Why lots of work in progress is so difficult for businesses to recover from...

Why lots of work in progress is so difficult for businesses to recover from? This, this is an interesting topic.

It's an interesting topic to me, because we've got such an obvious example of a work in progress problem playing out in real time right now, what am I talking about, of course, the Los Angeles port situation, they have fallen behind for COVID reasons for rule reasons, for whatever reasons, they have fallen behind.

Now we're seeing a backlog of ships backing up.

Now, what's interesting about this is that, let's say today, they returned to exactly the same work that they were doing before.

But notice that because of the slowdowns, we got four weeks of ships backed up, and they just get back to exactly the same right now.

Do you know what's going to happen? Hopefully you do.

Hopefully, you can think through this and go hang on.

If they are working at the same rate that used to continually move at the same rate, the boat would come in the boat would leave the boat would come in the boat believe, and all of these boats are going across the Pacific Ocean.

But now we've got a full week lag when they're waiting to line up and get it and now they get back to that same rate.

Will they ever clear that backlog? Nope.

Never clear the backlog.

What is interesting is that they have to work faster than they were working before in order to begin to recover that backlog.

Let's say that they do two times just for easy math.

So it's they're working twice as fast.

Now, they'll start to get into that backlog, and it won't happen immediately, is still going to be some time, even if they managed to work twice as fast they like Right, let's just open up and we'll work 24 hours a day, it's still going to take some time to clear that backlog.

It won't happen instantaneously.

So they've got to maintain a two times speed.

Now, this is problematic.

You know why? Because your risk goes up or you've got a duplicate functionality, you got to build a whole nother port, or you got to find a way to actually get to a to x speed.

You got to find more people, you got to find or you got to push everything faster than it was.

But probably the 1x speed was close to capacity.

So this, this is a big problem, particularly if they've got to build infrastructure or find more people and there's shortages.

they potentially could never recover from this.

Imagine that they only get up to point eight of what they were doing.

Guess what it'll seems like they're doing better than they were point five.

Now they're at point eight of speed.

But they're never going to clear that backlog.

In fact, at point eight speed, the backlog will continue to get worse.

And notice the problem of all of those boats sitting there, they're not looping back, you just got this dead space, this dead ships that are sitting there doing nothing they're waiting.

They're waiting.

And this is why Lean Manufacturing really made such a difference is like Okay, hang on, we want everything moving through.

And what they realized is that you can only move the entire production line at the speed of the slowest component, the slowest part of that production line is as fast as the entire thing can go.

And so you can drive the front of that in for let's say, the slowest pieces in the middle, everything goes to speed and then it's just going to backlog in front of that slow piece.

And then beyond that doesn't matter how quick you are, they will still keep coming out at that rate of the slow piece.

And the only way to recover from this is to duplicate that slow piece if you can, like if you have a second one, and you have now have two where it's 111 and then the slow one is two, then you've doubled the speed of that.

Yes, there'll be some cost in terms of splitting it, you know, one has to go one way but that should be relatively minor compared to the benefit of having that double speed thing that actually having the two machines.

But this if your slowest point is the LA port and you're like, Okay, we need to speed this up.

This is not like a production line where you could potentially get another machine.

You know, well that machine's going to cost us 100,000 to duplicate the li port, who, man you're talking about some heavy duty investment.

And it's going to take a long time.

And this can happen in your business don't think that this is just an isolated experience.

Particularly if you can't see the work in your business, which is extremely common these days.

It's like, well, what's going on our business? I don't know, everyone's working really hard, but getting a lot done.

You're like, Okay, well, why aren't we getting the results? Like? I don't know.

That's because you can't see the work on a production line, you can see it backing up at the slowest production point is like, Oh, wow, look, they're all backing up behind there, it's very obvious.

But most likely, you are dealing in a reality where you don't have that physical backlog.

It's all on a computer.

It's not like the computer is going to suddenly slow down and go, Oh, you know, I'm really chugging at this point.

It's likely hidden, because you can't see the work of your business.

Strangely, this is a systems problem.

Like, what how is that assistance? Well, well, you know, the cool thing about systems is that they force you to show you the work like doing the system brings the work out of the background out of the hidden realms.

And suddenly, it's like, oh, there's that project is that project is that project is that project look, we can see that they're all stuck at this one point.

That's the slow point.

And if you have really cool software, then you can even track how long each of those points take.

And you'll Okay, well, we can put two people on to that particular task, and we'll split the jobs.

And now that stops being your slowest.

And then whatever the next lowest becomes apparent, it's like, Oh, wow.

But you have to be able to see the work in your business.

And typically, this is not so easily done.

It's like, man, there's all these files everywhere.

