Moving from customer/supplier relationships to partnerships
During the 1980s and 1990s many organizations embraced Total Quality Management (TQM) as a means to improve product quality and ultimately overall business performance. Some of these organizations had success, but many failed for a number of reasons. The reasons they failed are beyond the scope of this article, but almost all the organizations that adopted TQM or continuous improvement practices went through the exercise of identifying their customers, suppliers, and major products, processes, and services. Many adopted the horizontal or “systems” view of work known as process management. Baseline measurements were established, improvement tools were introduced, and the improvement process was launched.
Typically the improvement effort begins at the corporate level and then cascades to the plant floor. Teams are one tool that many organizations use to increase employee involvement. Some businesses implemented empowered work teams to move the organization to participative management where the teams are actually responsible for managing a process.
As stated earlier, one of the hallmarks of the TQM process is the identification of key customers and suppliers for the organization’s products and services. These are called external customers and suppliers. TQM dictates that this effort be taken a step further as each business unit defines what its core products and services are and then identifies its processes along with the customers and suppliers for those products and services. These are called internal customers and suppliers.
Many organizations that implemented TQM strategies have retained the practice of identifying their internal downstream customers and upstream suppliers within their business processes. This includes the maintenance service organization that supports most businesses and industries at the plant and facility level.
Typically operations has been identified as a customer of the maintenance organization. Operations usually relishes this role as a customer and without much prompting takes on the assumption, although misguided, that the customer is always right. Maintenance assumes that because operations is the customer it must do everything in its power to “satisfy the customer” because TQM and continuous improvement teaches that if you satisfy your customer you will produce a higher quality product which will result in lower costs. This is true in some respects but there can be a downside to this approach if not undertaken properly.
Why go through this exercise of identifying customers and suppliers? The reasons are:
- Customers can provide the suppliers, whose services they use, with the precise requirements needed to optimize their process.
- Customers can provide suppliers feedback when the suppliers’ services are not meeting the customers’ specifications.
- Suppliers can provide feedback to the customers on how the customers can help the suppliers succeed. This is very seldom practiced and will be discussed later.
Sets up dialogue
During my consulting visits to various organizations, I have worked with maintenance groups who have adopted the practice of calling the operations teams they support as their customers. As someone who has studied and practiced quality management tools and techniques, I usually applaud this effort. It starts the dialogue between operations and maintenance. Communication is usually a problem between these two functions. In many instances, an adversarial relationship has developed between operations and maintenance. Any tool that assists maintenance in improving communication with operations and understanding what their requirements are should be promoted. Unfortunately, when this customer/supplier relationship is developed between operations and maintenance it is sometimes carried to an extreme.
In a true customer/supplier relationship the customer has the ability to fire the supplier when the supplier fails to deliver or meet the customer’s requirements. This happens quite frequently in the business world and I am sure all of us as homeowners (customers) have experienced this. For example, a homeowner hires a gardener and, after a few months of shoddy service and repeated feedback sessions, decides to fire the gardener and hire someone new.
Internal customers do not have this prerogative. I have experienced instances where the operations group decides to use services for maintenance other than its own maintenance organization. This can be a very subtle rejection of the services its maintenance organization provides. For example, internal PLC repairs and software configurations are not made rapidly enough or perhaps the service does not quite satisfy those who operate the equipment so operations decides to hire a contractor to perform this service. The contractor will report directly to the operations group. Operations will feel more in control and think that it is receiving better service and lower cost when in reality this may be far from the truth.
To understand what is really happening it is necessary to discuss systems. A system can be defined as a collection of parts that interact with each other to function as a whole. The parts of a system are often viewed of limited value when taken separately but when combined and arranged correctly they become very valuable. In other words, the parts or elements work together to achieve a common purpose. In fact, many times the sum of the parts is greater than the whole. This is defined as synergy.
With systems there is usually a certain interdependency between the parts. When a system is functioning correctly there is usually high interdependency between parts. When the system is functioning incorrectly there is low interdependency between parts. Some examples of systems would include biological organisms (such as plants, animals, and the human body), the atmosphere, chemical reactions, industries, factories, teams, and all organizations.
Many times, when the parts or elements of a system are not aligned properly, the system becomes dysfunctional or suboptimized. It can no longer achieve its intended aim. The parts, with competing agendas and improper alignment, actually become very inefficient and incur tremendous waste. This can happen even though some of the elements or parts of the system appear to be optimized and performing at a high level. Optimization of only some of the parts results in suboptimization of the system.
