Monday, October 31, 2011

What's this got to do with TOC?

Well, apart from the fact this costume is real cool and kinda freaky, I think it shows us the way we should be thinking when taking on the six questions of new technology (well, at least 1-5):

Question no. 1:  What is the Power of the Technology?

Question no. 2:  What current limitation or barrier does the new technology (or product) eliminate or
vastly reduce?

Question no. 3:  What usage rules, patterns and behaviors exist today that consider the limitation?

Question no 4:  What rules, patterns and behaviors need to be changed to get the benefits of the new

Question no 5 – later version:  What is the application of the new technology that will enable the
above change without causing resistance?

Question no 6:  How to build, capitalize and sustain the business?
(I copied the questions from Eli Schragenheim's artice "Using the Six Questions by Dr. Goldratt on Riddle no. 3")

Should I elaborate?

Happy Halloween and enjoy the treats

Sunday, October 30, 2011

Shop floor insights - freinds and foes

TOC for retail is based on the statistical characteristics of forecasting. Specifically the fact that the more general the forecast - the better fit you will get between results and reality. The other side of this coin is, of course, that the more specific the forecast - the worse fit you'll get. Therefore TOC calls for holding inventory centralized and moving it closer to the end costumer as late as possible.
Pushing the merchendise into the final storage rooms earlier creates local shortages and surpluses. These increase the workload for the sales staff, of course. Since they can never know what is available and what is not, so they are always checking. Another very significant impact this has is the increase of the customer's percieved risk. Since you can't know ahead of time, even when you know for sure the SKU is part of the store's stock, if it will be available in that store at that moment and if they will have the size and color wanted.
As I described in earlier posts, the chain I worked for pushed the inventory forward as soon as possible. I am sure this seems logical to them, after all - if the item is not in the store it can't be sold, so that seems like the best place to store you inventory, no?
The stores also had access, through the central database, to the tracked inventory of all other stores in the chain.  This data is used to reduce lost sales by cross shipping from oher branches. There were always calls from one branch to the next requsting the relevant SKU (though we were always describing, not using the codes) and issueing a cross shipping. I don't think there was a morning we did not have packages of cross shipments coming in AND going out.
A couple of things I noticed. First off - we never checked the warehouse inventory. This makes total sense in retrospect, since the warehouse was automatically replacing any shortages we had if there was stock. So, if the warehouse had it, we knew we'd get it. Even surpluses were rarely sent of to the warehouse. Everything was worked out between the stores. Second - cooperation between shops was choppy at best. Finding the garment you need to get the sale was always a good thing, but sending off a garment wasn't such a hit. We were directed to limit the outgoing shipments to those garments we had enough stock off and the ones that were not selling well. When a branch "overdid it" the manager would stop answering their calls and direct us to do the same. Then, if one of us inadvertedly did answer, the manager of the other store would give that poor bastard such a talk to.....
From my point of view, as a simple sales clerck, this was a no win situation. If I help out the other store - my manager gets mad at me, if I don't help them I have the phone going on all the time and at the end they manage to get a hold of us and they are mad at me.
Taking the owners point of view this whole situation is not in their best interest, either. Don't you think?

Friday, October 7, 2011

Shop floor insights – winners and losers

One of the pillars of TOC is the "win-win" concept, which states that for every conflict a solution in which nobody loses is feasible (Please see the comment I got on this from Avraham Mordoch below). This stems from the very basic assumption or axiom that win-lose situations can't exist in real life. Compromises can exist only when the compromise is acceptable for the compromiser and in most cases both sides need to compromise to make the situation acceptable. When a compromise can't be achieved there are only two options: either everybody wins or everybody loses. No other option exists.
This axiom should be taken into consideration when creating any kind of incentive pay scheme. If your scheme is based on "one man's gain is another man's pain" you are setting yourself up for disharmony and loss.
So what happens when people get paid a commission based on their sales? As far as I could see we got less service to customers as it is considered bad manners to step into another worker's sale and we got quarrels when such step in accidentally happened. Sometimes even heated quarrels. Between people who have to work together day in and day out. When I asked about this I was told that when we compete against each other (the data was easily reviewed at all times) we become more motivated. If we see the other sales clerk has more sales, we'll push harder, if we see the other store has more sales – we'll push harder. But, as far as my logic goes – people buy what they want. Sales clerks have an impact, sure, but it is limited. If someone has lit a fire under me, the natural reaction will either be to push hard, which will turn off the buyers, or clam up, which will reduce service to the buyers.
I have to say that I find I get the best service at restaurants that use a tipping pool – all tips go into the pool and are then split between the entire shift staff. This means all the service staff has a vested interest in my pleasure and cooperation is beneficial for all. I am sure that the team members know who is free riding on them and quickly straighten such abusers. When tips are personal, service can still be great, but it is at risk.
My suggestion to that retail chain - pay comission based on store performance, then you'll have a team working together.