the market today, it warns against deception. They articulate the Seven Sins of Green-washing:
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AuthorJohn Skelton is the Principal Consultant and founder of Strategic Inventory Management. Archives
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