Theory of Constraints Handbook - James Cox Iii [278]
A common dilemma that many organizations face on a daily basis is the conflict between Sales (top side) and Operations (bottom side) shown in Fig. 14-10.
Sales versus Operations Conflict Cloud
A major customer comes to the salesperson and wants to place a very big order, but it is in a much shorter lead time than currently quoted. The salesperson’s job (increase sales) is to book orders for the company to bring in revenue. To do this, he must commit to this short lead time (which disrupts the schedule). On the other hand, Operations has to respond to making orders for all customers (effectively flow product). Operations is continually pressured to expedite parts through the system and has numerous other orders already late or near late. Flow is constantly being disrupted by changes in the schedule (therefore, Operations wants to maintain the schedule). If you have Sales and Operations in your system, you’ve probably experienced this or some derivative of this conflict. So what’s the right answer? Generally, people in Operations will fight for stability in the schedule and people in Sales will fight equally hard for the additional sales opportunity. Does this conflict have anything to do with a fixed performance measure within these departments (i.e., commissions, efficiencies, etc.)?
A market constraint dictates one set of assumptions and will direct the solution in one direction, and an Operations constraint dictates another set of assumptions and will direct the solution in another direction. Without this knowledge, there is no way to properly resolve this cloud. Even if you can resolve the conflict, with fixed metrics driving Sales (sales revenues, sales quotas, commissions) and opposing metrics driving Operations (DDP or overtime, for example) departments independently, there is no way to resolve this cloud to everyone’s satisfaction. However, with visibility of the constraint’s current load, Sales can be an active participant in both managing sales to exploit the constraint capacity as well as prioritizing the use of scarce capacity when the constraint is overloaded (market spike) in the short-run. A good BM system dramatically reduces the conflict in the organization by giving everyone the same view of the state of the logistical system and tying all of their measures/actions to the global metrics (ROI or RACE).
FIGURE 14-10 Sales versus Operations conflict cloud.
Should We Ever Be Satisfied?
We believe that an organization is either growing or dying and therefore should never be satisfied with maintaining the status quo (however healthy the current organization is). The problem is that targets, standards, and metrics are often assumed to have an end point—a state of “being achieved”—and therefore do not promote ongoing improvement. A reference environment that we can use to clarify the problem comes from a professor examining young students’ responses to different forms of expectation and measurement of their academic performance.
Dr. Carol Dweck, a Stanford psychology professor, has been researching the subject of learning and motivation for years. In a series of experiments, Dweck tested the effects of praise and acceptance of achievement (promoting fixed intelligence) versus the effects of praise of hard work and encouraging an interest in tackling adversity (promoting growth). Her thesis concluded that students who hold a “fixed” theory are mainly concerned with how smart they are—they prefer tasks they can already do well and avoid ones on which they may make mistakes and not look smart. In contrast, people who believe in an “expandable” or “growth” theory of intelligence want to challenge themselves to increase their abilities, even if they fail at first.