The Goal: A Process of Ongoing Improvement, page 31
"Al, the problem is Ethan Frost will never buy it,’’ says Lou.
"Then why did you suggest it?’’
"Frost won’t buy it if he knows about it,’’ says Lou.
I nod slowly. "I see.’’
"I can give you something that will slide through on the first glance,’’ says Lou. "But if Frost and his assistants at division do any checking, they’ll see through it in no time.’’
"You’re saying we could end up in very hot water,’’ I say.
"Yeah, but if you want to take a chance....’’ says Lou.
"It could give us a couple more months to really show what we can do,’’ I say, finishing the thought for him.
I get up and walk around for a minute turning this over in my mind.
Finally I look at Lou and say, "There is no way I can show Peach an increase in the cost of parts and convince him the plant is better off this month than last. If he sees these numbers and gets the idea our costs are going up, we’ll be in hot water anyway.’’
"So you want to try it?’’ Lou asks.
"Sure.’’
"All right,’’ he says. "Remember, if we get caught—’’
"Don’t worry. I’ll practice my tap dancing.’’
As Lou is on his way out, Fran buzzes me to say Johnny Jons is on my line. I pick up the phone.
"Hello there,’’ I tell him, We’re practically old pals by now; I’ve been on the phone with him just about every day—and sometimes three or four times a day—for the past few weeks. "What can I do for you today?’’
"Remember our dear friend Bucky Burnside?’’ says Jons. "How could I forget good ole Bucky,’’ I say. "Is he still complaining about us?’’
"No, not anymore,’’ says Jons. "At the moment, in fact, we don’t even have a single active contract with Burnside’s people. That’s the reason I’m calling. For the first time in months, they’ve expressed interest in buying something from us again.’’
"What are they interested in?’’
"Model 12’s,’’ he says. "They need a thousand units.’’
"Terrific!’’
"Maybe not,’’ says Jons. "They need the whole order by the end of the month.’’
"That’s only about two weeks away,’’ I say.
"I know,’’ says Jons. "The sales rep on this already checked with the warehouse. Turns out we’ve only got about fifty of the Model 12’s in stock.’’
He’s telling me, of course, we’ll have to manufacture the other 950 by the end of the month if we want the business.
"Well... Johnny, look, I know I told you I wanted business, and you’ve pulled in some nice contracts since I talked to you,’’ I say. "But a thousand Model 12’s in two weeks is asking a lot.’’
He says, "Al, to tell you the truth, I didn’t really think we could do anything with this one when I called. But I thought I’d let you know about it, just in case you knew something I didn’t. After all, a thousand units means a little over a million dollars in sales to us.’’
"Yes, I realize that,’’ I say. "Look, what’s going on that they need these things so fast?’’
He tells me he did some digging and found out that the order had originally gone to our number-one competitor, who makes a product similar to the Model 12. The competitor had had the order on its books for about five months. But they hadn’t filled it yet, and this week it became clear they would not be able to meet the due date.
"My guess is that Burnside turned to us, because they’ve heard about us offering such fast turn-around to everyone else,’’ he says. "Frankly, I think they’re desperate. And, hell, if there is any way we can pull this off, it’d sure be a good way for us to save face with them.’’
"Well, I don’t know. I’d like that business back again, too, but....’’
"The real kick in the head is if we had only had the foresight to build a finished goods inventory of Model 12’s while we had those slow sales months, we could have made this sale,’’ he says.
I have to smile to myself, because at the beginning of the year I might have agreed with that.
"It’s too bad,’’ Johnny is saying. "Aside from the initial business, it could have been a big opportunity for us.’’
"How big?’’
"Strong hints have been dropped that if we can come through on this one, we could become their preferred supplier,’’ says Jons.
I’m quiet for a moment.
"All right. You really want this, don’t you?’’ I ask him.
"So bad I can taste it,’’ he says. "But if it’s impossible. . . .’’
"When do you have to let them know?’’ I ask.
"Probably sometime today, or tomorrow at the latest,’’ he says. "Why? Do you think we can really do it?’’
"Maybe there’s a way. Let me see how we stand and I’ll give you a call back,’’ I tell him.
As soon as I get off the phone with Jons, I round up Bob, Stacey, and Ralph for a meeting in my office, and when we’re all together I tell him what Jons told me.
"Ordinarily, I would think this is out of the question,’’ I say. "But before we say no, let’s think about it.’’
Everybody looks at me with the certain knowledge this is going to be a waste of time.
I say, "Let’s just see what we can do, okay?’’
For the rest of the morning, we’re busy with this. We go over the bill of material. Stacey checks on raw materials inventories. Ralph does a quick estimate of how long it will take to produce a thousand units after the materials are on hand. By eleven o’clock, he has calculated that the bottlenecks can turn out parts for the Model 12 at the rate of about one-hundred per day.
"So, yes, it would be technically feasible for us to take the order,’’ says Ralph. "But that’s only if we work on nothing else for two weeks except the thousand units for Burnside.’’
"No, I don’t want to do that,’’ I tell him, thinking about us screwing up relations with a dozen customers just to please one. "Let’s try something else.’’
"Like what?’’ asks Bob, who is sitting there with us, looking about as enthusiastic as a bump on a log.
I say, "A few weeks ago, we cut our batch sizes by half, and the result was we could condense the time inventory spends in the plant, which also gave us an increase in throughput. What if we cut the batch sizes by half again?’’
Ralph says, "Gee, I hadn’t thought of that.’’
Bob leans forward. "Cut them again? Sorry, Al, but I don’t see how the heck that can help us, not with the volume we’re already committed to.’’
