Eighty / Twenty and Down

Last week I wan meeting with the production supervisors with our CEO.  I was complementing them on their performance.  On time delivery was up, expedite orders under control and sales are up.  Great Job.  NOW it’s time to turn up the heat and really focus on improvement.  The hard part has just begun. Not text-book, complimenting then tell them to do more.

It’s the 80/20 rule.  It takes 20% of the effort to get 80% of the results.  The problem is so many companies get the 80% and declare victory.  “We’re There”, wherever “there” is.  They celebrate it as a victory and accomplishment.  Remember “Mission Accomplished”?  That didn’t end up well for the President.  America had achieved 80% of their objective.  They declared victory.  Problem is the last 20% requires 80% of the effort.  I think President Bush learned this lesson. (Don’t start sending hate mail.  I’m a fan of W and just finished his book.  Everyone makes mistakes)

Great companies get to be great because they know this.  When they hit the 80% level they rally the team for the difficult job still remaining.  They recognize they have accomplished a benchmark on their journey and then focus on the tough job still remaining.  This accomplishment was part of their goals.  they expected to achieve this accomplishment as only one of many benchmarks in their plan.  Great companies are the ones that plan for the last 20% to set them apart from their competition.

It would be easy to reach this 80% mark and maintain.  Sales and profits are acceptable.  Market share is okay.  To move beyond would require so much effort.  What’s wrong with being good?  I’ve written about this in a previous Blog.  If you aren’t improving, you are declining.  Competition targets you and continues to improve until they catch nad pass you.  You are on the decline.  Market share falls.  Pricing concessions are used to keep customers, impacting profit margins.  You are in decline.  Many times the decline turns to free fall, a company clawing at survival.

So my remarks last week were not from a greedy, overly tough manager.  It was from someone who deeply cares about their company.  It was from someone that will not settle for good enough.  It was from someone who cares about the team and wants Ebsco to continuing moving forward instead of backward.  I am extremely proud of the entire Ebsco team and our production managers.  They have achieved great victories. So when will we know when we get “Their”?  The answer is “Their” doesn’t exist.  Continuous improvement means continuous. Not continuous until we reach a certain level.  It’s continuous.

So pat yourself on the back for just a minute and then get back to work.  Your team deserves it.

Learn it the Wrong Way

Learning is not only something that happens in a classroom.  Learning is the processing and storage of everything you encounter.  Learning never stops and never takes a holiday.  Learning makes us the person we are.

Learning sometimes involves consequences.  If I do this, that will happen.  This is the purest form of learning that begins in early childhood.  If I cry like this, they will bring me a bottle of milk.  Pretty basic but complex at the same time.  Determining links in cause and effect is a complex form of learning, yet we do it at the earliest age.  Cause and effect learning makes the strongest impact on us.  It adds the element of a consequence, either bad or good to the lesson.  That consequences strengthens or memory of the event.  Think of the toddler that places a hand on the hot pan.  They get burned.  The consequence is a strong motivator to quickly learn the cause and effect involved in touching things that are hot.  If I feel heat I do not want to touch it so I do not get burned.  This lesson is strongly imprinted on us and remember throughout life.  Negative consequences often hold an emotional response that strengthens the lesson.

As we mature we continue to observe and learn.  Lessons build upon one another and we gain maturity.  With maturity often comes greater responsibility.  A new parent has no handbook on raising their new baby.  They learn from observation.  If the baby cries, they want something.  Learning what their individual cries mean come for experience.  If he does this, I do that and this occurs.  When they cry in this manner, I change them and they quit crying.  We are constantly building on the knowledge we have.

In business. leaders must continually learn.   Classes and  books help but observation is the key. In my previous job I was responsible for training several manager trainees.  They rotated through several stores, gaining experience from different managers.  Most, straight out of college had so much to learn,  I am not talking about policies and procedures, I’m talking about leadership.  Learning to be a leader is a complicated task.  I asked every trainee to take only two things away from their experience with me.  Only two things out of the numerous things they experienced in our time together.  Only two things that they would carry with them the rest of their lives.  I ask them to take one thing I did as a leader and commit to ALWAYS doing that in their career. The second thing I asked is that they take one thing I did and NEVER do that in their career.  I was a pretty good manager but I realized I had faults and shortcomings.  If these trainees were able to do this, with every manager they trained with, they would come out superstars.  Taking the best and leaving out the worst they experienced from several successful manager.

