Early on in the news about COVID-19, the term ‘flattening the curve’ became one of the most talked-about topics of this pandemic. We heard it was essential to prevent the hospitals from being overrun and was needed to keep many people from dying. In an emergency like this, there are only a few key levers. First, an increased overall capacity to handle a peak: (build temporary hospitals, utilize other sites as hospital wards such as stadiums, the mobilization of hospital ships, plus other efforts) and second, reduce the rate of infections (demand) by implementing stay at home policies, social distancing, the wearing of masks, etc. Although our combined efforts are creating a flatter trajectory, we are now faced with the challenge of keeping the curve flat and trending downward as we reopen the nation.
Why was this flattening of the curve so critical? Because all the models showed that a spike in infection would quickly overwhelm the resources (hospitals, doctors, ventilators, PPE, …) available to deal with them. As those that manage a business every day understand, spikes in volume/demand are some of the most challenging situations to handle.
As discussed in our first blog, ‘Facts Matter Data Driven Management’, facts are crucial to creating accurate models. For now, let’s assume the data feeding the models is correct. So, we can ask:
How can we address the spikes?
What we can learn from this?
How can we apply it to our businesses?
The Problem:
The underlying problem that has required all of the extraordinary actions is the spike in demand – unevenness. In Lean, Unevenness (Mura) is defined as one of the three core sources of inefficiency (along with Waste (Muda) and Overburden (Muri)).
First, Unevenness causes Overburdening, we ask people to work faster, harder or longer than the system was designed for. When faced with Overburdening the reaction of workers is very predictable, first they give up quality (have to work too fast to do it right), then goes safety (start taking short cuts to work faster) and finally frustration increases and morale plummets.
The typical next reaction is to add as many resources as you can, to cover as much of the spike as possible. While these new resources reduce some of the overburdening (and its negative effects), it causes additional Waste.
Examples of this Problem in Business
A spike in demand that breaks through your capacities >> causes Overburdening in the system
We often overburden our operations with little understanding or concern as to the implications. This is typically caused by a focus on volume without regard to effort. Sometimes we create this condition by unrealistic due dates, allocating too few operators, or by not having enough of the right equipment. Sometimes we plan resources based on “the average,” but on a daily basis we do nothing to operate at “the average”. If we allow Overburdening to become the norm, it negatively impacts us both internally with our associates and externally with our customers. Internally this results in unsafe conditions and frustrated employees. Do we hire frustrated employees, or do we create them?Externally the customer pays the price with uneven lead times and with quality issues – shortages, damage, wrong items.
>> With the COVID-19 Crisis we see an example overburdening with the hospital workers. They are working excess hours to take care of us. This results in exhaustion, stress and an overall drop in morale (complaints and emotional breakdowns). The inventory shortages and need to “hurry up” causes major safety risks by relaxing policies (reuse of PPE, etc).
We react to an overburdened system >> by adding resources
We often resort to adding resources (people, equipment, processing space) when our process is overburdened.This
can be effective in the short-term, but when done without a plan or if it’s allowed to be the long-term answer, it will become a source of inefficiency and added cost. Think about those times you have added resources to get caught up on a backlog – travel aisles are congested, more exceptions are created, equipment is not charged for the next shift, the wrong equipment is used, personnel added may not be as proficient, etc.
>> For example, in the COVID-19 Crisis, we are buying and making as many ventilators as possible. This is all being done in isolation without a coordinated effort. While this may seem like the only solution at this point, there are supply chain solutions that can better allocate resources and prevent over purchasing of resources. If a reserve pool were established at the National level (instead of by each state), FEMA could use pull-based distribution practices to distribute the units as needed (similar to what is already done frequently when responding to hurricanes and flooding).
This unevenness causes negative loops of Overburdening, Adding Resources, and Creating waste. Once these extra resources become the norm, and the volume wanes, they are used less than optimally. What happens with the decrease volume if we don’t allocate our resources correctly? The operation gets used to this slower pace (caused by excess resources). The next time the peak returns, it gets harder to return the previous performance.
The Solutions:
Not all spikes can be eliminated, but they can definitely be smoothed out without negatively impacting customer requirements. The key concept to apply here is part of the Lean principle of Just In Time – Level and Balanced.
When we see Unevenness in business there are a number of things, we can do to address it:
The first effort should be to Level (Heijunka) the Volume. This can be accomplished by:
Engaging our partners to understand true demand and priorities: many times, we can shift volume. The high-volume customers become a big opportunity because they benefit the most from leveling.
Improving Scheduling: taking control over appointment times and order release times allows you to level the workload
Increasing order / delivery frequency: this can smooth volumes and reduces the impact of forecast errors; getting you closer to real demand. This will also level volumes across the entire supply chain as it works to reduce the “bullwhip” effect.
Where we can’t level the volume,
We attempt to balance the workload and capacity:
Shift capacity to the peak periods
Shift workload - lower priority work to lower volume times
Expanding the operational window
Create a cross functional workforce – This includes ensuring operators are cross trained and that the work structure allows for easy and flexible people movement
If the new demand is real and reoccurring, the Long-Term solution is to:
Increased capacity through continuous improvement
The solution in action:
An example of Level and Balance:
Actions taken:
Define/Collect/Analyze Volume to Examine Trends and Understand Variability
Create schedules to shift volumes (workload planning)
Standardize Processes
Implement Workforce Allocation
Continuous Improvement to increase capacity and refine the process
Level and Balance is a key element of JIT Operations (along with Pull and Flow). We will discuss this further in the next blog – JIT is the Answer, Not the Problem
Questions:
As a result of the pandemic, some operations have experienced extreme spikes in volume, others have seen a dramatic drop-off.
Will there be a surge in your business after the shutdown due to pent up demand or as a result of your capacity limitations?
Are there plans in place now to effectively handle this surge? How will you implement more level and balance to address the surge?
Do you have the tools and the know-how to shift the workload and capacity?
Will there be a window of opportunity to build your capacity through continuous improvement before you return to surge volumes?
What can you do now that will help you come out more competitive in the future?
If Lean Quest can be of assistance reach out us and we can create a plan together to address your needs.
Comments