When Increasing Capacity Becomes a Priority

One Sunday morning, a homeless woman at a traffic intersection was approaching cars and begging for alms.  Some drivers give but most don’t.  But the woman persists anyway; she shows a sign saying she’s homeless and asks for money for food. 

I thought as I observed the homeless woman:  if the government could spend so much setting up facilities to quarantine patients infected with the CoVID-19 virus, couldn’t it also spend a little more to house the homeless who roam the streets?  At least the government could provide a place to sleep and some food and water to homeless people even for a brief time so they’d be able to find work or resolve whatever issue that brought them there in the first place? 

The frequent answer to such a suggestion is a lack of resources.  The government would say they don’t have the budget to provide such for homeless people. 

How then were they able to provide for CoVID-19 infected people?  That’s different, a government person may say.  It was a national emergency and the virus is dangerous and life-threatening. 

But isn’t being homeless and without food dangerous and life-threatening too? And at this point, the government would not pursue the argument.  With a wave of a hand, they’d just say there is no justification to provide the resources. 

Not only governments but also enterprises hesitate to provide resources even when the demand would be there.  Executives would cite limitations in budgets or capital.  They would prefer that the operations spearheading supply reach their points of maximum capacities before asking for any investment in additional capacities. 

And even if they are at that point of maximum utilisation, executives would require proof that operations are also at their highest efficiencies.  Executives by common practice, will want an organisation to exhaust all of its means before considering any investment in additional capacities. 

If executives can avoid investing in new capacities, they will.     

This is why factories run flat-out to supply products before companies realise they need to build new production lines.  This is why airlines wait until flights are overbooked or ticket counters turn away passengers before they add new planes to their fleets.  This is why some restaurants don’t expand their dining areas or hire new staff until they see patrons waiting for tables or walking away because they couldn’t get a waiter to serve them.    And this is why internet companies don’t install new equipment until they see slowdowns in downloading speed or backlogs of subscribers. 

It doesn’t occur to many enterprises that investments in additional resources should ideally happen before operating limits are reached. 

At the height of the CoVID-19 pandemic in New York City, USA, in late March of 2020, the US Navy dispatched the USNS hospital ship, Comfort, to assist the city’s medical services. 

New York was low on available beds and staff to treat a surge of CoVID-19 patients.  New York City welcomed the Comfort, with its 1,000 beds and trained medical staff.   

But instead of helping, the Comfort would only take non-CoVID-19 patients.  The US Navy thought that by taking in patients not infected by the virus, New York could free up space in their hospitals for the CoVID-19 patients.  The Comfort’s beds were also spaced closely side by side so in the first place, the ship could not enforce social distancing for CoVID-19 patients.

The Comfort ended up treating 20 patients at its first week as New York’s hospitals continued to struggle with crowded wards and weary staff.  After so many weeks of sitting idly by hardly utilised, the Comfort departed New York City. 

The story of the Comfort was a lesson for leaders, if not an eye-opener for executives.  One should not wait till an issue becomes extremely urgent before acting.  

But nobody did learn.  Nobody did realise.  Many executives of governments and enterprises have forgotten the story of the Comfort. It has been relegated as one more passing tale of the pandemic era.  Meanwhile, wave after wave of virus infections months after the story of the Comfort have led to overcrowded hospitals and more deaths due to patients unable to be admitted for treatment.   

We shouldn’t wait till the last minute before deciding we need more capacity.  It isn’t complicated to calculate how much more we need if we can see the rate of  growing demand and anticipate when our resources will no longer be enough. 

I gave money to the homeless woman that day but I saw more homeless people begging on the street corners the weeks afterward. 

We still haven’t learned. 

About Overtimers Anonymous

Just About Every Enterprise is a Supply Chain Enterprise

I and ten million people in Manila have the same problem every day.  Mobile phone reception—it’s lousy. 

It would take several tries to call someone on my mobile phone and when I do, chances are the conversation would stop in the middle. 

Poor cellular reception is a norm in the Philippines.  It’s just so hard to get a decent signal to have a continuous conversation or get a text out. 

I’m sure telecom companies are doing all they could to improve their services.  I see it with their unrelenting investment in the set-up and maintenance of cell-phone towers as they continue to expand coverage and upgrade reception. 

If we think about it, the operations of telecom companies have similarities to those enterprises who manufacture and deliver finished products.  The good quality mobile phone reception we yearn for is not much unlike the supermarket products in how both are made available to consumers.  In short, both have supply chains. 

The supply chain is a model for enterprises that buy raw materials and produce & deliver merchandise for their customers.  Supply chain management has become a standard when it comes to managing the inventories and logistics of items, from chemicals to consumer goods.

Supply chains, however, aren’t limited to just physically tangible products.  They’re very much applicable to intangible items, such as electricity, health care, and business process outsourcing (BPO) services. 

Supply chains follow the flow of products from their start as raw materials to their conversion to merchandise and subsequent delivery to users.  Service and utility enterprises also follow a path of conversion and delivery not altogether different from product supply chains. 

In manufacturing industries, factories convert raw materials into products. 

In non-manufacturing industries, enterprises convert specific problems and issues into finished services.   Hospitals treat sick patients.  Call centres handle problems and questions.  Telecom companies provide mobile phone receptions resulting in uninterrupted conversations and successful sent messages.  Power utility companies make available electricity from energy sources. 

But It’s not just relating manufacturing and services.  It’s also the logistics behind both.  Whereas manufacturers rely on procurement of materials and logistics for transport and delivery, service enterprises depend on infrastructure and systems to ensure the flow of their operations.

A hospital needs not only ambulances but also the system of managing the dispatch of the ambulances for the assurance of fast turnaround for the benefit to patients needing immediate transport. 

One mistake I observe with service companies is that they limit supply chain management to stuff like spare parts and supplies. 

A large energy corporation for instance has a supply chain executive whose job is to buy equipment and components.  The energy corporation had no structure or strategy when it comes to power conversion and delivery.  The energy corporation, hence, had big issues in unreliable power delivery due to poor planning in energy generation and power plant capacities. 

The success of a supply chain model starts with its scope.  Does the supply chain manager of the enterprise handle the total flow from start (procurement/purchasing), to its conversion (production/service operation), and the logistics operations (transport/delivery/orders processing)?  If it misses on any of the aforementioned, chances are the enterprise’s business has a lot of room for improvement.

We consumers want good quality from the things we buy.  Not only the merchandise from the store but also from services such as mobile phone reception, electricity at the flick of a switch, and the best health care. 

The supply chain model is just as much applicable for intangible services as much as it is for tangible items.  Most if not all enterprises have supply chains for what they offer and deliver.  We just need to recognise that managing the operations with supply chains in mind can go a long way to bringing excellence and win-win results. 

If only the telecom companies can think like this, then maybe we’d get better service with our cell-phones. 

About Overtimers Anonymous