As someone who’s been doing project work for a long time, anytime I read something that makes me ponder, I take note.

Consider stop lights and roundabouts.

Stop lights are the dominant way that we use to manage intersections and flows of traffic for two roads that cross.  Have you ever thought about the assumptions behind this approach?

1. People can’t make decisions on their own approaching an intersection and need to be told what to do
2. The intersections must be managed with complex rules and technology with cables, lights, switches and a control center
3. A plan and logic must be determined for every scenario, thus requiring a solution with multi-colored signals, arrows, etc

Now, think about roundabouts.  In a roundabout, cars enter and exit a shared circle that connects travel in all four directions.  The assumptions for this method are significantly different:

1. People make their own decisions on entry and exit and trust one another to use good judgment
2. The intersections are managed with simple rules and agreements: give the right of way to cars already in the circle and go with the flow
3. Lots of scenarios happen, but co-ordination and common sense will be good enough to handle them

How about the performance of each approach?  Ironically, the roundabout outperforms the more complicated and sophisticated system on the three key performance metrics:

1. They have 75% less collisions and 90% less fatal collisions;
2. They reduce delays by 89%; and
3. They are between $5,000 and $10,000 less costly to operate/maintain each year (and, of course, function as normal during power outages)

There’s some pretty profound insights and learning’s from this comparison.  Obviously, if you’re involved in designing and implementing new thinking and technology, keep it as simple as possible and don’t try to automate every decision.

The other key insight from this example is actually more profound and speaks to the nature of work, innovation and teams.

I’ve been very fortunate to have led two fairly important projects with respect to retail Flowcasting.  This dichotomy between stoplights and roundabouts highlighted why we were successful and paints a picture for how projects, and indeed work, could be organized better.

About 25 years ago I was the leader of a team at a large, national Canadian retailer whose mandate was to design a better way to plan the flow of inventory from supplier to store.  We would eventually design what we now call Flowcasting and would implement retail DRP and supplier scheduling for the entire company, including all suppliers – a first in complete integration from retailer to supplier.

As luck would have it, our team would eventually report up to a Director, who was, like the team, a bit of a maverick.  Let’s call him Geoff.

What Geoff did that was brilliant – and consistent with the roundabout philosophy – was to give me and the team almost complete decision making authority.  I remember him telling me, “This team knows what they’re doing and the design is solid.  My job is to clear trail for you, shelter you from unnecessary bureaucracy and make sure you can deliver”.

And he did.  The team had virtually the entire say in all decisions that affected the design and implementation.  That’s not to say we didn’t communicate with Senior Management and give updates and ask for opinions – we did, it’s just we felt like we were given ultimate say.  It was exhilarating and, as it turns out, a model for project work.

Fast forward 20 years and I’m a consultant on another Flowcasting project – this time for a mid-sized national hardgoods Canadian retailer.

In another stroke of good fortune, the business sponsor for the team inherently had a similar view about work and how projects delivered.  Let’s name him Ken.

Ken’s operating style also gave the team the latitude to make the key decisions regarding design and implementation – of course he kept abreast of things and contributed his input and advice but ultimately we were in charge.  His role, he said, was to educate and help the Senior people make the journey.

As an example, I remember Ken telling me before our first steering committee meeting, words to the effect…”We’re not going in looking for approval.  We know what we’re doing and why.  These sessions are about educating and informing the group, and every now and then asking for their opinions and advice”.

It was how the entire project operated.

In one example that demonstrated the team’s authority, I remember one of the analyst’s on the team helping Ken change his thinking on our implementation approach.  It was a great example of the team working with psychological safety and proof positive that ideas were more important than hierarchy.

I’ve been doing a lot of reading lately on the future of work and how companies can innovate.  And what I’m seeing is that a model for work (day to day, and also project work) is starting to emerge.

It’s based on the principle of turning people into self-organized, self-managing teams and giving them the space, freedom and authority to work and innovate – treating them like small, micro-enterprises.

Principles I’ve been fortunate enough to have experienced in two of the most successful and rewarding projects I’ve been involved with.

You can manage, innovate and drive change using the operating principles of the stoplight or the roundabout.

Choose wisely.

 

Bad habits are like a comfortable bed, easy to get into, but hard to get out of – Anonymous

Friedrich Nietsche said “Most bad habits are tools to help us through life.”

This is especially true in the world of retail supply chain planning. When retailers embark upon implementing time-phased planning, it is tempting – from a change management standpoint – to tell people “this isn’t much different than what we do today” or “we’re essentially doing the same thing in a different way”.

While this is partially true at the 10,000 foot level, the things that are different are fundamentally different.

This month, we’ll explore a bad planning habit that is particularly insidious, because it is often treated as best practice in a non-Flowcasting world: Using the forecast as a “joystick” to control product flow.

There comes a time in every retailer’s life when product must flow further in advance of customer demand than desired, such as for capacity blowing seasonal peaks, planogram resets or promotional display setups.

In a reorder point world, there is little means to plan these types of things in advance. Replenishment rules such as safety stock apply “right now”, making it exceedingly difficult to do a lot of advance preparation in the system. This leaves 2 options:

1. Plan all of your safety stock updates in advance and use an Outlook reminder to update the values at just the right time to trigger orders when you want them to arrive.
2. Spend hours creating manual orders/transfer requests with the future ship dates you want – and pray that things don’t change a lot in the meantime that will require you to change those dates/quantities as it gets closer to execution time.

Neither very good options to be sure.

But wait!

There is a third option. By putting an artificial spike in the forecast at around the time you want product to arrive at various locations, you can ‘trick’ the system into flowing product when you want, but also take advantage of changing inventory levels right up until the lead time fence, thereby letting the ordering happen automatically.

To some extent, this makes sense in a reorder point world. Often, it can be the only efficient and automatic way to control flow. And it doesn’t do too much damage, because the forecast really only exists to trigger an order for an item at a location.

So what would happen if this approach was applied in a Flowcasting world? Not much: just unstable plans, incorrect capacity and financial projections and general chaos within operations and the vendor community.

That’s because, with Flowcasting, the sales forecast doesn’t merely drive ordering for an item at a location. It drives replenishment across all locations in the supply chain simultaneously. It drives capacity planning for the DCs and transportation department. It drives labour planning at the stores. It drives revenue, purchasing and inventory projections within the merchandising teams and finance.

Simply put, the forecast must always be representative of how much you expect to sell, where you expect to sell it and when you expect to sell it. And with the visibility afforded by a reasonable sales forecast, many options become available for controlling the flow of goods as necessary.

In other words, once you make the leap to Flowcasting, the bad habit of using your forecast as a ‘joystick’ to control replenishment is no longer  a ‘tool that helps you through life’ – rather, it is one of the quickest possible ways to make your life a living hell.