What is rigidity (inflexibility) and how we can see and calculate it? | Lean thinking |
An easy to remember definition for rigidity is: the inability to be flexible when customers require it.
It does not matter if we are talking about an organisation, an area, a department or a single employee; when you are not able to adapt and cope with external or internal customers explicit requests, or expectations, it means that you are rigid.
There are numerous route causes for why inflexibility appears and some of the most common are:
Strategy and vision (we do things in a certain way only);
Processes and technology (we would like to change something but we are not able or it would cost us too much, or it takes us three moths to hire someone);
Employee’s mindset and behaviour (why should we do this, it’s not on my job description).
There are four types of rigidity that we will cover during this article:
Product mix rigidity appears when you have the product that the customer is interested in but, you do not have one that complements it and the customer desires to buy both as a package.
For example, let’s suppose that you are a mobile phones retailer and some of the customers request for an insurance that goes with the phone so that they protect themselves from the danger of damaging it in the future.
If you are unable to provide it it means that you are rigid and therefore losing a specific segments of customers.
Product features rigidity appears when your product does not have a specific feature which the customer desires in order to make the purchase.
Let’s stick to the mobile phone example and let’s suppose that you are selling one that is attractive for customers but unfortunately your product is not waterproof, or the battery lasts only for half a day, or it has no wireless charging capability. If a segment of customers are turning your product down because they expect this functionalities, or performance, it means that you are rigid.
Demand rigidity is the rigidity that reflects the inability of an organisation to cope with customer demand. In a previous video I was explaining how to calculate the number of employees (FTEs) that you need based on the number of requests coming from the customers. So, if you haven’t seen it yet, make sure to check it out.
In graph below we will have a look at a department that needs six employees at the beginning of the year in order to get the job done, but after first three months customers requests go down and so does the number of employees needed. On the other hand we see that in the department we had five employees working (existing) for first three months and when finally one more person was hired, it was already too late.
The drop in volumes could be caused by seasonality, in which case we can conclude that the department is doing a poor job when it comes to forecasting demand or, it might be loss of business caused by customers being unhappy with the long waiting times from first quarter.
As funny this situation may seem, it’s actually something that happens quite often in most corporations. Long recruiting process and inability to forecast demand properly leads to rigidity in both forms:
The so called negative rigidity, which appears when you are under capacitated (meaning that you have more employees needed than existing employees).
And the positive rigidity, which appears when you are over capacitated (meaning that you have less employees needed than existing employees).
And don’t get tricked by the name positive, or negative. They are both equally harmful. In the first case scenario you have customers waiting for long and employees being overworked and stressed while in the second scenario you have employees doing nothing productive and inventing some activities in order not to get fired (in other words generating waste).
The formula to calculate rigidity is: 1-FTEs needed/FTEs existing. So if we take January as an example, it will be:
1-6/5 (which is 1.2) = -0,2 or -20% (negative rigidity)
If this seems difficult to remember I will give you an easier way to calculate. We can see that in January there is a needed for six employees, but there were only five. It means that the department was one employee rigid (six minus five). One employee rigidity out of five employees existing is 20%. Exactly same result.
If we apply the same formula for May we would have:
1-4/6 (which is 0,66) = aprox. 0,33 or 33% (positive rigidity)
Again, we see that we are two employees rigid which is aprox. 33% out of six existing employees. So, as you can see, it’s very easy to calculate rigidity even without the formula.
There will always be a certain level of rigidity in any business because the customer demand will always vary throughout: the year, the month or even daily. It is important to understand what is the amount acceptable for your business and try to contain it within those boundaries with proper capacity management (to be covered in a future article).
The final type of rigidity is service delivery and it reflects the inability to fulfil the quality of service that the customers are expecting from your side.
For example if you are an Italian restaurant and you promise to deliver pizza in under ten minutes from the moment the order has been placed and you fail to do so, it means that you are rigid. In some cases it might be that it’s not even you setting customer expectations so high, but might be that the competition around you is the one doing it.
If your pizza is extremely delicious, or you sell a good product at a very good price, it might be that you’ll still have enough business to keep you going no matter how fast the the others around you manage to deliver. But, there will certainly be a segment of customers that you’ll lose because in that particular day speed was more important than anything else.
What is your view about rigidity? Do you have any specific questions related to it? If yes, don’t hesitate to put your comment below!