That Was Another Crazy End of the Month

Another Crazy End of the Month

It is safe to say that many organizations face an abundance of challenges in trying to become a high performing organization. “End of the Month” Syndrome is one of the major challenges that organizations struggle to eliminate, especially in the demanding world of pressure to reduce prices, provide shorter lead-time response to customers, provide higher quality product or services, or provide additional product features, all with the added pressure to meet the internal financial goals of the organization.

 

End of the month syndrome

“End of the Month” syndrome is defined as the rush to complete the orders in the last few days at the end of the month in order to meet the financial targets of the organization. Usually this push is directed to the work that is either close to being complete, or the work that is of high value that, if completed, it will make a large impact on the revenue for the month. What is also interesting, the push is usually irrespective of negative cost implications associated with expedited efforts, disruptions and delays that it causes to other orders, or promise dates on other orders. If the organization suffers from these situations, it is usually the effect of having multiple priority systems that are guiding the decision making within the company. These multiple and sometimes competing priority systems are what prevent organizations from becoming high performing. It can be concluded, that if the organization makes more than 25% of the monthly revenue plan in the last few days of the month, it will continuously struggle to achieve its revenue goals and to achieve its full potential; as the “End of the Month” crunch very often creates overtime costs, expediting expenses, quality issues, inefficiencies by forcing bad multi-tasking, which all have negative effects on the financial performance of the organization. In addition, the customer may also experience negative effects as a result of the end of the month rush, such as missing information, order inaccuracies, non-conforming product, or late deliveries.

 

The internal conflict

The internal conflict that is created by the end of the month syndrome typically is a result of the internal goal shift from “controlling the cost” at the beginning of the month, to “increasing the flow” at the end of the month. However, there are a number of issues that are created by this mode of operation. In addition to the negative cost implications, another one is the “workload starvation” at the beginning of the new month, because all the orders that were near the end of the process were flushed out in the previous month. This switching of priorities within each month creates the condition where very few orders are available for shipment early in the month and the majority of the shipments are available for delivery at the end of the month, and the cycle happens month after month, which creates the situation known as the “end of the month syndrome”.

 

Breaking the conflict

To break the end of the month syndrome cycle, the focus has to switch from focusing at the end of the process and trying to complete orders on-time to the beginning of the process and starting orders on-time. So, instead of focusing on the orders that are closest to being completed at the end of the month, the focus should be on the orders that need to start on-time continuously throughout the month. This does not mean starting orders as soon as possible. It means, starting orders as late as possible to reliably flow orders from release to completion while taking into account the amount of variation and dependencies in the process flow. In addition, a single priority system needs to be established that is designed to meet both the customer commitments and the company’s financial goals. This approach creates an external focus of meeting the customer requirements verses an internal focus of meeting the internal revenue goals. The new internal focus will now concentrate on meeting customer commitments that are aligned with the organization’s financial goals.

 

Eliminating the end of the month syndrome

Eliminating the end of the month syndrome can be achieved by implementing three actions:

  • Establishing the order action team that reviews all incoming orders daily and establishes a plan for each order that satisfies both the customer’s needs and company’s financial goals,
  • Establishing a robust process for systemically releasing work into operations based on the plan established by the order action team,
  • Establishing a single priority system for work so everyone in the organization is synchronized and working to the established plan.

These techniques create a shift in thinking required to break out of the end of the month syndrome, which requires a change from focusing on completing the orders on time, to focusing on starting orders on time.

Subscribe to our blog

Subscribe for your bi-weekly blogs and receive our valuable articles on several topics related to operational excellence, business optimization and the process of ‘change’.