In this column, we will again change focus. In past columns, we have focused on topics primarily of interest to production and inventory control practitioners. We have covered topics such as capacity, processes, manufacturing orientations, ABC analysis and an analysis of costs. However, we will now look at topics that are broader based. These topics go to the heart of management and problem-solving.

This month, we look at the concepts of problems and symptoms. To understand the reason for this shift in attention, it is important that you have some important background information.

Recently, one of the authors worked with a small manufacturing company. At one of the meetings, the author met with the firm's CEO. The CEO gave the author a copy of his company's objectives and action plan. What the CEO wanted was an "honest" assessment of this plan (it turned out that he really wanted a blessing on the plan, not an assessment). In reviewing this document, the author's eyes came to rest on one item — "reduce inventory by 25 percent." This is interesting, thought the author. This item was circled for future discussion.

After reviewing the document, the author sat down with the CEO to discuss it. The author noted the interest in inventory. What did he (the CEO) think were underlying causes of this increase, asked the author. After all, you can never attack inventory directly since it is a symptom of other problems. At this point, the CEO stopped and looked at the author with that expression reserved for small children and people who don't seem to understand. The CEO pointed out that inventory was the problem, not the symptom. If the firm focused its energies, then he was sure that the inventory levels would drop.

This situation is not unusual. In many cases, we see people who are unable to differentiate between problems and symptoms. They often confuse the two. In many cases, they concentrate their attention on attacking symptoms, only to find that their efforts at improving the situation in one area has created a problem elsewhere in the firm. Problems and symptoms are related, but they are different. In this article, we concentrate on these differences.

Symptoms are Indicators
As pointed out in the preceding story, inventory is often a symptom. Symptoms are often the first indicators that something is wrong. Symptoms are like thermometers; they tell the manager that something is wrong, but not why it is wrong. Typically, we can determine that we are dealing with a symptom by listening to the way the concerns are described. When managers talk about symptoms, they use words such as "too much," "too little" or "not enough." For example, you will hear people talk about too much inventory or the scrap rate being too high or the output per employee being too low.

Fundamental to symptoms is that they can never be attacked directly. Symptoms are residuals; they are outcomes. To effectively attack symptoms, we must first understand the underlying causes — those factors that gave rise to these problems. If you attack a symptom, the result is often the "good news, bad news" syndrome, as described by Gene Woolsey of the Colorado School of Mines.

Let us return to our inventory example. Attacking inventory levels without understanding the reason for their presence could result in inventory reductions — at a cost. If the inventory exists because of processing problems (as indicated by high scrap levels), any reductions in inventory would result in shortened orders and missed due dates. The result is that without the protection offered by inventory, we would find that the number of parts ultimately produced would fall. This would mean that we would be forced to ship incomplete orders, or we would be forced to miss due dates. Note the "good news, bad news" syndrome. The good news is that inventories have fallen. The bad news is that our customer service levels have also fallen.

What is a Problem?
Ultimately, a manager's time is better spent dealing with problems and causes. This leads to the question: "What is a problem?" As Charles F. Kettering, one of the great innovators of 20th Century business and a major player in the growth of General Motors, once noted, "A problem well stated is a problem half solved."

In general, a problem is a perceived gap. This gap may be between the present situation and some desired situation. For example, if the inventory noted in the opening story had been an indicator of problems in processing, then the problem statement might have been as follows: "What can we do to improve the efficiency of current operations so that their processing performance is in line with other comparable operations in well-run systems?"

Urgency of Problems
When dealing with problems, we have to deal with three related issues. The first is the issue of urgency. Presenting a problem is an invitation to action. When you define a problem, you have defined a gap. The implied response is that something should be done to close the gap. However, when you issue an invitation to action, you must recognize that action involves change. Many managers resist change. This is a fact of life. To successfully define a problem, you must also identify the impact statement. The impact statement asks the question, "What would happen if we did nothing about this problem?" It deals with the issue of living with the current situation.

Urgency is created whenever we show that the costs of acting on the current problem are less than the costs of not acting. For example, there are many people who have stopped smoking because of an impact statement. Their doctors told them (often after a heart attack or such) that if they continued to smoke, they could expect to live about six months. But if they stopped, their life expectancy could be years. It is important that we deal with urgency. However, there are many problems that are best left alone because the costs of change are far greater than any benefits we could expect to gain.

Structure of Problems
The second issue is that of structure. Problems span a spectrum, running from ill-structured at one extreme to well-structured at the other. Well-structured problems involve clear goals, well-understood means of achieving these goals, and complete and accurate information to identify and resolve the difficulty. When faced by well-structured problems, managers can often adapt and apply ready-made, routine solutions. For example, consider the situation of your car and an oil change. In this situation, you have a well-structured problem — to close the gap between the current state of the car and the desired state (a well-maintained and properly working car). The conditions triggering the need for an oil change are well defined (e.g., once every 3,000 to 5,000 miles). When this condition has been identified, the owner applies the routine solution of changing the oil to create the desired state — a well-maintained car.

With ill-structured problems, managers lack good information. With poor understanding of appropriate goals and the means to achieve them, they have trouble assessing the size of the gap between the current and desired state, or even whether any gap exists. In such situations, managers must assess current conditions, often gathering more information to do so. They must add structure to an ill-structured problem. This action must precede any further activity.

Orientation of Problems
The third dimension is that of orientation. Problems can be strategic, in that they deal with how the firm competes in the marketplace. They could also be operational, in that they deal with operational issues such as equipment breakdowns, absenteeism and late deliveries. Operational problems have short time horizons, while strategic problems have very long time horizons. Why focus on the differences? The reason is that we can never really solve a strategic problem on an operational level or an operational problem at a strategic level. There are many problems encountered by managers that are really strategic in nature, yet they are seen as being operational.

Dealing with Causes
Finally, we must deal with causes. The cause of a problem is anything that creates or contributes to a gap between the current and desired future situation. A cause is a source of observed symptoms. It is the condition that managers must identify and change to eliminate the symptoms.

Causes and symptoms are closely linked. In many cases, several symptoms can be traced back to a few common causes. On the other hand, different causes can create similar symptoms. Vague links between symptoms and causes complicate problem-solving, since managers must identify the most likely set of causes for observed symptoms, based on limited available information, and take appropriate action. We must recognize that under these conditions there is always a chance that managers may misidentify causes and take inappropriate actions. This is a "fact" of problem-solving.

What Have We Learned?
In this column, we have learned the following:

• Managers are basically problem solvers. To be an effective problem solver, we must understand the differences between symptoms, problems and causes.
  
  
• Symptoms are indicators of problems. They point to difficulties. Symptoms are often indicated by the use of the "too" word — "too much inventory," "too little output," "too much scrap."
  
  
• Symptoms are residuals. They cannot be attacked directly. Rather, to eliminate a symptom, we must identify and eliminate the underlying causes.
  
  
• Problems refer to gaps between what we are experiencing and what we want to experience.
  
  
• When dealing with problems, we must recognize the importance of: 1) urgency; 2) the degree to which the problem is well-structured; and 3) orientation (strategic or operational).
  
  
• Problems should be addressed when the costs of change (or the benefits gained) are less than the costs of not changing. Identifying the costs of not changing requires the formulation and presentation of an impact statement.
  
  
• Causes refer to the sources of the observed symptoms. This is what we act on.

In next month's column, we turn our attention to problem-solving.

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