An example would be a manufacturing business that creates a product. Within that manufacturing business or process are many subprocesses. Each of the subprocesses contributes to the manufacturing of the final product. One of the subprocesses, which is responsible for a small piece of the final product, could have lower costs than the other subprocesses and appear to be operating more efficiently than the others. But in reality it could be shipping a product to its downstream internal customer that requires a lot of rework to make it usable for that downstream process. Usually this occurs because the upstream supplier fails to properly identify his downstream customer’s requirements. As a result, the product he ships or transfers to his downstream customer is “out of spec” or “fails to meet the requirements” required by the customer.
This of course begs the question: why do we worry about what the product looks like after it leaves one subprocess to go to another? Because many unnecessary costs and waste in the form of out-of-spec products and services can be transferred to the downstream customer. In some cases, these costs are double or triple what they would be if handled right the first time in the process where they were designed to be eliminated. In a system each process is designed to create a product or service and transfer it to its customer in the most efficient manner possible for the system and not that individual process.
That is why, in TQM parlance, we must go through the process of identifying what our customers’ specifications are for each downstream process. Customers sometimes are proactive and identify these before hand and share them with their suppliers. This is usually done in the form of surveys, questionnaires, and product specification forms. Unfortunately, in many instances, the customer will set such high requirements for its suppliers that many costs are transferred to the supplier that might be more appropriately handled by the customer.
This is not a significant problem when we are talking about external suppliers. Typically we go through a bidding process with several different external suppliers. Usually the external supplier offering the highest quality at the lowest cost is selected. In this situation, companies let the competitive nature of enterprise control the costs of the service they are receiving from their external supplier. On the other hand, if some of the costs and process wastes are transferred to an internal supplier then the costs are merely transferred to another process within that business. Process owners who transfer these costs think they have done something clever and are at times quite proud of themselves, when in reality the supplier or process to whom these costs were transferred may not be as capable of managing and reducing the waste and costs as the customer is.
How does this phenomena apply to customer/supplier relationships between operations and maintenance? As stated earlier, many maintenance organizations today have taken the approach that operations is their customer. Their purpose in life, however noble, is to meet or exceed their customer’s expectations. Unfortunately, this type of relationship between internal customers and suppliers can actually drive costs up, lower the quality of services, and create an antagonistic relationship between maintenance and operations. Once the organizations become antagonistic, maintenance will isolate itself and adopt a “you operate, we fix” mentality with very little communication and cooperation. See accompanying section “How to Know When Relationships Need Fixing.”
In this dysfunctional relationship, the system is not optimized but suboptimized. The subprocesses, although operating efficiently in the eyes of the process owners, actually are allowing waste to occur and driving costs up. In this case, the maintenance organization, suboptimized by a poor relationship with its customer, will incur unnecessary costs, inefficiencies, and waste which will manifest themselves ultimately as poor equipment reliability. Poor equipment reliability is the antithesis of a partner’s goals and objectives.
That raises the question of how maintenance and operations avoid creating an environment of non-cooperation and competitiveness. The key is the practice of identifying customers and suppliers and their respective requirements and specifications. Customers can help their suppliers succeed by conducting ongoing dialogue with them to improve their processes as a team. Identifying the customers’ requirements is not enough. In any business organization internal customers must go beyond merely passing on their specifications and requirements to their suppliers.
One way to achieve this is to move beyond thinking customer and supplier to developing a partnership. A partnership between internal customer and supplier, in my estimation, would represent an evolvement from the relationship that many organizations practice today. The customer and supplier, in the context we are discussing now, are operations and maintenance.
Rather than operations dictating to the maintenance organization how it works with them, operations and maintenance should develop a partnership. In his book “Stewardship,” Peter Block describes what partnership means: “Partnership means to be connected to another in a way that the power between us is roughly balanced& When we talk of supplier-customer partnerships&what we are seeking is to recognize the interdependence of the parties and replace control with cooperation.”
What we are trying to achieve is a level of cooperation that is attained when both customer and supplier feel accountable and responsible for the system as a whole. They are more than just customer and supplier; they are stakeholders who feel a sense of ownership from their processes that can be achieved only by partnering rather than one serving another blindly without any voice in how to best manage and care for the process or equipment. So how do we build a partnership between operations and maintenance? See accompanying section “What You Need to Build a Partnership” for the six requirements.
When a partnership is developed between operations and maintenance, finger pointing and the blame game will slowly disappear. Processes will function at a higher capability, ownership will increase, and communications will improve. When equipment is needed for a PM, all options and alternatives can be voiced and heard by both operations and maintenance. As a result, better decisions will be made that reflect the best interests of the system rather than a subprocess. Systems will be optimized and equipment reliability will improve. Organizations will develop greater speed, flexibility, and capacity to change direction. Ultimately the stakeholders, operations and maintenance, will have greater ownership of the system.