As we learn traits and behaviors we want to emulate, we often struggle to meet those standards.  We try to repeat those behaviors but find that life’s interruptions often distract us from doing the things we said we would always do. As we throw ourselves into work we struggle to maintain those behaviors day in and day out.  On the other hand, we DO seem to be able to avoid the behaviors we said we would never do.  We find a strong sense of responsibility to never repeat those behaviors. It is easier to avoid negative behaviors because they have strong emotional attachments.  When we observe someone mistreating an associate, we have a strong emotional reaction, and vow that we will never do that.  The desire to have higher standards and avoid those behaviors is imprinted with that emotional response.  It becomes something we could NEVER do.  The positive behaviors we want to emulate become things we would like to do.  That would be good.  They usually do not have strong emotional reactions attached to them and therefore become less imprinted on us.

The point of all of this is that we all must understand that learning is ongoing and constant.  We should open ourselves up to observing and learning not only what to do but  what not to do from others.  When we open ourselves up to this we will find that the lessons learned are strongly imprinted upon us and quickly become part of the person we want to be.  Positive role models are always important but the negative role models and the negative mistakes made by positive role models have as much to teach us as the positive.

So open your eyes and your ears and discover those things you never want to do and then commit to making that part of who you are. You will end up being a better person.

Now if you will excuse me, I need to go screw up something so I can be a good role model.

The Wall

“Mr. Khrushchev, tear down this wall.”  These famous words were delivered by President Reagan at the Berlin Wall.  President Reagan understood that the people of East and West Berlin were better united then separated. The President spoke of the wall as not only a physical barrier but as the symbolic division of the ideologies of the east and west.  He saw the wall as a barrier to the potential of the people of Berlin.  Walls go beyond the strong physical boundaries we see.  Walls serve to divide and weaken those that are separated.

What walls do you see in your daily life? I have spent the past 30 years, armed with my sledgehammer, picking away at walls in the workplace.  They exist everywhere.  The very nature of an organization, separating departments and responsibilities encourages walls.  As managers, it is our responsibility to tear these walls down.  In my career at Walgreens, I found walls between pharmacy operations and Self Service.  Walls created within each individual store, serving the same customers.  The words “They” and “We” were often used.  When the walls were removed, synergy occurred.  1 + 1 equalled 3 and sometimes 4.  Everyone grew and the stores became an exciting place to be.

Workplace walls are usually created through lack of knowledge.  While the company may have a clear, well communicated vision, individual departments may not fully understand other departments roles in that vision.  Companies break down operations into departments and groups that specialize in specific aspects of the operation.  By nature, sometimes these specific aspects are at odds with one another.  An accounting group charged with reducing costs to deliver a competitively priced product might be at odds with a production group looking to decrease lead times that feels they need additional staff.  Without a thorough understanding of one another’s goals, walls form. ”Us” and “Them” begin to enter the vocabulary.  “If it wasn’t for them, we could meet our objectives”. The more engaged the team members the greater change for walls.

These walls, if ignored grow ever higher and stronger.  They begin to hamper progress in all departments.  They create tension and animosity in the office.  Managers must be vigilant to walls forming and like President Reagan, tear down those walls.

This past week we had walls forming at Ebsco.  Both departments on either side of the wall are outstanding and fully engaged in their jobs.  In fact, their enthusiasm for their jobs helped push them to form the walls.  They knew where they wanted to go and were not going to let anyone impede them. Our President, Ms. Dooley saw the walls forming.  She took immediate action, meeting with both departments.  She listened attentively to their frustrations and reasons for building the walls.  After meeting with both groups she initiated ongoing meetings with the two departments to discuss these issues.  The meetings will allow them to get rid of the “them” in their vocabulary and replace it with “us” including the other department.  They will combine their individual skills and talents to jointly tackle problems. Synergy.