The dashboards are hard to come by, maybe the dashboards aren't showing you the critical data.

But if you set up your systems, right, where you can track the work getting done and track the outcomes of that work, now you can see the work getting done.

And you can see where it's backlog in.

This is cool.

This gives you the capacity to pivot and choose and say, Okay, well, we need to either slow down the amount of work coming through, or we need to speed up this particular step.

And you start to be able to judge between Well hang on if our fulfillment game is our slowest point.

And we know that we can only take four jobs per month, let's just say that as an example, you're you might be much higher, you might be much lower.

But there's no point in selling 10 jobs a month, if all you can produce is four, if you can only fulfill on four, then you should sell four.

Because otherwise your backlog and you'll have pissed off customers, they'll be like, Dude, we we bought three months ago, and you haven't started yet.

Let alone the danger that you begin to rob Peter to pay Paul.

And you're like, Okay, you know what I'm going to take the sale of today that we're not going to be able to fulfill on because I don't actually know when we're going to fulfill on it sometime in the future.

But I've got to pay my team now for work that they are doing on a client that I took their money and paid them to the previous clients.

And suddenly, you are in a negative cash flow position, you are on a little bit of a journey to bankruptcy, and all of the work and all of the effort and all of the late nights.

And all of the hard work goes to waste.

Because you can't see the work in your business and you can't get the optics to know what is your slowest point in your business.

Now if you can sell 10 And you should fill four then you should be able to go okay, well, we need to fulfill two and a half times more.

How do I do that? Where's the sticking point in the fulfillment? Maybe it's just one point.

Everything else in fulfillments running smoothly but you've got this one point it's like alright, let's let's double or triple this low point and we'll be able to clear 10 Sell 10 fulfill on 10 Sell 10 fulfill on 10 This understanding is typically difficult, because you can't see what's going on in your business.

And that's because your systems gain is so poor, that it's all just a mess.

It all just seems random, it all just seems to be chaotic, surprising you Oh, well, we got another fire.

Where did that fire come from, oh, we got another fire.

Hang on, we got fire and fire and fighting, this means you are working late you are stressed and you are broke.

And suddenly, you're like, you know what, I'm just going to take a job.

If you would just take the time to work out.

Underneath every part of your business, the engine that drives every single business area is systems.

And your systems are made up of processes and those processes create the results in each business area.

You document this stuff out and suddenly your team is freed from having to ask you, they also have this specific instructions so that they can complete the work consistently and accurately on time, so you don't have to pay them for mistakes.

And watch takes one hour takes one hour, instead of taking eight hours or taking 30 hours or taking 200 hours.

Do not think that there's a linear relationship between error and rework required.

It you might be lucky, a one hour job might just cause you one hour of loss work.

But it may not.

Particularly if a lot of work has gone on before that error gets picked up.

And suddenly, you're looking at 10 hours, 50 hours, 200 hours, lawsuits, payments that are bankrupt your whole business you're like Man, if only I had paid attention to systems.

Yes, they're a bit like broccoli, but that's okay.

They're also the key to revenue and profits and enjoyment and you fulfilling your dream life as an entrepreneur, it's your choice, continue to operate as you are, or sought this out.

Systems are the key.

They are the engine room.

They are the war room that enable you to get stuff done in business effectively.

If you want surgical precision, if you want military staff precision in your business.

There's only one way to get that.

And that is systems.

All right.

That's all I got for you.

We shall see how this plays out.

I don't know.

The problem is that the problems that got them here haven't been solved.

And it's unlikely that they will be able to operate and go you know what we need to we need to get better than we were producing before just to catch up.

empty shells are no fun.

This is serious business.

This is important food on the table is the number one priority for happy people.

No food on the table.

One problem, food on the table.

Logistics must be handled.

It's a tough, tough gig.

I'd be trying to sort this out.

If I was the president.

I'm like, Man, whatever it takes, we got to get those boats offloaded, and get them back to speed.

Otherwise, the economy falls into heat.

And all of those 100 year productions to get your money back.

Whatever it is that the P of 100 It's like, dude, none of that's coming true.

Small like a PE of like infinite you never get any money back.

That doesn't bode well for stock markets.

And the opportunity though, is for those that focus on how to do things effectively how to do things efficiently, how to systemize your business, how to run your business without you how to turn a profit guess what, what is coming is an opportunity.

And that's super exciting.

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If you're enjoying the journey.

I'm excited for where this is going.

There is an opportunity for, for you for me, for the entrepreneurs of the world to to live our dreams and benefit all of our customers in that process.

Alright, that's all I got for you.

Continuing this journey of systems creating results. See you tomorrow.