Expect, Inspect, Accept: Managing Expectations

Over twenty years ago I heard for the first time the phrase expect, inspect, accept. I learned through this simple statement a very powerful method of setting standards, measuring those standards and then either being happy with the results or having to set new standards.

Over the years many people have spent a great deal of time introducing several concepts of budgeting. After all the years that I've been working either with my own business or on other businesses I still like the very simple methodology of setting expectations, measuring those expectations and then moving on to the next project or corrections on my present project.

The purpose of this article is to give you some simple methods for making sure you and your company is moving towards outcomes that are appropriate for you. It's important to remember that the simple act of measurement will start you on the road of improved operations and profits.

Setting Expectations, the first step

George Michaels had routes that would produce between $5,000 and $10,000 in sales. He kept looking at how to move the lower routes to higher levels of productivity. However, every time he tried to get his management team to step up and manage this project they had reasons for why it was not possible to get productivity from the lower producing routes.

George forgot the first method of setting expectations. That is having an understanding of what your expectations are. George was not specific and clear with his managers about what he was actually measuring or why he was unhappy with his productivity numbers.

For example, if George instead set standards for what inventory levels should have been for each of his machines and then managed at what percent of sales levels they should have been refilled, he might have seen that in fact his $10,000 route could have had a 30% increase in productivity while his $5,000 route could only have a 15% increase in productivity.

The first step George should have done is set standards for how long it takes to service each type of machine on his routes. He then would want to set inventory level expectations for how much merchandise he expected to have in each machine and finally calculated travel time between locations his route drivers were servicing.

In our example above, George found that he only had inventory levels in his snack machines of 70% of the machines total capacity. He also found that his route drivers on the $10,000 routes were filling soda machines at a sell rate of $60.00 per service stop. This meant they were filling machines when 25% of the inventory was sold. He thought that canned soda machines could easily move to a 60% sell through before needing more merchandise.

On the other hand, his $5,000 route had many stops that required fresh food and fresh pastry fills. The service time for these machines had more to do with code dates on perishable food items that it did with the amount of inventory in the machine. However, had George thought about whether the locations the $5,000 route was servicing should have fresh commissary prepared items or frozen items, he might have come up with different answers to his quandary of how to improve the productivity on his routes.

The key with setting proper expectations is to ask the correct question in the first place. You also may want have the discipline to not stop at the first question but to always ask three to five sub-questions after your first question about what you expect. When asking more than one question on a topic will help you get the true and core issue you are trying to solve. Asking at least five questions on a topic will often help you get better answers which can give you more value in your planning process.

You will also want to remember that often the expectation setting part of a planning and measurement process is always the most difficult. If we don't take an appropriate amount of time to make sure our expectations are correct, we will measure the wrong number and not get the results we want.