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Big batches, poor cash flow

Pharmacy operations receive payment for dispensing from the NHS. The original, green prescription dockets provide the trigger for the post-dispensing payment of fees from the NHS and, also, the evidence required in any subsequent audit trail. The “greens” are checked by the pharmacy before filling in the necessary form to trigger the fee payment.

Because this after-the-event checking is seen as a chore and a less value-added operation than the daily dispensing and fulfilling of customer orders, the “greens” are put to one side until a large batch has been collected. They are then processed in one sitting. Unfortunately, this delays NHS payments and impacts on operational cash flow. This situation was shared with the whole team and the “greens” are now processed in short bursts, which has speeded up NHS payments and improved cash flow.

Authorisation loop, delayed materials
This case study is from the offices of a computer hardware manufacturing company. They have made a lot of progress with lean thinking, especially with 5S workplace organisation, stock reduction via just-in-time deliveries from suppliers and using customer orders to pull demand through the factory. However, the just- in-time deliveries were often arriving just too late, causing delays, downtime in the factory, replanning and extra changeovers.

Why was this happening? Purchase orders were being raised when needed, on time, every time. However, every order then had to go to the Financial Controller for authorisation. She felt it was important to have a direct check on all the spending, but also found the frequent interruptions for her signature a nuisance.

So, she placed an in-tray outside her office door and the orders were allowed to accumulate. For how long? Often as long as two days. She would then go through them in a batch, believing this to be the most efficient use of her time. Maybe it was, but it was also causing the biggest perturbation in the whole supply chain and was the main cause of orders arriving late. We put a cost to the problems arising and this helped to relax the authorisation loop.

How far upstream is the problem arising?

Tracking the source of problems up the supply chain is a common need. This example is from the electronics industry. Our client is a supplier of scanning equipment used in stock management. Their business model is dependent, amongst other factors, on short lead time deliveries into their customers. However, often the lead times promised were not being realised, leading to customer dissatisfaction.

One of the main sources of delay was identified as delivery to them of sub assemblies from a key supplier. Was the supplier not very well organised? Did they have sufficient demand visibility? Were the lead times required of them shorter than the time they needed to plan and assemble?

We were allowed to spend some time with the supplier. Demand visibility had been an issue but our client’s procurement team had made good progress making demand visibility accessible to the sub assembly supplier. Analysis in the factory quickly showed that sub assembly build time was much shorter than the lead time. So, what was the main source of delays?

We spent some time with the operators on the assembly line. One of the key issues for them was space; they were often having to struggle around work in progress on the line. Why was there work in progress on the line? Most of it was sub assemblies on hold. Why were they on hold? We put a large cause and effect diagram, a fishbone, on the wall by the line and asked them to collect the reasons for “holds”. By far the biggest source of “holds” was defects in the metal cabinets which housed the sub assemblies, burs, sharp edges, paint defects, etc.

So, we visited the cabinet supplier. To cut a long story short, they were given time to improve the quality of their output, but were not able to match the consistently high standards required by the end users. Cabinet supply was switched to a company who could.

NED
“Alan brings great examples and opportunities to improve the business. He is a great communicator at all levels throughout the business. His contributions have really added value to the company”
Nick Hamlett, MD, Goodlife Foods 


 

 

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CONSULTANCY

“Alan from Pathfinder was commissioned to investigate supply chain costs which we considered were too high. This included evaluation of suppliers, cost modelling, cash flow analysis, reviewing the feasibility of in sourcing and proposing alternative sub contracting options. Alan used his extensive experience of manufacturing operations and this, combined with the clarity of approach, led to a highly successful result. Savings are expected to exceed £600K pa, equivalent to 25% cost saving, which represents a pay back of less than one month on the cost of the project.

