Backlogs aren’t the security you think they are

Observation #23

carpedia-observation-23Editor’s Note: In the previous Observation, we discussed why it’s hard to eliminate backlogs, –a task that’s often brought forth if you are trying to improve the productivity of an area that uses some kind of backlog-management system (e.g., engineering work orders). We suggested that one reason it’s tough is that backlogs are a form of security for many people. Sean Brown, president of Egan Visual (manufacturer of visual communication systems and business furniture) and former Carpedia partner, offers some additional thoughts on the topic: 

A key to overcoming this objection is communicating that a large backlog is not the job security people think it is. Certainly there are operational efficiencies that you might be able to leverage when there is a backlog, but there are potentially hidden, but very real risks and costs lurking. Rather than being viewed as a “healthy amount of work ahead of us,” employees should recognize that a backlog often represents two things: customer dissatisfaction and a competitive threat.

The larger the backlog, the longer your lead times are (from order to cash). Unless you are in an environment where customers nail down their orders months before they need something, this backlog reflects an unfilled need in their organization. This means they are dissatisfied on some level. Before they order, they own the dissatisfaction. Now that the order is in your backlog, your name is on it. Enter the competitive threat: many companies have won share and dominated industries by competing on lead times: “Order from us and get your stuff right away.”

Identifying and communicating the source of the backlog and its burning platform will help build understanding and momentum in backlog elimination. This will in turn help generate some (one-time) cash early in the improvement initiative, directly contributing to the project’s ROI.