The heart of quality management is addressing every problem by repeatedly asking why. Why do we have this problem?  Why that cause? Why again? If you asked why enough times, what hidden solution could you discover?...John

Management idea

Our client's new product lines were well received with better than expected sales but the revenues didn't match. Why? Because of too many backorders. Why were there too many backorders? A myriad of reasons including one that surprised everyone but the Accounting Department. 

Inaccurate inventory was a major contributor. As new shipment containers arrived by air they were quickly unpacked, however it was days before the inventory system was updated. This lag aggravated the backorder situation. Why did it take several days before the inventory was updated?  Because it usually took a few days to get the exact shipping costs for each container.

Why was exact cost important? Because it enabled Accounting to do precise cost accounting.  Did the customer get a different price because of the precise cost data? No. Did it lead to better management decisions? No. This procedure made it easier for the company to do accounting but at a significant cost to Customer Support and ultimately, the customer. By switching to a "standard shipping cost" they were able to update the inventory the same day it arrived and have current, correct inventory every morning. Adjusting the "standard shipping cost" periodically kept the financial statements accurate so nothing was lost.

RUN WITH THE Big dogS™

Every week the strategic planning facilitators of Myrna Associates interact with the executive teams of the best managed mid-sized companies in America. 

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