At Ebsco we have formed several cross department teams which were designed to increase knowledge and communication between departments.  We have developed the Ebsco U training program that teaches team members what other departments do.  We work hard to address issues before walls form.  With all of our efforts we still have walls.  The key is to address those walls and find solutions before they grow and are still easy to tear down.  Walls are a natural occurrence in organizations. The key is to be ever vigilant and address the walls as soon as they appear.

If you allow walls to form through out the organization, you will eventually have a maze of walls that loses the objectives of the organization.  Watch for walls, find their foundation and destroy them.  Destroying the walls will allow the organization to successfully meet their objectives while creating a better working environment for everyone.

They Didn’t Know I Was Gone!

For those of you that have followed this blog, you know I have experienced health challenges the past two years. Initially I was paralyzed from the waste down, due to an infection in the spine. Recovery meant learning to walk again. This process ground away at my knees and I had to replace both of them. I was at the point of declaring victory this past month when I was hit again. The original infection returned in one of the new knees.
They removed the new knee (and infection), put me on IV antibiotics and will replace the knee again in two months. Oh woe is me. No, that is not my point. I know people are receiving much worse news every day. It’s life. My point is how this impacts my position at Ebsco.

I have always used the following as a working definition of success, as a manager, “In the absence of the manager, things progress as they would if the manager was present”.  If you have communicated your vision and standards while training behaviors and processes, things should work as well without you as with you.  Obviously it takes good people to make this work. Duirng these health challenges, my theory has been continually challenged.  Just when I get back to work full-time I seem to be pulled back.  My involvement has ranged from none (while in the hospital taking drugs) to full-time at the shop.  I’ve used my lap top at home, spent partial days at the office, teleconferences with groups and several other methods to stay in the loop.  The bottom line is that I have not been there to make the day-to-day decisions as I would like.

What have been the results?  Sometimes I’m not sure they even know that I’m gone.  Believe it or not, life exists without me.  I enter this new chapter of limited availability with the utmost confidence.  The Ebsco team makes things happen.  I’m proud of the team I work with and feel very fortunate.

So with me or without me Ebsco will continue to meet our customers needs for precisions springs to their specifications, when they need them.

Thanks Team.

TODD

We Run

As Americans, we always run.

After the Boston Marathon Bombing, WE RAN.

After 24 hour news coverage of the terrorist manhunt, WE RAN.

After the OKC Bombings, WE RAN.

After 9-11, WE RAN.  Americans RUN.

We do not run away from danger and adversity, we run to it.

Americans don’t run away from uncertainty and pain we ran through it.

We run because we can and no one can stop us.

We run with a never-ending optimism that we can make a difference.

We run with hopes and dreams of a better world and a certainty we can get there.

We share and sacrifice ourselves ever-moving toward the finish line we shall never reach.

Each time the finish line comes into view we say NO!, we can do more and stretch that line ever forward.

We run.

We run for a better tomorrow.

We run for inequity.

We run for others.

We run because that’s what makes us Americans.

Americans run.

God’s Speed America

Keep Running

I WONDER?

This week is a short one. The message is good but there is no reason to draw it out. It is what it is.

I blogged previously about Management by Wandering/Wondering. It’s very effective. Simply walk around with no immediate destination or purpose, observing and listening. Some of my best ideas have come from this. Wanderind around and Wondering what if. I discovered this week that Management by Wandering/Wondering also has a place in meetings.

Cheryl, our CEO called a meeting of management and supervisory staff this week. There was no real agenda. She had one issue to discuss and that was it. I usually, being the list guy come in with an agenda but this time I didn’t. The boss just let the discussion WANDER. WOW! It was really effective. I came away with a new sense of urgency on a couple of projects and two or three additional projects that have big implications for Ebsco.

Later in the week, I held a production meeting. Yes, I had an agenda for this one. I think the juices were still flowing and again they came up with several great points that we are going to follow-up on. The discussion started off topic and I let it go.  Normally I would drag it bag on topic to keep the meeting flowing, but not this time.

