SOURCE: Kay Sever | May 1, 2021
You know that your car’s battery is “connected” to your ability to travel. If the battery is not charged, the engine will not start and you can’t go anywhere. For that reason, a charged battery is a priority in your life. When you move into a new house, you will not have electricity or water until the utility companies “connect” your house to the grid system and water supply. You pay utility deposits to turn the power and water on so you can move in. You pay your monthly utility bills to keep those connections alive. Paying those bills is a priority in your life. When you go to the grocery store, you expect the shelves to be full because trucks, truck drivers and trucking schedules “connect” that store to supply chains for produce, canned goods, meats, milk, juices and snacks. If a supply chain is interrupted, deliveries won’t be made and shelves could be empty. You value the role these supply chains play in our ability to procure food and supplies when we need them.
All of these examples highlight the value of these “connections” and how they enable our mobility, comfort and even survival. We have high awareness of the importance of these connections in our personal lives and know that if we were disconnected from car batteries that enable travel, utilities that give us heat and water, and supply chains that bring us food and supplies, our lives would quickly change and we would be thrust back to life as it was in pioneer days.
What do these connections in our personal lives have to do with achieving optimization in companies?
In companies you depend on physical “connections” within the production system and value stream to create the final products sold to third parties and meet your budget goals. You track dollars spent for every function and hold managers accountable for spending levels linked to the budget. There are “disconnects” in the production system that you want to prevent because you know that losses are attached to those disconnects, so you are staffed to handle those disconnects if they occur. Here are two examples:
1) If a piece of mobile equipment (shovels, trucks, drills, etc.) or fixed plant equipment (crushers, mills, conveyors, flotation systems, etc.) has a breakdown (i.e., becomes “disconnected” from the value stream), you immediately make the breakdown a top priority for maintenance crews and expect them to get it fixed as soon as possible.
2) If the power is disrupted to a shovel or plant, all work linked to that shovel or all plant inputs and outputs stop because that shovel or plant became “disconnected” from the value stream. Your electricians are immediately called to find the source of the outage and restore power as soon as possible.
In both of these cases, you know that fixing the problem (i.e., reconnecting the equipment to the value stream) as quickly as possible will minimize your losses and restore the planned production levels and stabilize the cost stream that you planned for.
What about “disconnects” that you are not monitoring, that you have no dollars for, that you have not budgeted to handle… disconnects that are not on your radar because they not linked to physical equipment?
There are “organizational disconnects” that can exist for years without management’s knowledge. These “disconnects” negatively impact the way your people work together. Some are linked to management policies and procedures. Many cause cost overruns or production delays that may be even budgeted for. Why? Because the monetary impacts of organizational disconnects are embedded in historical actuals used for budgeting. Dollars linked to “organizational disconnects” are seldom quantified because the financial system was not designed for that purpose. Sometimes these disconnects cost as much as equipment breakdowns or power failures, but without numbers that expose these dollars, it is difficult for management to take action to fix these disconnects or prevent them from happening in the future.
Which brings us to optimization…
If leadership teams are not aware of their organizational disconnects and the value that these disconnects steal from the bottom line, they are incurring losses that they are not aware of, which means that, even with new equipment and systems, achieving optimization or “best possible” performance levels remains out of reach.
Thought for the month: Leadership teams are already empowered to fix organizational disconnects and would do so if they knew that these disconnects can cost as much as disconnects of equipment from the production value stream.
Kay Sever is an Expert on Achieving “Best Possible” Results. Kay helps executive and management teams tap their hidden profit potential and reach their optimization goals. Kay has developed a LIVESTREAM management training system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. See MiningOpportunity.com for her contact information and several training options for your team.
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