Trying to Improve Performance? Management by Exception is the Key

By: | February 24th, 2015

Management by Exception

Management by Exception (Image Courtesy www.dreamreport.net)

Management by Exception (MBE) is a style of business management that focuses on identifying and handling cases that deviate from the norm.

The main advantage of management by exception is that issues are identified rapidly and managers can use their time and energy more efficiently on matters that count, rather than for less important issues that could provoke delays in their daily operations. Additionally, managers need to work less on generating statistics, and the frequency of decision-making becomes less by delegating to subordinates. Managers make fewer decisions, and subordinates have more responsibility, which increases their motivation.

Management by Exception has both a general business application and a business intelligence application. General business exceptions are cases that deviate from the normal behavior in a business process and need to be cared for in a unique manner, typically through operator intervention. These issues might include process deviations, infrastructure or connectivity issues, external deviations, poor quality business rules, malformed data, and the like. Management by Exception is the practice of investigating, resolving, and handling such occurrences by using skilled staff and software tools. Good management will contribute to improved efficiency in business processes.

Management by Exception also gives employees the responsibility to make decisions and to fulfill their work or projects by themselves. It consists of focus and analysis on regularly generated KPIs (Key Performance Indicators). If an unusual situation or deviation occurs which could cause difficulties for the business and can’t be managed at the operator level, the operator should pass the decision on to the next higher level. For example, if all equipment is operating at expected performance for the shift, except one which is underperforming at a statistically relevant margin, only the data for that equipment will be presented to their manager for further investigation, assignment, and root cause analysis. Management by Exception can bring forward business errors and oversights, ineffective strategies, changes in competition, and business opportunities. Management by Exception is intended to reduce the managerial load and enable managers to spend their time more effectively in areas where it will have the most impact.

The Challenge in Implementing MBE

Generating KPIs and delivering that data to the right employee for regular exception review has been challenging in the past. Most business practices require employees to be proactive, using standard Business Intelligence (BI) tools in the analysis of data. If they aren’t proactive, data isn’t reviewed. Ideally, KPI generation will be automatic, and information will be delivered on schedule, repetitively, to support a Management by Exception strategy and the development of work habits. In addition, purpose-built tools need to exist for the deeper analysis of an anomaly. These purpose-built tools need to deliver the expected results quickly and without the need for extensive domain or technology expertise.

This is Where Automated Report Generation Comes In

It doesn’t matter what industry you are in. You can be in Water, Wastewater, Food, Pharmaceutical, Energy, Automotive, Chemical or just general manufacturing and the answer is the same. Automated report generation, report delivery, and long-term report management is the best solution for implementing a Management by Exception strategy. Reports are generated automatically and will deliver the current and best KPIs. This information will be delivered on a scheduled or event basis in order to support a routine and regular assessment of performance. Reports will be archived and managed to enable a quick review and comparison against past performance. Access to this information needs to be on “Any Glass”, ideally through an internal or external Web Portal, with support for mobile devices. When an anomaly is found, simple and prebuilt operator tools will exist to enable a root cause analysis.

The key is to deliver information routinely and automatically, to support the development of continuous improvement as a habit. It is equally important to review KPIs for relevance and implement new KPIs as needed to support your current business strategies. This latter requirement is where many alternative solutions fail. The repurposing of business intelligence tools typically requires a higher level of system integration, training, and long-term support to deliver their value. Their lack of industry specific functionality makes them costly to implement and slow to adapt as business strategies change. This is another key benefit associated with a purpose-built, industrial, report generator.  Report definition and generation needs to be easy to implement so that adaptations can be created and managed by those that require the information. Report generation and anomaly review tool management should no longer be the sole domain of IT staff professionals.

What Does the MBE Process Look Like?

  • KPI information is delivered automatically, based on time or event. For example, time-based reporting might include a Monday morning report on the past week’s performance. A batch report, created automatically and delivered at the end of a batch, will enable an operator or manager review of KPIs, prior to the start of the next batch.
  • KPI information is delivered in the most convenient way. That can be an automatically printed document. That document can be enhanced with QR Codes and barcodes to make it actionable with mobile and data collection devices. The information can be emailed, including hyperlinks within documents for actionability. Documents can be posted within a web portal for review and approvals, and access to additional web portal interfaces for anomaly analysis.
  • Operators and managers will receive and review documents. This can include the determination that all systems are normal, and a document approval can trigger a wider distribution. A review can also determine an area needing improvement. The process may simply entail forwarding the document, with notes on action items. The process may also include generating additional documents, or assessing data in the web portal as a means to determine the next appropriate steps. Most of all, the generation of documents become an audit trail for a review of past performance to improve future performance.
  • As continuous improvement progresses, the need to adapt KPIs, or generate new KPIs must be quick and easy, to promote a continued focus on improvement. Adaptation must be in the hands of those using the information and can’t be a cumbersome process involving third parties and IT professionals, with iterative processes of specifications and deliverables. Put the power of report generation and dashboards in the hands of those that need them, and empower their use.

For more information: www.DreamReport.net

Roy Kok is an automation industry veteran of over 30 years, having worked with Data Acquisition, HMI/SCADA and Reporting technologies. Roy is also the vice president of sales and marketing for Ocean Data Systems, makers of Dream Report.

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