It’s amazing what the team will come up with if you turn them loose without direction. That’s the key is no direction. When you have an agenda they will always focus there. When you step in with an opinion you start driving the conversation. When you shut up and let them talk, magic happens. They have a great deal to say and may just be looking for the opportunity. We have open communication at Ebsco and the entire management staff is always in contact. Everyone is busy and we are focusing on the issues at hand. When faced with no agenda, no demanding priorities, that is when all the rest comes out.

So I encourage you to try it. Actually try both of them.
Wander around your business with no specific point. Listen and observe and wonder WHAT IF?
Bring in groups of key employees to meet with them with no specific agenda. Sit back and let them go.
Try IT. Who knows what you will discover.

Youu Don’t Know What You Got till It’s Gone

 

 

 

I highly value all the Ebsco Team Members.  They work hard, know their jobs and make things happen.  I realize that I can’t do what they do and appreciate them all the more for that.  So if you told me I didn’t appreciate our team members, I would emphatically tell you that you were wrong!  I found out this week that you might be right.

This past week the production supervisor was out on vacation. Our Quality Systems/ISO manger was out on personal business.  Our Web Master Multimedia Manager was out on maternity leave.  All three of these people are highly valued in our organization and highly appreciated by me.  They always have been.  So why was I surprised at everything thrown my way with them out. I knew how hard they worked and how self driven they are.  I know they do their jobs without direction.  I knew they cared about the company.  Even with all of that, I obviously take them for granted, or maybe not them but all they do.  That’s why I was surprised.

I spoke last week about my new job rotation plan, where I spend Wednesday afternoon in the shop having an individual show me their job and allowing me to help for a few hours.  WOW!  Have I learned a great deal in two weeks.  Mind you, I was aware of the difficulty of their jobs and even understood some of the specifics that make it challenging but until you stand in their shoes you really don’t know. I observed our Coiler Team Lead setting up a machine for a difficult spring. We spent two hours and when we just about were finished, we found that to get the customers specifications on the spring we had to use a larger size of wire. Tear it down, put on a new roll of wire and start again. Only I couldn’t stay for that I had an interview waiting. Two hours gone. Well worth the time but 2 hours gone.

I was reviewing our Facebook statistics last week and watching the readership fall.  I have thrown a couple of things up there but there is no way I can make it as interesting as our Web Master.  People want to read what she says. Our Web service provider has been changing servers and our website seems to be down as much as it is up for the past week.  I have been trying to work with our IT Manager and track it but there just isn’t enough time. I imagine it wouldn’t have been an issue if our Web Master was there.  An email here, a call there,an entry on face book and daily tweets, well almost daily, it all adds up.  A few more hours gone.

I have attempted to keep up on all of the continuous improvement documents and maintain our non-conformances for our ISO Manager.  Talk about a lot of paperwork.  It’s important.  If we don’t track what went wrong and why, we can’t fix it. But ALOT of paperwork.  As I was furiously trying to send out NCRs on several issues someone walked into my office and told me a team member had run into a hand dolly and was injured.  I didn’t mention that the ISO Manager also documented and tracked injuries for our safety team.  I stopped, rounded up the forms and followed up.  The employee was fine but the area the cart was stored was a hazard.  Fill out and file the safety incident, write an NCR on the safety risk and how we were going to correct it and have that communicated to everyone.  Another hour passed by. By the time I got back to my NCRs I checked my email and two more issues had arrived for another two NCRs. Not done yet. 4:30, time to go, but not for me, I’m still forwarding NCRs. A few more hours have passed by.

I mentioned that I had to leave the coiler set up for an interview. We have a current opening and as applicants came in it is our Production Supervisor’s job to evaluate them. The Production Supervisor was on vacation. Guess who is handling this for the week?  My only savior, and I can’t say I’m happy about it, is that unemployment is so low we aren’t getting many aps in.  As things came up on the production floor I leaned on my other two supervisors to fill the gap but I still had to remained focused on the little issues. Again, our Production Supervisor usually does this but that vacation thing. Our two other supervisors also handle scheduling and systems so their day-to-day jobs keep them very occupied. They had to find time to do their normal tasks and fill in for the Production Supervisor. That meant that any special projects we had going came to a stop last week. A few more hours gone.

