The Daily EO: February 13th, 2013

If any of you reading this works in manufacturing, operations, or supply chain management, you’ll cringe when I tell you what I have been doing this week.

Inventory.

Financial institutions and accounting departments see them as necessary, but I see them as a source of stress, pain, sleepless nights, anxiety, and error.  Because you shut down production and count everything you own, it gets boring very fast.  And when you are counting a 40,000 square foot warehouse, it takes a very very long time.

The worst part is that inventories cause as many issues as they resolve.   The inherent issue of team members spending all day painfully counting and recording everything in a warehouse is fraught with errors.  Its manual, and its boring and it is endless.

And when they finally are done?  Then the recounts start.

Many organizations see inventory as a thing that can be controlled, that can be managed, but it truly is not.  Inventory is a symptom of how well you are running your business.  Forget “goal keeping” (delaying receiving transaction until after month/year end), forget manual manipulation.  You will be partially successful, but you will never achieve high inventory turns through force alone.

Worry about accurate transactions, strong contracts with your customers (detailing inventory management), align your supply base with the needs of your customer, improve reporting, reduce lead times, eliminate purchasing outside of your ERP system.

But I digress.

February 13th, 2013 Extra-Ordinary:  Physical Inventories.  The bane of any Materials Manager’s life.

Advertisements

The Daily EO: February 4th – 7th, 2013

I work in manufacturing in Canada.  Manufacturing within North America has its challenges.  We are a society that wants everything always.  We don’t wait.  We don’t save.  We buy it.  If it breaks or wears out, we buy a new one.  That means things have to be cheap.  That means the cost of manufacturing needs to be cheap.  That means Canada – with our minimum wages; a lack of strong protectionist policies and artificial currency control; stringent safety regulations, and comparatively high costs of living – struggles to compete with other countries that may not have these things.

The two major cost drivers in manufacturing?  Raw materials and direct labour.   Sure there is overhead like the building, equipment, non-direct labour (office people), and other items, but its labour and materials that usually makes up 80-95% of each dollar of cost depending on the sector.

Cost Savings are generally fall into several categories:

  1. Raw Materials changes, cost decreases or vendor switches.
  2. Reduction of the amount of labour required for each unit produced. (or improved efficiency).

So, you focus on raw materials.  What are my biggest spends?  How can I use less, how can the vendor come down in cost, is there a cheaper, less quality option?  Can I source from low cost geographies (China, India, etc)?

And you focus on your process.  How can we do that faster?  What is the bottleneck?  Could we combine tasks in a way that nobody is ever waiting for a process to finish?

The way that this is supposed to work is that you do these things well and you keep your current and earn new business.  Because you are continuing to produce the same product, but you can offer a lower price.  Business moves to you and away from other companies that haven’t done as well on cost savings.

But I’ll tell you now:  with few exceptions (say niche manufacturing or some luxury items), there isn’t a manufacturer in North America not trying to accomplish the same thing.  Drive down the cost.

So, you’ll read in the paper about large corporations doing major cuts.  It’s normal to pick up the paper and read about small and large layoffs.  It happens all the time.  Faceless “Management” just making sure their bonus is big again.  And small companies rarely get press coverage unless they are in a small town.

But we are not out to make a buck – we are trying save jobs by reducing costs.  We want to be here, we want our company to be here, we want you to be able to pay your mortgage, feed your kids, or pay for your trip to Hawaii.  Do you think we haven’t reviewed every possible other option?  Driven our suppliers to make the same difficult choices?  Looked at ordering less stationary supplies, frozen wages, reduced spending in all areas of the business?   “Management” has done that and more.  Cutting people isn’t easy; it is hard, it is emotional and it changes the company.

This week, while me and my peers changed the story for many team members with a temporary layoff, we weren’t gleeful.  We were disappointed that we couldn’t have done more to cause less impact on people.

February 4th-7th 2013 Extraordinary:    My peers and team members showed respect and grace in a difficult situation and I am proud of them.

The Daily EO: October 17th, 2012

It doesn’t matter what you make or where you do it, the principles of manufacturing are the same.  And, no matter what, you’re going to meet all kinds.

So, if I have made electronics, sinks, auto parts and ice cream treats, surely I can make Natural Health Products.  And it seems that I am right – I can.   Well, in moments of confidence anyways.

But it’s those conversations that you realize that despite it taking place in English, you really have no idea of what anyone is talking about.   And wonder if  you ever will.   I tend to spend about 50% of my time not knowing what question to ask first and the other half of the time trying to figure out who I should be asking those questions to.  What am I doing?  What are you saying?  What?

Skills that have served me well so far:

  1. Ability to repeat word for word what someone has told me – even if it is just sounds to me.   “It is my understanding that the didicator is disrupting the lubrication flow into the main chamber.  It is causing insufficient cooling and creating warp within the finished goods.  We need tear down and insert a refabricated piece to protect the integrity of the machine.  All in all, I think it will take about 4-6 hours.”  Just what did I say?  I don’t know, but boy did that sound like I was up on what was going on.
  2. Looking interested and engaged on the outside despite roiling turmoil on the inside.  “That was great coverage of the issues at hand.”
  3. Appearing to be soliciting the team’s opinion when you’re just really hoping someone can tell you what to do.   ” Hmm, that is a complex problem.  I know how I’ve handled similar in the past.  But do yo you have any recommendations on how we should proceed?”
  4. Sincerely apologizing for your ignorance when all of the above fails.

October 17th, 2012 Extra-Ordinary:  Maybe I can do this?  I am not sure, but I am either going to do it, or build more strategies to fake it.

The Daily EO: October 12, 2012

When I was a young kid, mom had our curtains in the living room replaced.  I don’t remember the old curtains, only that they were regular curtains.  When Mom told me she was going to have the curtains replaced, she was not specific, she used the term “curtains” to mean “window coverings”.  At that age, I didn’t understand that there are window coverings other than curtains.

When you’re a kid, the smallest things are exciting, so I remember well the day the people arrived to install mom’s new curtains.  It was a husband and wife team who made and installed them.  (I also remember that their daughter had “helped” with the prep and she did it wrong, so they had to undo all of her work at our house and redo it.)

It turned out that the curtains I was expecting were actually vertical blinds.  This was in the late seventies/early eighties, and I had never seen vertical blinds before.  And I couldn’t fathom how these two people were going to turn these strips of fabric into curtains.  I watched intently noting the steps and how they did it.  I was that weird silent kid in the corner staring.

It’s the first time that I remember considering how something is manufactured.  And it was interesting.  Good thing it still is.

3 days in.

October 12th, 2012 Extra-Ordinary:  Vertical Blinds do not magically fuse into curtains.  It is very disappointing.

The Daily EO: September 18th, 2012

I can’t – and I don’t really want to – get into the details of today.  I will write about it eventually.   Today, I entered a manufacturing facility for a couple of tours.  I had to wear a lab coat, a hair net, shoe covers and a mask.  I kept smiling at people as a greeting and realized later that they could not see my friendly expression.  Except the crows feet around my eyes when they crinkle.  But I work hard at not having those to begin with, so perhaps my obsession with youthful eyes has belied my friendliness.

I sat in the lobby awaiting the beginning of the tour, I took in the walls, chairs, building, people and their clothes, etc, but I was distracted.

I really only thought about two things.  First off, the chair was low and my butt was lower than my knees.  When I stood up – would I be able to do it gracefully?  Or would my negligence in my ab workouts finally show itself as I tumbled over.

Secondly, I felt like I was sitting in a field.

September 18th, 2012 Extra-Ordinary:  The whole place smelled like berries – a field of assorted wild berries.