A Tale of 2 Grocery Lines
Understanding AP Bottlenecks
Posted by Rakesh Shukla on Mon, Aug 25, 2008 @ 02:03 PM
This "Life is crap" t-shirt (a spoof of the famous "Life is Good" t-shirts) got me thinking about 2 very different experiences I recently had at grocery stores.
I hate waiting in line - especially grocery stores lines. The other night, I stopped at the grocery store to pick up some milk. It was peak grocery shopping time so why were there only 2 registers open??? Of course, both lines were super long! Which line to choose? I admit that I always try to choose the shortest grocery line by doing some quick calculations based on the number of people in each line, the number of items each shopper has, the competency of the check out clerks, etc.
"OK...there are 8 people ahead of me in this line with only 2 or 3 items, and there are only 4 people in that line but one of them is an old lady with a heaping cart full of food ... The check-out gal in the longer line looks like she knows what she is doing but the droopy-eyed check-out guy in the shorter line looks like he needs a cup of coffee."
Tough choice but I decided to take my chances with the longer line when, all of a sudden, some frizzy-haired soccer mom from the shorter line darted in front of me! Of course, this voided my previous wait-time calculations. Annoyed, I went to the shorter line behind the feed-the-small-army old lady. After fiddling with my blackberry and sneaking a peek at the tabloids ('ST. VALENTINE & CUPID WERE SECRET LOVERS!', 'JOHN MCCAIN ENDORSED BY UFO ALIEN' and , 'ELEPHANT SHUNNED BY HERD... after making love to a rhino!'), I got really annoyed when frizzy-soccer-mom got rung up before me and I was still stuck behind the old lady.
Now, compare this to my experience at Trader Joe's a few days earlier. Trader Joe's is my favorite grocery store . It's very reasonably priced, they have cool & interesting food and the check out lines never seem to be too long. Trader Joe's has a great, dynamic check out system -- if a check out person's line gets more than 2 or 3 deep, he/she rings a bell and another check out line is opened immediately. When the check out traffic subdues, check out lanes are closed and the employee goes back to doing other tasks such as stacking or inventory maintenance. The number of check out lines are dynamically growing and shrinking as needed -- it's a great system that prevents long lines and yet keeps all the employees productive.
Pondering my grocery store experiences got me to thinking about queuing theory which is the mathematical study of waiting lines (or queues). I'll admit that my knowledge on this topic has long been forgotten since some brief exposure during my MIT college days. Dusting off an old text book, I was fascinated to (re)learn that a very small and seemingly insignificant change can quickly disrupt a smooth functioning process causing chaos --- like short grocery lines turning into long grocery lines in a matter of minutes. Without delving into the mathematics of queuing theory (not that I even understand it anymore), small changes at the margin (number of checkers, competency of checkers, average checkout time, number of shoppers arriving) can very suddenly lead to bottlenecks and long wait lines ... unless these small changes are detected early and additional checkout lanes are opened almost immediately. Some brilliant executive at Trader Joe's clearly understands these queuing concepts which is why you will hardly ever see a long line there.
Now, here's the thing about queuing theory --- it would also explain AP invoice processing bottlenecks. Think about it. Your staff is humming along processing invoices and then a small change happens such as someone calls in sick, or the number of invoices increases during period end or a few AP clerks get sidetracked dealing with unpleasant supplier disputes. Any of these small changes could result in a significant backlog increase - especially for larger AP operations. Using the Trader Joe's model, the best way to prevent these bottlenecks is early detection of growing backlogs. If you have real time visibility into each AP clerk's backlog, you could dynamically balance workloads or reallocate resources in real time to prevent backlogs before they get out of control.
A simple dashboard that showed each AP Processor's backlog could be a great productivity management tool.
-Rakesh