The difficulty and importance of managing “shoulder periods”

Observation #46

carpedia-observation-46Many industries experience “shoulder periods.” These are the time periods leading up to and away from the peak volumes. Figuring out how to manage these periods can be a difficult task for managers, but it’s also very important for realizing performance improvement gains.

When managers or performance-improvement teams try to “streamline” resource requirements (e.g., labor, equipment, space, etc.), they do this by figuring out what they have to do (activities); how much time it takes (time standard); and how often they have to do it (volume). Usually the biggest variable is volume. If the business has any kind of seasonality or variability, which of course many do, an average volume based on the total year could be too high one-half the time, and too low the other half. So companies build resource and production plans in order to forecast volume and determine their resource needs as they operate throughout the year.

Variability is tough to manage. If your peak volumes are in October and November, when do you add staff and when do you reduce staff? Or can you do this at all? What if the skills required are not easy to find? If you ignore the variability and carry a fixed staffing level, your productivity will be high for two months and naturally drop during the other 10 months. Will attrition take care of any of this imbalance? If you cut hours or lay off staff, will they go to competitors or get other jobs? What if you can’t find enough qualified people when you need them and then miss your volumes and damage your service reputation? These are all very difficult questions that managers have to answer.

We’ve used “months” as a peak time period, but to make this issue even more complicated many functional areas have shoulder periods throughout the month (e.g., accounting), throughout the week (e.g., medical labs), or even throughout the day (e.g., restaurants). If you don’t manage these shoulder periods carefully, it’s very easy to see the productivity gained during peak periods offset by the productivity lost at other times.