A Story Of Business Intelligence and Early Retirement

Business Intelligence is often touted by software vendors as a savior in this tough economy, and it can provide measurable value. Yet, more often than not, it simply reinforces outdated management practices.

Researchers have found that a person’s focus determines the nature of questions they will ask themselves, and subsequently the actions that they will take. Are your people focusing on critical information, or are they distracted by less important matters?

For all you know, the best investment you could make in business intelligence is to shutter your data warehouse and eliminate output that is distracting your people from asking the important questions – questions that impact their behavior, and therefore your destiny, and perhaps that of hundreds or thousands of people.

That may sound a bit overstated, but the true story below illustrates the financial value of empowering questions.

Many years ago, a Chief Executive and VP of a small manufacturing company asked me to investigate production problems out in their machine shop. Chronic shortages were causing the final assembly lines to shut down, which was both expensive and disruptive. They wanted to understand why the new MRP system wasn’t doing the job for them.

So I went out to the machine shop to speak with the foreman. He told me that he was receiving reports but they weren’t helping. He explained that they could keep up with the production lines if they knew exactly what parts needed to machined for each of the next three days. If they could get a couple days ahead of the production lines, they would be fine.

Next, I had a conversation with the purchasing manager and inventory control people responsible for the machine shop. They liked the idea of a firm three-day schedule. They told me that if the final assembly lines could commit to a firm schedule for three days, most of the shortage problems in the plants would go away.

When I explained my earlier conversations to the CEO and VP, they were skeptical. In their minds, the shortages were causing the schedule changes – not the other way around. But they realized that if they made a firm schedule their top priority, the entire plant would be inspired to line up behind them and make it happen. A memo went out the next day that any proposed schedule change in that time frame would require the CEO’s personal approval.

Next, I stopped by the production control office and showed them how to keep the schedules up-to-date in their system. Then I created a report with the stock on hand and the requirements for each machined part for the next 3 days – netted out in daily buckets. It ran in a batch job over night and printed out 5 copies in the plant.

From then on, every day the foreman would retrieve the report and tell his people – “If there’s any quantity required in Day 1 then build that right away. Then build Day 2, then, if you still have time, build Day 3 and then if you’re done with everything, come see me.” By the end of the first week, most of Day 1 showed as zero. Within a month, most of the quantities in Day 2 were zero and things had settled down.

And what was ROI of this simple change in focus?

Over the next year, sales and production volumes continued to soar. Months later, I noticed the VP and CEO taking a delegation of Japanese businessmen for a tour of the plants to see the just-in-time system in action. Apparently they liked what they saw. The company was eventually acquired by Ryobi Japan.

Most of the executives enjoyed an early retirement. A great example of how an entire company met an important objective by asking good questions and acting on the feedback they received.

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