Addressing Operational Issues and Problems in Business

Businesses want to create and deliver value to its customers and stakeholders. But not always things go as per plan. Operational issues and problems (OIPs) often derail many a plan and affect business performance. They render a business less profitable.

In any business the following, which we may refer to as core pillars of a business, form the basis of its existence, performance and growth. 

1. Mission, Vision, Strategy & Alignment
2. Investment, Infrastructure and Resources
3. Leading and Management
4. Structure, Systems, Processes and Policies
5. Execution of Work

Core pillars provide what a business requires. Right from defining business purpose to support and work, these pillars lend strength to the business. When these fall short of requirements they may then give rise to causes that cause operational issues and problems.

OIP Categories

Operational issues and problems fall under following five categories. The first three of them are primary and direct, while the last two are contributing to the first three.

1. Wastage issues
2. Delay issues
3. Quality issues
4. Control & Management issues
5. Work cultural issues

Though containing OIPs require constant efforts, companies cannot work on same issues again and again over their life time. Often symptoms attract more effort than the real problem. To remedy it and address core operational issues and problems we need to understand them better. OIP Framework is an effort in that direction

OIP Framework

The OIP framework helps businesses to identify and understand operational issues and problems in an effective manner. It helps businesses to understand and analyse OIPs before trying to resolve them. With the help of OIP framework companies can identify, understand and contain issues and problems that affect their operational performance in an effective manner. The structure of OIP framework is as follows

1  Categories of OIPs

1.1  Types of OIPs

1.1.1  Causes of OIPs

The general OIP framework contains 5 categories, 21 different types of OIPs and 54 different causes. OIP framework help businesses improve their operational performance 

How OIP framework works?

What may not be clear to people at the top may be clearer to people near the surface due to their proximity to action and other people. They often see, hear and perceive the happenings but not always air them. Not often they take it beyond their level, even if they air them. OIP framework ropes in these very people to capture the types and causes of OIPs and how significant and big they are in affecting the operational performance of the business. People are involved and facilitated to contribute in the following manner.

• Key people are identified (Managerial up to supervisory level)
• Orientation on OIPs and the method 
• Defining OIPs
• Discussing various categories and types of OIPs
• The OIP Framework diagram will be introduced and explained
• Understanding each of the listed causes and how they cause OIPs
• How to contribute using the framework?
• Workshop
• Identification of OIPs, their causes along with significance and contribution ratings
• OIP framework worksheet will be used

Combating the OIP virus

The identification of OIPs and their causes using the OIP framework is only a beginning. For a business to rein in OIPs it takes further efforts to win over them. The following diagram represents various stages in an OIP fight, which may have to be repeated periodically to keep the business OIP free.

Fig.1 - Stages in combating the OIP virus

Conclusion

A business free of OIPs would appear in every business leader’s wish list and may even top it. It may not be possible to get rid of OIPs completely but surely businesses can work towards achieving that dream state. Realistically companies can keep improving in their fight to eliminate OIPs. With every ground gained, and every inch protected, OIPs can be kept at bay and may even be eliminated eventually. The important thing is ‘constant fight against OIPs’. Never accept any part of it as given or acceptable. Always consider it to be something that should be done away with even if it is there for a very long time.

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To know more about the OIP framework and to avail the services of N.Balajhi, Business Consultant, you may contact him at nbalajhi@gmail.com

Analysing wastage

Every business model has a value proposition and to create this value cost is incurred. If the cost incurred shoots up disproportionately then the whole picture will change and could affect the profitability of a company. Value should be there for both the company and its customer. If either of them suffers then the value will be distorted. One aspect of poor performance that can alter the value significantly is 'Wastage'.

Anatomy of wastage

Wastage takes many forms and prime among them are

• Material Wastage
• Time wastage
• Knowledge / Skills wastage
• Technology wastage

These aspects are in turn caused by various operational issues and problems as given in the diagram below. This diagram (OIP - Wastage) is built keeping manufacturing industries in mind. It can however be easily adapted to other sectors with modifications where necessary. Even for the manufacturing industry, the diagram below can be expanded and enriched further. Click on the picture to expand it.


Deep analysis of each sub aspect will help us unearth deeper and finer reasons why wastage happens. But even at this level (as given in the diagram above) it is clear to us on what is causing different types wastage and where to look at for each of them. For example Rejects, Rework and high material consumption points finger to process and quality management while high inventory, idle stock and storage loss points to materials management. Outmoded systems and bureaucracy points finger at poor management practices while unused or poorly used technology speak about the work culture and people attitude. Like this each sub-element can be localised and further analysed for exact reasons why they happen. It will lead to uncovering the roots of different types of wastage. Once the root cause is identified and understood, solution to set things right would be much easier.

Less tangible wastage

Traditionally material and time wastage attracted much of management attention. Knowledge/skills and technology aspects of wastage rarely attracted time and energy of managements for the simple reason that they are less tangible. Even today some companies do not accord necessary importance to these two types of wastage. It is criminal, in a business sense, to use a comprehensive ERP system for just transactional purposes. But still many companies do that, spending millions on a ERP system but failing to use the analytical and informational power of it. Like wise there could be different technologies that are not fully utilised to their potential. This type of wastage is less tangible and hence escapes attention. The best way to measure technology wastage is to figure out different usages for which a particular technology is intended and how much of it are put to no or sub-optimum usage. By quantifying benefits missed we will get a fair idea on how much a company loses due to technology wastage.

Knowledge/skill wastage is another aspect that was long ignored but gaining importance now. People are more aware of the potential of Knowledge/skill inventory that an organisation in possession of and therefore emphasise on better utilisation of it.

Removing wastage

• Focus on all aspects of wastage
• Identify various forms of wastage in vogue, term and specify them
• Tolerate 'zero' wastage and make it known to everyone, clear and loud
• Collect data, analyse and interpret
• Implement necessary changes to systems and processes
• Link it to performance of units / departments / individuals
• Make wastage data known to all and invite suggestions to remove it
• Reward and encourage sharing of best practices, suggestions and actions
• Penalise inaction and continued poor performance on this front

Try to modify the generic OIP - Wastage diagram given above to reflect your own industry / company. Give me your feedback and inputs.