Post 3 of 4 in a series looking at Revolutionizing VPOs.
Reason Codes give us clarity, but without action, they’re just data. That’s why Daily Reviews are the next step in revolutionizing VPO management.
The biggest objection we see to making the review process daily is the time commitment – “We can’t do that every DAY it’ll take too much TIME!” – what we see in practice is the opposite, a daily review minimizes the amount of time it takes to resolve any operational issues. These daily reviews are the best 15 minutes per day your teams will spend when it comes to creating both immediate and enduring value. A daily cadence reduces the amount of review needed while ensuring the situations creating VPO’s stay fresh in everyone’s heads.
Daily Reviews are the best 15 minutes per day your team will spend creating value
Need one more reason to make VPO reviews happen daily? Less frequent won’t happen with consistency. It’s a simple fact we’ve seen repeated over and over – an intention to do VPO reviews less frequently puts too much distance between the event and the resolution, that distance introduces noise that will prevent people from identifying the true cause of the VPO with swift and total accuracy. Eventually this leads to less opportunity for problem solving, for cost reduction, and usually to the demise of the review process.
Imagine a report emailed at 5:30 AM, listing yesterday’s VPOs by team. Purchasing has 4 line items coded to their team, sees a “Quantity Error” for $500; they call the Field Manager, understand the issue, and start fixing it before lunch.
I know what you’re thinking “If I set this up by team and something gets miscoded my teams are just going to be fighting over who owns the VPO rather than resolving it!” There is no doubt that when you move towards a culture of higher accountability the rising expectations can create tension between teams. We recommend a simple two-pronged approach to prevent VPO reason codes from becoming the cause of in-fighting.
First – no one should have VPOs as a component of their compensation program. This might seem counterintuitive, but in practice setting up your VPO reduction program as a cross-team challenge and goal will be much more effective.
Second – Remember from Post 2 (linked here) that our goal is creating clarity for the team, if a VPO shows up in someone’s reason code but after a quick call or text they learn it really belongs in someone else’s reason code – what do you do? Have a quick and easy process for recoding if a VPO is incorrectly coded. This way codes aren’t permanent stamps, simply the best guess given the available information the person entering the VPO had at the time it was needed.
If Reason Codes create the opportunity for accountability; then Daily Reviews turn that opportunity into value-creating action. Picture this: a Purchasing Manager spots a $500 variance, fixes it for the current job, and flags two upcoming jobs with the same issue—all in a day’s work. But even with great codes and reviews, success hinges on mindset. That’s what we’ll explore next: a culture that refuses to let the same problems repeat.