This week I feel that applying Kolb’s Experiential Learning model is more relevant than Daudelin due to the focus more on ‘experience’ rather than reflection (although a bit of reflection is always necessary).
I understand my main problem this week to be our closing inventory of unsold stock. As this represents bikes that have not been sold during the year and then also result in costs of storing, this is essentially doubly costly.
As the finished goods warehousing line item has cost us at times close to $2 million a year I feel that this is a particularly relevant issue. Given that we are coming toward the business end of the year (excuse the pun) it is apparent that all the bike markets are no longer growing in size and so market share is now a key factor in improving sales. On the other side though, profit margins can be improved by cutting unnecessary costs, such as finished goods warehousing. Part of the problem lay in my not having a firm understanding of the accounting side i.e. the cost drivers which means I didn’t fully grasp the costs each year of production. I should have realised that I didn’t 100% understand and should have taught myself or asked for help. I find this relates in a small part to this weeks reading by Greiner (1972) wherein we didn’t so much have a crisis of autonomy but more a crisis of knowledge autonomy. Each team member shared in decision making which was great but none of us took the time learn too much about each others departments, even a small amount of overlapping knowledge. I felt that this was more a fear of overstepping duty than laziness but for me it meant a limit to my learning of the game was reached. Once I felt I was on top of the operations decisions as I saw it I stopped trying to learn. I should instead have looked at the reports that showed operations and accounting for example, in this way I wouldn’t have neglected costs like finished goods warehousing which realistically could have saved us millions.
As we all are/ are becoming very knowledgeable about MikesBikes variables, we find problems lie in adapting this same knowledge in slightly new situations. For example, we might tinker with SCU to get idle time as low as possible whilst producing enough bikes. However, personally speaking it becomes noticeably more difficult to set when this also tied in with advertising cuts, firing employees, changing prices. Essentially I felt my role as being in charge of operations was about making sure we produced enough bikes at a low enough cost with enough quality. Now I realise that whilst that is one of the necessary functions of any MikesBikes team, this shouldn’t have been my number one priority. The organisations goals of growth and profitability are the number one priority and production is just a part of that. As for a large number of years we had fairly dramatic idle time and finished goods warehousing, I didn’t take this as a failure from my own part and thus didn’t try to learn from it. It’s not about knowing everything there is to know but knowing when you need to learn more (Kolb, 1976).
My next step? The action I am going to take is to literally delve into all the financial reports and compare each figure to last year and on its own just to try and understand why each figure is where it is. It might not help in decision making at all. But then again, it just might..
Greiner, L. E. (1972). Evolution and revolution as organizations grow. Harvard Business Review, 50(4), 37--46
Kolb, D. A. (1976). Management and the learning process. California Management Review, 8(3), 21--31