Business a Pipeline to Profits?
By Jay Arthur
Is your business a "bucket brigade" or a "pipeline to
profits"? A bucket brigade is a business that spends too much time
in fighting fires and crisis management. A bucket brigade usually
has a backlog of work and customers complain about how long it takes
to get what they need. Does this sound like your organization?
Unfortunately, most businesses look more like a bucket
brigade throwing water on a fire than a pipeline to profits. If
you’re still not sure where your business falls, here are a few more
elements that describe a typical bucket brigade:
employees or computers fill buckets (e.g., inbox, e-mail,
workstation, vehicle, etc.) with work. It doesn't matter if the
bucket is a carpet cleaning truck, a salesperson's order file or
a hospital waiting room; it's a bucket.
proceed to work each piece in the bucket, filling an outgoing
bucket with partially finished work to be sent on to the next
workstation. The first piece in the bucket has to wait on the
last piece in the bucket before moving on.
They also fill
another bucket with pieces that have to be reworked in an
earlier step. Someone on the bucket brigade periodically picks
up these buckets and carries them back to an earlier workstation
to be processed. This rework inhibits the workflow.
workstations are faster than others, buckets pile up at some
workstations waiting on the next step in their journey. This
causes more delay. If a printer, for example, can print one
million magazines in a day, but only bind 200,000, the other
800,000 have to be stored for four days and moved more than
once, increasing the chances for damage.
Because of the
start-stop motion of the bucket brigade, inventory has to be
maintained everywhere along the line: raw materials, partially
finished work, rework, finished goods and scrap.
This bucket brigade method of running a business takes too
much time and puts any business at risk. It makes it difficult to
change the schedule of production. How did it get this way? It dates
back to lessons learned as children.
The Myth of
Economies of Scale:
If you were growing
up in the 1950s, you learned about Henry Ford's mass production line
and economies of scale. Economies of scale suggest that if a
factory can produce 10,000 identical black Model-Ts, it would be
cheaper than producing 10,000 custom cars. While this was true in
the 1920s, in the 1950s Toyota was perfecting a way to produce
10,000 custom cars cheaper than 10,000 mass-produced cars.
In this century the new economies are economies of speed.
The fast eat the slow. To avoid being eaten, a company must slash
its turnaround times by 75- to 90 percent. How does a company get
faster? By turning their bucket brigade into a pipeline to profits:
Stop trying to make employees faster.
In a bucket
brigade, employees only work on the product for three minutes
out of every hour.
Start making the product or service faster.
Where does it sit idle waiting on the next step in its journey?
How can the workflow be rearranged to allow each piece to flow
through without waiting on the rest of the bucket?
Reduce inventory of all types.
Inventory is fundamentally evil; it sucks up time, space
and money that could be used more productively.
Downsize machinery. Mass production often requires big, high volume
machines. Pipeline production often requires a handful of
smaller machines instead of one big machine.
Shrink the space. Often, people and machines expand to fill the
available office or factory space. This increases unnecessary
movement of people and materials. Walking is waste.
Redesign the space to minimize unnecessary movement.
Stop doing stuff and making things customers haven't
operate on the “Field of Dreams” theory: "If you build it, they
will come." Pipeline companies operate on the theory: "When they
come, build it so fast it will make their head spin."
When one piece of work can flow through the business
without waiting, it's a pipeline. Sometimes, small batches of
work are necessary, but aim for one-piece-at-a-time. If you’re still
not sure about how to turn your business into a pipeline to profits,
think of Subway … not the public transportation, but the business
model of Subway sandwich shops.
Use Subway As A
Walk into any Subway sandwich shop and you'll see a pipeline in
is made to order (one piece at a time).
A small oven
cooks fresh bread as needed.
A small storage
unit holds the baked bread.
A small toaster
handles the hot sandwiches.
of cheeses, meats and vegetables provide the raw materials.
A small rack
across from the cash register allows customers to pick their own
bag of chips. This is replenished as needed.
their own drinks.
While most managers
worry that pipelines won't keep workers busy, it's only true for a
short period of time. Studies have shown that a pipeline will enable
Double productivity and profits.
When employees don't have to pick up work and put it down and
store it and move it around, it's easy to double productivity.
Grow three times faster than their competitors
(source: Competing Against Time by Stalk and Hout). When
customers figure out that a business is up to ten times faster
than the competition, they flock to it.
Reduce mistakes and errors by 50 percent.
(Less fire fighting, billing adjustments, returns, warranty
Any one of these three is a good reason to reconfigure a
business into a pipeline, but when combined, they are a winning
While bucket brigade businesses can still make a tidy profit,
pipeline businesses can make a fantastic profit and garner more
market share. Remember: the fast eat the slow. Haven't most
businesses waited long enough to start streamlining their workflow
into a simple pipeline that will maximize profits and customer
satisfaction? Or are they going to wait to be overtaken and eaten?
Only time will tell.
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