I found Alan’s approach refreshingly simple and, despite the difficulties associated with convincing existing suppliers to substantially review their operations, he was able to guide all parties to a satisfactory conclusion.”
Jim Hopwood, M.D. Intellident Ltd

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TEAM COACHING

To help with growing customer demand on our company, Alan designed and led two team development programmes for us with the project title of ‘Realising Potential’, involving a range of illustrative exercises and activities, including a business simulation programme, which was both engaging and great fun whilst providing an education in a life-like business scenario. Much of what was learnt was then tested in our work environment and the individuals were supported with one to one coaching. Alan is very approachable, nurturing and tuned to the needs of our unique business and it has been a great investment towards our continued success.”                          David Wolfenden, MD. Ripple Group, Jan 2015

 

 

“I have worked with Alan at various times over the last three years. During this time he has facilitated team coaching and also individual coaching. He has helped us identify key strategies for sustained company growth and also with developing the team, which has strengthened enormously and is now unrecognisable from when we started. We would never have made so much progress without Alan’s input. From a personal point of view he has been a tremendous mentor and coach. He listens well and teases information from you and helped me to see things more clearly and sometimes to see things from a different perspective. He is also a man full of integrity.”                         Tim Clifford, P.A. Ross, Oct 2012

“Alan worked with the practice operations management team to strengthen collaboration between team members, in order for us to become a more effective operation. Understanding was much improved that we have different skills to offer and have our own preferences as to how we contribute to the team. We really enjoyed working with Alan, he has a very relaxed, inclusive style and the learning points were illustrated with a range of relevant and fun exercises. He has been a wonderful coach to me as I’ve sought to develop my skills as managing partner during a period of significant growth for the firm.”                                                                                           Chris Bishop, Managing Partner, Slater Heelis, June 2015

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BUSINESS SIMULATION

“Alan provided some excellent material on supply chain quality management to me when I was developing a course for a major client, and was fun and supportive while delivering the course itself.

More recently, my high opinion of Alan was boosted further by experiencing the exciting and engrossing simulation he’s developed. His approach of using physical simulations with real items means it’s in a different league to computer simulations – the factors involved are real, tangible and obvious. The learning points were made completely practical through the application and testing, not left as unproven theory.

Running the simulation was good fun, and I found myself observing a lot about the human factors of improvement – I learned an awful lot about my colleagues! It was a great experience and I’d recommend it to anyone.”

Andrew Wright, Director at Dynamic Technologies Ltd., June 2014

“Alan has developed a fabulous business simulation workshop, which is both fun, practical and applies to many different businesses. It is good for team development as well as providing some key learning on productivity improvement in a thoroughly enjoyable way. Would recommend this as a superb group activity.”

Caroline Mayoh, UK HR Manager at Clean Air Power, May 2014

“I just wanted to record my thanks to Alan and to recommend his business simulation to others. He was kind enough to run a session at one of out BCN meetings where lean principles were brought to life as we worked in teams to maximise throughput and quality. The lessons learned that day through thinking and doing rather than just listening will stay with the attendees for the long term. Thanks, Alan!”

Bill Webster, Consultant at Plan Dynamics Ltd. / Senior IT Project Manager / Currently on assignment with Martin Brower UK, May 2014

 

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COACHING

“We first started working with Alan from Pathfinder 18 months ago to help coach a member of staff who had been seconded to his first role in management. Subsequently, and due to the immediate positive results of this first assignment, Alan undertook performance coaching with seven first line managers. More recently he has been coaching two senior managers.

We have found Alan very easy and flexible to work with and have been very pleased with the results from the coaching programme, which has been a key part of the transformation being undertaken by the company.

All the managers he has worked with have appreciated his confidentiality, experience and gentle but probing approach. I have also found him to be an honest and trusted resource as a strategic sounding board, due to his depth and breadth of experience and knowledge. I would have no hesitation in recommending Alan for coaching managers at all levels within an organisation”
Jason Smith, M.D. Tullis Russell Coaters

“I have been working with Alan for almost two years now and in that time my life has changed beyond recognition. He helped to identify quickly and address the pressing issues within the business. His wealth of business experience and his skills in working with teams and businesses of all sizes really does show through. Working with him has made a dramatic difference to both my professional and my personal life.”

From a position of little future focus Alan has allowed me to structure a way forward. I am prone to skipping from one topic to another without resolving anything. We focused on specific areas each time we met and this illustrated that a lot of my problems are inter-related. Alan’s patience and guidance helped me to keep on the topic at hand. I would recommend Alan to anyone.”

Tracy Norton, Newleaf Advice Centre

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TRAINING

“The training was excellent. Alan delivered a very high standard of tailored (leadership) training which met our needs perfectly. I would be very happy to provide a recommendation”
Danny Savage, M.D. Pulsar Computing

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