Conflicting Goals

One of the biggest challenges with Six Sigma is to align goals across the business. Take purchasing for an example. Their goal may be to get the best deal, but in doing so, they may cost the company many more dollars than they save.

One of our customers called and asked if they could still get the discount on 50 copies of the QI Macros, if they bought them 25 at a time. Curious, I explored why they didn't want to buy all 50 at once. The answer was simple: they could put two separate purchases of 25 on their credit card (below their limit), but if they went to 50 it had to go through purchasing which would take four-to-six weeks.

Could I have forced them to pay the extra $10/copy to avoid going through purchasing? Sure, because it would save them more than $10 in time. Does it cost me twice as much to fill two orders as it does to do one? You bet. Did I give them the deal anyway? I had to, because I despise idiotic bureaucracy.

How much are delays in purchasing costing your company?

Another state agency wanted to buy an enterprise license that would save them a significant amount over any of our other discounts. All they had to do was get purchasing to issue the order. A purchasing agent called us and asked if we sell our product through resellers. We do, but not our enterprise licenses. He didn't care. He then had to call three resellers and see if he could get a better price through them. So each of the three resellers had to call us to find out about pricing. Of course, they asked about a quantity half the size of the license. So we had to give them a heads up that purchasing was screwing around with all of us. Most of them admitted that the state's purchasing department had given them fits in the past.

Of course, then the purchasing agent fed these quotes back to the buyer, without mentioning that there was a reduction in quantities. So the buyer had to call us, thinking we were trying to finagle something.

How will this all turn out? I don't know because it all started two weeks ago when the customer tried to order 100 copies and we tried to do them a favor of upgrading to the lowest enterprise license which would save them money. Meanwhile, the people who need the software, aren't able to do anything. What did all of this churn cost the customer? More than the license is worth, I'm sure of it.

Is a foolish constraint in one department, like purchasing, driving the rest of your company to drink? Is it driving your suppliers to consider firing you as a customer because you cost too much to manage? Is micromanagement in one department killing your ability to perform in the marketplace?

Realign your measures and goals. Purchasing, for example, should be rewarded on speed to issue a purchase order and minimizing total cost. If they only count the pennies saved on each order and not the total cost to the organization of the delays involved, then they will optimize the goal set for them. This is true of any department.

What are the idiotic goals your department lives by that constrain the overall productivity of the company? Does Information Technologies take too many months to implement a software change? Does billing take too long to issue an invoice? Payments too long to issue payments causing collection calls by suppliers and delays in new shipments?

You're not a silo anymore. Get over it. Align the goals throughout the company to maximize your speed, quality, and profitability. Eliminate the ones that slow you down or hold you back.

Stop the insanity!

Rights to reprint this article in company periodicals is freely given with the inclusion of the following tag line: "© 2008 Jay Arthur, the KnowWare® Man, (888) 468-1537,"

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