In a perfect world, people do exactly what they’re paid to do. Trouble is, in an imperfect world, people also do exactly what they’re paid to do, but it isn’t quite the right thing. Compensation managers who design plans based on unquestioning loyalty to executive mandates can often be missing opportunity to be a better partner to the business. Case in point: Though they got the closing Biff Tannen quote wrong, (it’s “and get out of here”), this right here is chapter next in the seemingly never-ending saga of “Just In Time Too Often Isn’t.”
When I first started out, I honed my airport-fu to the fine edge of a Shaolin sword. That is, until it dawned on me that “success” wasn’t about how many “Just Another 5 Minutes” could be squeezed in front of another mad dash to the terminal gate, but, rather, how few times I’d miss a meeting for having been grounded due to a jetway door being closed in my face. (Going to “Always-Enough-Time” also helps with both quality of life and blood pressure.)
Yet, right now, Ford is parking trucks by the truckload at an underused racetrack in Kentucky because somebody put too many logo eggs in one vehicle trim basket. With apologies to the brilliance of Taiichi Ohno, (no relation to American Olympic speed skating phenom, Apolo Ohno—I checked), I prefer to evaluate “Just-In-Time” (JIT) opportunities on a few additional vectors beyond just what’s on the wall clock.
Remember, at the beginning of the pandemic, when everybody was running out of toilet paper?
Toilet paper doesn’t go bad. Toilet paper doesn’t suddenly become obsolete. Best of all, like most things, toilet paper is cheapest to buy in bulk. Toilet paper is the wrong stuff to try to JIT. Sure, if you live in a studio apartment and you don’t have a place to put more stuff, you’re not going to want to have a warehouse-store-sized box of it sitting in the middle of your living room (aka the dining room and bedroom). But if you happen to be the mindful progeny of Great Depression–raised forebears, you were not the one scrambling for the fluffy stuff when the panic hit—you were the one quietly counting the months you could go before the next shipment would have to be arranged to replace the enormous warehouse store box of it you always have in your storage closet—you know, the one right next to the warehouse-sized boxes of paper towels and Puffs Plus.
Of course, this strategy won’t work with fresh produce, yesterday’s newspapers, or Turkish Lira. You need to be judicious with your use of stock-up tactics. But stuff that doesn’t go bad, doesn’t suddenly become obsolete. And the cheapest to buy in bulk needs to be evaluated on a broader basis than “Just-In-Time.” (See Tony Polito’s great take for deeper analysis: http://www.tonypolito.com/wri_jit5.pdf.)
The saying is true: folks tend to manage what they can measure. The good news or bad news, depending on your perspective, is that JIT is the classic measurable thing to manage, and that’s where the problems start. Procurement bonuses are always all about cost, and they are so rarely about risk and supply chain diversity or durability that compensation managers don’t even talk about such things. Procurement managers aren’t really trained to think about it much, either—it’s always “how much did you save me lately,” and always about the “get.” So how do you think the folks involved in the Ford badge procurement process did against cost targets in the past year or five or ten? I’m willing to bet there’s a good chance they’ve been knocking it out of the park on the regular, and those buyers have been rewarded accordingly. Yet, how much do you think that matters to the folks now calculating the opportunity and financing cost of maintaining a carpet of pickup trucks over at the speedway? I’m guessing if they’re looking for that proverbial single throat to choke, they’re never going to find it. Folks were paid to source inexpensively, which they did, and now it’ll be the classic “nobody’s fault.”
Is there a C-level risk manager in your organization?