Management by Exception: Operating Model of the Future

May 20, 2016 · 2 min · Fabio Pelosin

Originally published on the Discontinuity blog, May 2016.

How automation will shape the company of the future, through human-machine collaboration. The business is encoded in software that handles routine operations and requests human intervention only where necessary. This enables new levels of standardization and efficiency that would be unthinkable otherwise.

Example (order flow):

  • Software: check stock availability.
  • Software: request picking to warehouse staff.
  • Warehouse: confirm picking.
  • Software: request quality verification.
  • Quality: approve shipment.
  • Software: check remaining stock and prepare replenishment order.
  • Software: request purchasing approval.
  • Purchasing: adjust quantities and confirm.
  • Software: send PO automatically.

This opens interesting scenarios. For example, if an order is not confirmed within the historical average tolerance, the software can notify progressively up the chain hierarchy until the order is fulfilled. This prevents work from being hidden by staff or simply forgotten. Nothing gets swept under the rug.

Management by exception is a style of business management that focuses on identifying and handling cases that deviate from the norm. General business exceptions are cases that deviate from normal behavior in a business process and need to be handled in a unique manner, typically by human intervention. Their causes might include: process deviation, infrastructure or connectivity issues, external deviation, poor quality business rules, or malformed data. Good exception management contributes to the efficiency of business processes by using skilled staff and software tools to investigate, resolve, and handle such occurrences in a targeted way.