I never added up the hours but I can tell you that I missed them. I have always appreciated the jobs of each one of these people who I spoke of. I knew they were key members of our team. I didn’t realize just HOW valuable they were until they were out. I’m sure I could take these examples and find the same thing with just about any of our team members. Everyone is valuable to the overall team.

“The strength of the pack is the wolf and the strength of the wolf is the pack.”

This phrase is from Rudyard Kipling’s “The Jungle Book”.  It is called the “Law of the jungle”.  I have it posted on my wall and use it to guide my actions.  I saw it in real life last week.  The pack was much weaker without those wolves and I personally was weaker due to the pack being weaker.  Everything I am, comes from everything the pack does, and the pack is made up of all the individual efforts of the wolves.

So if you find yourself in a situation that you begin doubting your team members.  STOP  Take a few minutes and put yourself in their shoes, as if they were not there.  When you do, I think you are going to need to find several more hours in your week.

Time to HOWL!

Caution Executives at Play

I like signs and I am considering a new one for the entrance to our production floor

“NO UNATTENDED EXECUTIVES”, or “CAUTION EXECUTIVES AT PLAY”.

Both are appropriate after last week. On Wednesday afternoon I worked on the shop floor. Yes, Me the one that have always said they don’t know how to make a spring, ventured onto the shop floor and made a spring. A real spring! It was round, had little coils and sprung back when you compressed it. A SPRING! I MADE IT!

That is somewhat true. I left out the part about one of our top coilers standing next to me telling me to push that and turn the other all the way through. Still, I pushed it and I turned it and I made a spring. Pretty exciting! Of course I left and went back to my office before the springs hit Quality Assurance but none the less, I made a spring.

So what enticed me to wander out on the production floor and actually get my hands dirty? Actually, it is something I have been talking about for several months but my new knees haven’t been up to it. I am assigning myself a familiarization job rotation. I plan on spending one afternoon a week in different departments across the shop.

No. I have no intentions on becoming a coiler or grinder or work in shipping. We have several, exceptionally qualified people already doing that. I will never reach their abilities, they are the experts. So what purpose is their in my spending time working in their departments?

This “job rotation” will provide me first hand knowledge. When team members explain something happening in the shop I will be better able to visualize what they are talking about. I will learn some of their frustrations and obstacles they encounter. As I stand in their shoes, I will gain a deeper appreciation of their individual contributions. That alone would be enough to justify this but their is so much more.

There is value in bringing in someone without first hand knowledge of a process. They will question everything and have no preconceived ideas. In bringing in a novice, the experienced teachers are oftened asked questions that challenge their process and force them to look at alternatives. It is the possible, the teachers, through explaining what they do in detail will realize wastes in the process and find better techniques. The greatest understanding comes from teaching ones that understand little. It forces you to put into words exactly what you do and examine it for its purpose.

The other value to this exercise is in morale building. Actions always speak loader than words. When I talk about how important team members are to me it is merely words. When I take the time to show them, through my actions it has meaning. Me, taking the time to understand a small piece of their job puts my money where my mouth is. When I take time out of my day in an attempt to better understand their job, they see I really do care. It means something when a vice president ask you to teach them. It conveys to them that you do not think you know everything and that they have real value in the organization.

The final benefit is seeing the sphere from the inside. My job requires me to stand outside the processes and look down. I look at everything from a distance and see how each individual piece interacts with the whole. By stepping into the process and seeing it at close up of individual actions I will increase my understanding of. It will also allow me to see it from their eyes, close up and personal. This understanding will allow me to make better decisions when I look at it from afar.

So have I justified my actions? Have I laid on enough of my B.S. to convince you this is a great idea that will benefit the company? Are you telling yourself that this is a great idea that needs to happen at your company? If so I can give you the real reason for it.

“I GET TO PLAY WITH ALOT OF REALLY FUN TOYS AND GET MY HANDS DIRTY!”

Caution, Executives at Play!

Gotta Go, I’m setting up a manual coiling machine this week!

Consultants

In my last blog on Just in Time, I mentioned consultants and said that was a topic for a future Blog, well here it is.  I didn’t paint a very favorable picture of consultants and want to clarify my opinion this week.  Consultants are a good thing.  Consultants can play a positive role in your company.  The problem is not all  consultants, it is how businesses utilizes them.

