Is Your Business a Pipeline to Profits?
By Jay Arthur
Is your business a "bucket brigade" or a "pipeline to profits"? A bucket
brigade is a business that spends too much time in fighting fires and crisis
management. A bucket brigade usually has a backlog of work and customers
complain about how long it takes to get what they need. Does this sound like
Unfortunately, most businesses look more like a bucket brigade throwing
water on a fire than a pipeline to profits. If you're still not sure where
your business falls, here are a few more elements that describe a typical
· First, employees or computers fill buckets (e.g., inbox, e-mail,
workstation, vehicle, etc.) with work. It doesn't matter if the bucket is a
carpet cleaning truck, a salesperson's order file or a hospital waiting
room; it's a bucket.
· Then they proceed to work each piece in the bucket, filling an outgoing
bucket with partially finished work to be sent on to the next workstation.
The first piece in the bucket has to wait on the last piece in the bucket
before moving on.
· They also fill another bucket with pieces that have to be reworked in an
earlier step. Someone on the bucket brigade periodically picks up these
buckets and carries them back to an earlier workstation to be processed.
This rework inhibits the workflow.
· Because some workstations are faster than others, buckets pile up at some
workstations waiting on the next step in their journey. This causes more
delay. If a printer, for example, can print one million magazines in a day,
but only bind 200,000, the other 800,000 have to be stored for four days and
moved more than once, increasing the chances for damage.
· Because of the start-stop motion of the bucket brigade, inventory has to
be maintained everywhere along the line: raw materials, partially finished
work, rework, finished goods and scrap.
This bucket brigade method of running a business takes too much time and
puts any business at risk. It makes it difficult to change the schedule of
production. How did it get this way? It dates back to lessons learned as
The Myth of Economies of Scale
If you were growing up in the 1950s, you learned about Henry Ford's mass
production line and economies of scale. Economies of scale suggest that if a
factory can produce 10,000 identical black Model-Ts, it would be cheaper
than producing 10,000 custom cars. While this was true in the 1920s, in the
1950s Toyota was perfecting a way to produce 10,000 custom cars cheaper than
10,000 mass-produced cars.
In this century the new economies are economies of speed. The fast eat the
slow. To avoid being eaten, a company must slash its turnaround times by 75-
to 90 percent. How does a company get faster? By turning their bucket
brigade into a pipeline to profits:
· Stop trying to make employees faster. In a bucket brigade, employees only
work on the product for three minutes out of every hour.
· Start making the product or service faster. Where does it sit idle waiting
on the next step in its journey? How can the workflow be rearranged to allow
each piece to flow through without waiting on the rest of the bucket?
· Reduce inventory of all types. Inventory is fundamentally evil; it sucks
up time, space and money that could be used more productively.
· Downsize machinery. Mass production often requires big, high volume
machines. Pipeline production often requires a handful of smaller machines
instead of one big machine.
· Shrink the space. Often, people and machines expand to fill the available
office or factory space. This increases unnecessary movement of people and
materials. Walking is waste. Redesign the space to minimize unnecessary
· Stop doing stuff and making things customers haven't ordered. Most
companies operate on the "Field of Dreams" theory: "If you build it, they
will come." Pipeline companies operate on the theory: "When they come, build
it so fast it will make their head spin."
When one piece of work can flow through the business without waiting, it's a
pipeline. Sometimes, small batches of work are necessary, but aim for
one-piece-at-a-time. If you're still not sure about how to turn your
business into a pipeline to profits, think of Subway … not the public
transportation, but the business model of Subway sandwich shops.
Use Subway As A Model
Walk into any Subway sandwich shop and you'll see a pipeline in action:
· Every sandwich is made to order (one piece at a time).
· A small oven cooks fresh bread as needed.
· A small storage unit holds the baked bread.
· A small toaster handles the hot sandwiches.
· Small buckets of cheeses, meats and vegetables provide the raw materials.
· A small rack across from the cash register allows customers to pick their
own bag of chips. This is replenished as needed.
· Customers get their own drinks.
Pipelines = Profits
While most managers worry that pipelines won't keep workers busy, it's only
true for a short period of time. Studies have shown that a pipeline will
enable companies to:
· Double productivity and profits. When employees don't have to pick up work
and put it down and store it and move it around, it's easy to double
· Grow three times faster than their competitors (source: Competing Against
Time by Stalk and Hout). When customers figure out that a business is up to
ten times faster than the competition, they flock to it.
· Reduce mistakes and errors by 50 percent. (Less fire fighting, billing
adjustments, returns, warranty problems, etc.)
Any one of these three is a good reason to reconfigure a business into a
pipeline, but when combined, they are a winning trifecta.
While bucket brigade businesses can still make a tidy profit, pipeline
businesses can make a fantastic profit and garner more market share.
Remember: the fast eat the slow. Haven't most businesses waited long enough
to start streamlining their workflow into a simple pipeline that will
maximize profits and customer satisfaction? Or are they going to wait to be
overtaken and eaten? Only time will tell.
Jay Arthur, the KnowWare Man, works with companies that want to fire up
their profits with Lean Six Sigma. Jay is author of "Double Your Profits:
Plug the Leaks in Your Cash Flow." He has spent the last 20 years helping
companies maximize revenue through the "Lean Six Sigma System," a collection
of audio, video, books and software. Jay is also the author of "Lean Six
Sigma Demystified" and the "QI Macros SPC Software" for Excel.