We have noticed that in peak season, the biggest strain within the organization, is put on middle management. To understand the root cause and create a solution that takes away the root cause, we analyzed the control loop system we use.
There are three main levels in the company which are the top, the middle and foundation. The top is formed by the board of directors, the middle is formed by a layer of middle management and the foundation is where the actual value adding processes are executed.
In abstract the following is happening:
• The top is issuing instructions.
• The middle receives these instructions, process them, translate the instructions to meaningful Instructions in their area of responsibility, and issue instructions to the value adding layer (the foundation).
• In case an instruction issued to the value adding layer is erroneous, it is returned to the middle layer for correction.
• The higher decision capacity is utilized, the less accurate (more errors in decisions) decisions will be.
• In peak season, especially when new products are introduced, workload on decision making processes on mid-level are increased. This leads to decreased decision quality which leads to a higher % of decisions being bounced back from execution level to mid-level which further increases workload leading to lower decision quality, etc.
Next to having good standardization, supply chain synchronization (at the release of a new product a
matching supply chain is released as well), work preparation, a new product introduction process to minimize uncertainty and the need for additional decisions, three other concepts are interesting in this context:
Intent-based leadership: In intent-based leadership, decision power and authority are moved down the organization to where the information is. Giving control is supported by the development of technical competence, organizational clarity, and the environment in which the work is done to create a safe environment where people are valued, there is a sense of predictability, people have control, influence, and autonomy. This distributes decision making over the organization and therefore relieving mid-level decision making nodes which are the heaviest utilized/overburdened.
Active compensation: Within control theory, active compensation is a situation where there is a mechanism build into the hierarchy that checks how busy a decision maker is, and based on that selects which decision maker will get the issue assigned for decision and processing. This is not applicable in all areas, but in production or other operational departments where there is duplication of positions this can be applied (production, warehouse, maintenance, quality). Active compensation spreads workload and prevents that overload leads to vicious cycles and cascading collapses (where the collapse of one position causes others to be overburdened starting new viscous cycles and collapses).
Fusion cells: When production is fully utilized, focused on achieving output targets, and solving daily problems, we as an organization still must deal with incoming risks and new developments. In order to make sure we are still able to do this, Fusion cells are made which consist of people from different organizational parts who work together and share information to keep risk mitigation and innovation going on par with a changing environment.
Mosaic production: Mosaic organizations create a situation where flexibility is the norm; this is achieved through cross trained staff who are thus able to work at different stations (execution function), but also being able to do quality control related work (sensor function). Situational awareness is increased by real-time visualization of information to link all people together (kanban, job order, capacity, order status, scrap). Flexibility, competence, clarity, and situational awareness combined lead to a situation whereby default problems are able to being solved without the need to escalate everything up for a decision.