I do not have a favorable opinion of consultants straight out of college without any practical experience. They may understand the topic they are consulting on but have no idea how it interacts with the organization. A consultant with previous business experience and expertise on the specific topic is an asset. When they bring their expertise they also understand  how it interacts within the company.

Ebsco hired a consultant with expertise on our enterprise software a couple of ears ago. We wanted to roll out a new scheduling module in the software. The consultant had prior experience managing their own manufacturing company. She has expertise on the software and experience on how changes effect the company. She helped us come up with a game plan and provided answers to questions during the roll out. The key was we did it and she provide expertise and guidance. It worked well. We were able to implement the new module in half the time with their assistance.

So, after my last blog and what I just wrote, it appears I’m talking out of both sides of my mouth. I’m not. My problems with consultants are two-fold.

First, as I have already mentioned is the boy/girl wonders with no practical experience in the business world. They have spent years in classrooms learning the flavor of the month business tools. They know everything there is to know about, Lean, Just in Time, Total quality Management and everything else. They can recite every step and nuance. What they don’t know is people and managing people. They don’t know how it really works in the company. Their value is limited at best.  Their approach is often following a text-book.  The problem is that the text-book wasn’t read by the team.  The steps in the text-book fit a hypothetical company that has nothing in common with yours.  You are headed down the path of failure.

The second thing I have issue with is the approach companies attempt to utilize consultants. Top management reads about the newest and greatest business strategy. They want it and want it now. Pull out the check book and hire a consultant. The consulting firm offers guaranteed performance parameters by the end of the first year. They send in an army and make changes across the board. Guess what? They hit their goals and collect their paycheck. AND next year things go right back where they were. No real changes in the company except their bank account is a little lighter. This approach doesn’t teach anything.  It doesn’t take into account your company’s culture and team.  They blow right by everyone on the team and slap on a bunch of patches.  Those patches only hold a year or two.

Consultants that partner with management, offering guidance and advice can be a real asset. The good consultants learn your company and the talent you have available.  They adapt their guidance to your situation.  When management identifies a goal and brings in consultants for guidance these consultants have impact. Management must drive the change. Sustainable change must be bottom up, not top down. Major changes often impact the fabric of the company’s culture and must be implemented systematically with the support of the entire organization. This is where the people aspect comes in. The consultant must have the business experience to understand how implementation impacts the organization and understand what their role should be.

I hope any consultants out there now understand I am not against them. If you are attempting to b a consultant without practical experience, I encourage to go out and get a real job before trying to tell the rest of us what we need to do. check back with me in ten years and we’ll talk. For those consultants with a specific expertise and practical experience, who knows, maybe I’ll be calling you.

Just in Time

Okay, Okay, I can hear it now from all of the MBA Consultants with years of manufacturing experience, “With only two years manufacturing, he’s going to talk to us about Just in Time”. Well to you over educated wonders, yes I am. If you really learned the history of Just in Time you will know that the concept was perfected in manufacturing by Toyota. They borrowed some concepts from Ford BUT their true inspiration was American Supermarkets. Taiiahi Ohnu, a Toyota manager came to America with a group from Japan to study American manufacturing techniques. Yes they did learn from Ford and other manufacturers but Ohnu was truly interested in visiting American supermarkets and studying how they replenished their shelves. A customer buys one off the shelf and the grocer replaces that one on the shelf. A true pull inventory system. Short distribution stream and fast replenishment. That was the true inspiration for Ohnu. Since I spent thirty-one years in retail, for Walgreens, recognized as one of the best in the industry for distribution and replenishment, yes I am going to talk about it with some authority, thank you. Now kindly sit down and listen, you’re not receiving your hourly consulting fee for reading this anyway.

Early attempts in America to implement Just in Time were misguided. Companies did not take the time to understand the concept and tried to implement it. Their take on it was to strong arm the vendors and force them to ship just the right amount at just the right time, no matter what. What they did not look at was the consequences of not including the entire supply chain. Vendors were forced into this and the only way to comply was to build inventory at their level, ready to ship at a moments notice to their customer. The cost of holding this inventory throughout the supply chain always eventually caught up to the customer who was implementing this new miracle cure. The results, cost rose.

