Max Krug, Future State Engineering
It is safe to say that many organizations face an abundance of challenges in trying to become a high-performing organization. “End of the Month” Syndrome is one of the major challenges that organizations struggle to eliminate, especially in the demanding world of pressure to reduce prices, provide shorter lead-time response to customers, provide higher quality product or services, or provide additional product features, all with the added pressure to meet the internal financial goals of the organization.
End of the Month Syndrome
‘End of the Month’ syndrome is defined as the rush to complete the orders in the last few days at the end of the month to meet the financial targets of the organization. Usually, this push is directed to the work that is either close to being complete, or the work that is of high value that, if completed, will make a large impact on the revenue for the month. What is also interesting, the push is usually irrespective of negative cost implications associated with expedited efforts, quality issues, overtime, and disruptions and delays that it causes to other orders. If the organization suffers from these situations, it is usually the effect of unsynchronized flow and competing priority systems that prevent organizations from becoming high-performing.
It can be concluded, that if the organization makes more than 25% of the monthly revenue plan in the last few days of the month, it will continuously struggle to achieve its revenue goals and to achieve its full potential. In addition, the customer may also experience negative effects because of the end of the month rush, such as missing information, order inaccuracies, non-conforming product, or late deliveries.
Creating Balanced Flow
To break the end of the month syndrome cycle, the effort must switch from working on the orders that are closest to being completed at the end of the month, to working on the orders that need to start on time continuously throughout the month. This does not mean starting orders as soon as possible. It means, starting orders as late as possible to reliably flow orders from release to completion while considering the order work content and the amount of variation as well as dependencies in the process flow.
In addition, a single priority system needs to be established that is designed to meet both the customer commitments and the company’s financial goals. This approach switches the focus from meeting the internal revenue goals to meeting the customer requirements. The new internal priority system will now be focused on meeting customer commitments that are aligned with the organization’s financial goals.
Side Note: If you want to learn more about how to effectively eliminate end of the month syndrome by creating balanced flow, plan to bring a team to the in-person Operational Excellence Workshop on September 29 in Franklin, featuring Max Krug of Future State Engineering. In addition, NWIRC and the Northern Pennsylvania Regional College will host Max for a 4-part no-cost webinar lunch and learn series, Achieving Results: Operational Excellence, starting on Sept 14. See more on these events and register at www.nwirc.org/events.