Organizations today are faced with more challenges than ever before. Business as usual will not be good enough; in fact incremental improvement may not be enough. The challenge for today is to not only improve but improve at a rate faster than ever imagined. Taking years to develop the behaviors and culture necessary for a thorough implementation of a process improvement initiative will be intolerable if not fatal.
Today’s organization must move from a customer/supplier relationship to a partnership to succeed in the 21st century. The partnership model described here not only will provide the platform needed to succeed but will foster an environment where greater cooperation exists, and will seed the organization with the behaviors and cultural norms necessary to sustain long-term business improvement. At the end of the day an organization where customers and suppliers have created a partnership will experience greater productivity and business results and be positioned to be a front runner in today’s new economy. MT
- Operations writes the majority of work orders as urgent or emergency. There is little to distinguish emergency work from nonemergency work. If all work orders are urgent or high priority, the priority system becomes ineffective as a tool to ensure crews are working on the most important work first.
- Operations refuses to write work orders for some types of work. Because the mechanic is already out at the machine on another work order, he is expected to respond to a “shoulder tap” and fix another unrelated job. Once this behavior becomes acceptable it is hard to eliminate.
- Operations refuses to stick to the schedule. Work scheduled is bumped for other non-urgent work at the last minute, not due to changes in the production schedule but because it is convenient. Maintenance is expected to make adjustments as necessary because the customer comes first. Weekly schedules become meaningless and ineffective as a tool to maximize craft productivity.
- Operations delays in turning over equipment. Operations, for whatever reasons, delays in isolating the equipment for maintenance to make its repairs. It’s the old “dollar waiting on a dime” syndrome. Maintenance personnel must stand around the equipment waiting for it to be released and isolated or they are sent to another job by the maintenance supervisor.
- Work orders created by the operations group are not filled out properly. Maintenance is expected to fill in the gaps. Operations has either never received the training or never been held accountable for work order data quality. This results in significant rework by the maintenance group trying to find the data; this ultimately leads to poor analysis.
- Operations can’t find time to meet with the maintenance group to discuss problems and opportunities or to build schedules. Because operations does not own the maintenance process its priorities lie elsewhere. Production problems will always take precedent over maintenance concerns.
- “We own it, you fix it”. This is the attitude adopted by many operations groups. The operations group operates the equipment and pays the bills and therefore the maintenance group is reduced to a necessary evil. This type of relationship is definitely not conducive to promoting cooperation between the two organizations.
- Maintenance develops a superiority attitude where operations is reduced to a bunch of fools operating and destroying equipment. This is usually the end of the evolution or de-evolution I should say. At this point communication has broken down or is minimal, and cooperation is a foreign word. Operations and maintenance play the blame game, pointing fingers at one another, and the production process suffers which is often fatal.
- Systems thinking. Operations and maintenance must view their processes as part of a larger system. It must be understood that actions or lack of action affects the downstream and upstream processes. These subprocesses make up a larger system and their poor performance can affect the system as a whole and ultimately business profits. One way to develop a systems thinking mentality is to map your business’s major processes. This allows you to see the interdependencies between business groups.
- Dialogue between stakeholders. Communication must be two way under a partnership. That implies trust and integrity when dealing with each other. This can best be accomplished in a team environment. Some tools or activities that are useful in achieving this are team surveys and joint vision and mission building between operations and maintenance.
- Interdependence and cooperation. Relationships must be developed that foster openness and a balancing of power. Accountability, process requirements, and demands must flow in both directions. One of the most effective ways to accomplish this is the development of cross functional teams. A cross functional team would be comprised of operations, maintenance, purchasing, engineering, and, if necessary, contractors. The objective would be to create a forum that would promote interdependency and cooperation.4. Partnership contract. A contract should be drawn up between operations and maintenance that describes the behaviors each should exhibit that will make the partnership manifest to the organization.
- Partnership contract. A contract should be drawn up between operations and maintenance that describes the behaviors each should exhibit that will make the partnership manifest to the organization.
- Clear roles and responsibilities. Each stakeholder that is a member of a subprocess of a system should have clear roles, responsibilities, and expectations written up for his position. This is best done in a team setting where input from stakeholders can be gathered and discussed so that expectations are clear.
- Management support, commitment, and buy-in. For the partnership to work effectively, management or leadership also must be committed to fostering this type of relationship. The partnership behaviors should be modeled by management and expectations cascaded to the rest of the organization. One way to gain management buy-in is for management to create or at least participate in the development of a maintenance and reliability policy.