Over time companies realized their error and began looking at Just in Time throughout the entire supply chain. Now they were getting it. Everyone in the chain makes smaller batches with quicker machine change overs, they all carried less inventory of finished goods and work in process. Their overheads fell, everyone saved money and things worked great, Right? Well in concept yes. Some companies do a great job of this but there are a couple of flaws that need to be accounted for. The first one is the biggest flaw in every system, PEOPLE. The second one is the root of the supply chain and it’s inability to respond.

The key to Just in Time is forecasting. Forecasting your needs in the future, so suppliers can plan, acquire their production needs and respond. Any Just in Time system is only as good as its forecasts. Forecast can be very simple, number made last year plus ten percent due to our current sales increase. Others factor in economist forecast, seasonality, stock market trends and I’m sure a little palm reading and taro cards. Regardless they have a forecast. So where do people come in. When production hands the forecast to purchasing, they expect purchasing to have materials to meet that forecast. Often, purchasing wants to REALLY make sure so they meet the forecast so the pad the it 10% or 20% or whatever they think they might need. Now the supplier manufactures to forecast plan they add buffer and safety stock. Safety stock is to anticipate demand spikes from the customer and buffer stock to anticipate potential machine breakdowns or supply problems on their end. So you have the supplier already making the forecast plus and then the buyer has tweaked the forecast higher. At the end of the year the supplier looks at the forecast versus what the customer really bought and then walks into the warehouse and actually see the difference sitting on his shelves. All that stock is just like dollar bills sealed in a vault. Useless until it is sold. So what does the supplier do? Anticipate the buyer and begin cutting all of the customers forecast by 10% or 20%, to anticipate them padding the figures. Now the data is completely corrupt and Just in time doesn’t work. If you think this doesn’t happen talk to any CEO or scheduler at any business to business manufacturer. With true forecasts, suppliers can figure the actual time it takes to make one item (yes I know there is a LEAN, Japanese word for that. I think the only reason they throw around the Japanese is so the consultants can convince us that it is sooo complicated we need to pay them big bucks to do it for us. BUT that’s a story for another Blog. Sorry consultants) estimate time and materials for the batch and meet the forecast demands of their customer.

The other problem that arises is in mid-sized non publicly held companies. Those places where the CEO is the final word. These people built there empires by being smart and aggressive. They will proclaim that they want everyone to prepare for a 20% increase in business the following year. They have no data for this, the company is doing nothing different. The CEO just wants to push his team. Hey, If they don’t hit 20% and only get half of that, 10% aint bad, except when you are forecasting. See HUMANS. Forecasting does work with quality input, as long as people leave it alone.

The other challenge to supply chain just in time occurred to me the other day. As a spring manufacturer I usually think of us as the bottom rung or first components to our customers. Fasteners, springs, seals and gaskets and the castings will always be at the first of the process. So we are the start of the supply chain? NO! We have vendors that supply us wire. The wire vendors buy from steel mills. The steel mills buy ore and minerals to make the steel. That’s where supply chain stops working. At the very bottom rung is usually natural resources. Natural resources do not have an infinite supply. God set that part up as a one time shot. Lead times on ore are very difficult to change. As demand goes up shortages occur. When spring demand goes up, we make more. And the larger the quantity we sell you, the better the price you get. It is that way in most manufacturing unless you actually hit a total demand over production capacity. It is never that way with natural resources. The supply chain is somewhat held hostage at this beginning stage.

So what am I trying to say about Just in Time?
1. It works, but you must include the entire supply chain
2. Manipulating the figures destroys the system. Leave it alone.
3. Realize that it isn’t perfect and you need to account for that.
4. Communication up and down the line are essential
4. You don’t need and MBA to figure it out. Buy a book. Ask questions.

So there it is. Consultants you may now start taking shots at it, point out all of my errors, suggest alternate ways and explain why my way will fail.
But before you do, keep in mind that we were over 99% on time delivery last month, and our in-process and finished goods inventory is lower than it has been in years and our customer satisfaction surveys hit a new record high.
Just Saying!