Introduction
How important is a good business system to you? Does each make it easy to achieve results? Or do they stop your staff achieving the performance standards that they’re designed to achieve. And do you consider consequences before implementing or changing any business system?
History
I used to work in a company where stationery was distributed from a central store every Wednesday afternoon. If you needed stationery urgently you could receive it almost immediately by making a phone call. But proper approval procedures were always followed. Then management decided that the stationery inventory and stationery costs should be reduced. Our informal but effective system had to be “improved”.
The New System
The efficiency consultants descended on the company. They decided that the central stationery store couldn’t possibly be open every Wednesday afternoon to serve the clients – us. They decreed that stationery should be supplied on order not demand.
Of course, it immediately increased the time involved. With the new business system you had to prepare and submit a formal written order as you would for a purchase from an external supplier. Administration guaranteed to supply the stationery “within 14 days”.
Impediments
To make sure that we clients co-operated, the consultants demanded that all administrative requirements be fulfilled perfectly. In one instance, an order was returned to a branch office 500 miles away because it was undated! It became difficult to get stationery when you needed it. The new business system also demanded two weeks’ notice for large or special orders. This enabled a keen purchasing clerk to go out and search competitive pricing – a euphemism for “cheapest”, not “best value for money”.
That all sounds pretty good, doesn’t it? In reality, it was a disaster.
Consequences
The supply of stationery wasn’t prompt or complete. The “within 14 days” was ignored. I once had to leave the office to buy a box of pencils because “the order was late”. Special orders were supplied on price alone, with no regard for quality or service.
Bit by bit, we client departments found the answer. We started building up our own stationery supplies.
The total company inventory for stationery tripled in 6 months. So did the costs. Under the new business system, every department, every section, and in some cases, even individual managers over-ordered and kept their own stationery supplies. It was the only way to ensure you got stationery when you needed it.
The new business system stopped people from doing the very thing it was initiated to encourage them to do: co-operate with administration to reduce inventory and costs.
Conclusion
In this example the new system was harder to follow than the one it replaced. And it carried a much poorer service level. The consequences were that costs tripled and everyone played “beat the system”. Sound familiar? If you ignore client needs, ignore possible negative consequences and make major changes without consultation. Your business will suffer too.
