Posts Tagged ‘*PONC Price of Nonconformity’

How to define a problem

February 3, 2014

Problems tend to be defined in terms of the pain felt by the organization. Consequently the solutions may relieve the pain or embarrassment only to increase the hidden costs of nonconformity. For example, in order to reduce production costs we must have longer production runs thereby generating expensive inventory.

But system thinking and customer focus can change this for the benefit of customers and the organization’s other stakeholders.

Customer-focused-system-thinking organizations define their problems by describing how they as systems will fail or did fail to fulfill customer needs.

Their problem definitions comprise three parts:

A. The customers’ requirements;
B. The evidence of the system not being able to fulfill customers’ timeliness, affordability and performance requirements (perhaps including the PONC*); and
C. The nature of the problem to be solved.

Example:

A. Customers’ requirements fluctuate at short notice;
B. System resists changing its processes resulting in loss of business and customer loyalty (PONC approx $100k pm); and
C. Unable to fulfill frequent changes in customer requirements due to long lead times.

Note that it is better to blame the system than a person.

And, of course, the problem may be an opportunity.

In this case the system’s problem solving, or problem dissolving, processes result in the actions necessary to change their system. The changes may include mistake-proofed short-run processes that respond fast enough to satisfy customer demand for different products while continuing to deliver quality and value.

You can also define your problems in terms of how your system fails to fulfill customer needs. Not only your customers will benefit, you’ll also create more successful stakeholders.