"You know,’’ says Ralph, "we have quite a few orders we’d planned to ship ahead of their due dates. We could re-schedule some of those in the priority system so they’d ship when promised instead of early. That could give us more time available on the bottlenecks, and it wouldn’t hurt anybody.’’
"Good point, Ralph,’’ I tell him.
"But, hell, we still can’t get a thousand units done no-how,’’ drawls Bob. "Not in two weeks.’’
I say, "Well, then, if we cut the batch sizes, how many units can we do in two weeks and still ship our current orders on time.’’
Bob pulls on his chin and says, "I guess we could look into it.’’
"I’ll see what I can find out,’’ says Ralph, standing so he can leave and go back to his computer.
His interest finally piqued, Bob says, "Maybe I’d better go with you so we can noodle this thing out together.’’
While Ralph and Bob are wrestling with this new possibility, Stacey enters with news about inventories. She’s ascertained we can obtain all the materials we need either from our own stocks or from vendors within a few days, with one exception.
"The electronic control modules for the Model 12 are a problem,’’ says Stacey. "We don’t have enough of this type in stock. And we don’t have the technology to build them in-house. But we’ve located a vendor in California who has them. Unfortunately, the vendor can’t promise a shipment of that quantity in less than four to six weeks, including shipping. I’d say we might as well forget it.’’
"Wait a minute, Stacey; we’re thinking about a little change in strategy. How many modules could they give us per week?’’ I ask her. "And how soon could they ship the first week’s quantity to us?’’
"I don’t know, but doing it that way, we might not be able to get a volume discount,’’ says Stacey.
"Why not?’’ I ask. "We’d be committing to the same thousand units—it’s just that we’d be staggering the shipments.’’
"Well, then there’s the added shipping cost,’’ she says.
"Stacey, we’re talking a million dollars in business here,’’ I tell her.
"Okay, but they’ll take at least three days to a week to get here by truck,’’ she says.
"So why can’t we have them shipped air freight?’’ I ask. "They’re not very big parts.’’
"Well....’’ says Stacey.
"Look into it, but I doubt if the air freight bill is going to eat up the profit on a million-dollar sale,’’ I tell her. "And if we can’t get these parts, we can’t get the sale.’’
"All right. I’ll see what they can do,’’ she says.
At the end of the day, the details are still being sweated out, but we know enough for me to place a call to Jons.
"I’ve got a deal on those Model 12’s for you to relay to Burnside,’’ I say.
"Really?’’ says Jons excitedly. "You want to take the business?’’
"Under certain conditions,’’ I tell him. "First of all, there is no way we can deliver the full thousand units in two weeks. But we can ship 250 per week to them for four weeks.’’
"Well, okay, they might go for that,’’ says Jons, "but when can you start shipping?’’
"Two weeks from the day they give us the order,’’ I say.
"Are you sure about this?’’ asks Johnny.
"The units will ship when we say they will,’’ I tell him.
"You’re that confident?’’
"Yes.’’
"Okay, okay. I’ll call them and see if they’re interested. But, Al, I just hope what you’re telling me is real, because I don’t want to go through all the hassles we had before with these people.’’ A couple of hours later, my phone rings at home.
"Al? We got it! We got the order!’’ shouts Jons into my right ear.
And in my left ear, I hear a million bucks rung up on the cash register.
"You know what?’’ Jons is saying. "They even like the smaller shipments better than getting all thousand units at once!’’
I tell him, "Okay, great, I’ll get the ball rolling right away. You can tell them that two weeks from today, we’ll ship the first 250.’’
30
At the beginning of the new month, we have a staff meeting. Everyone is present except Lou. Bob tells me he’ll be in shortly. I sit down and fidget. To get the meeting rolling while we’re waiting for Lou, I ask about shipments.
"How is Burnside’s order coming along?’’ I ask. "The first shipment went out as scheduled,’’ says Donovan. "How about the rest of it?’’ I ask.
"No problems to speak of,’’ says Stacey. "The control boxes were a day late, but there was time enough for us to assemble without delaying the shipment. We got this week’s batch from the vendor on time.’’
I say, "Good. What’s the latest on the smaller batches?’’ "The flow through the shop is even better now,’’ says Bob. "Excellent,’’ I say.
Just then Lou comes into the meeting. He’s late because he was finishing the figures for this month. He sits down and looks straight at me.
"Well?’’ I ask. "Did we get our fifteen percent?’’
"No,’’ he says, "we got seventeen percent, thanks in part to Burnside. And the coming month looks just fine.’’
Then he goes into a wrap-up of how we performed through the second quarter. We’re now solidly in the black. Inventories are about forty percent of what they were three months ago. Throughput has doubled.
"Well, we’ve come a long way, haven’t we?’’ I ask.
Sitting on my desk when I get back from lunch the next day are two crisp, white envelopes with the UniWare Division logo in the upper left corner. I open one and unfold the stiff stationery. The body of the letter is only two short paragraphs, with Bill Peach’s signature on the bottom. It’s congratulating us on the Burnside business. Tearing open the other, I find it too is from Peach. It too is short and to the point. It formally directs me to prepare for a performance review of the plant, which is to be held at headquarters.
The smile I had from reading the first letter broadens. Three months ago, that second letter would have dunked me into dread, because although it doesn’t say so directly, I presume the review will be the occasion for determining the future of the plant. I was expecting some kind of formal evaluation. And now I am no longer dreading it—on the contrary, I welcome it. What do we have to worry about? Hell, this is an opportunity to show what we’ve done!
Throughput is going up as marketing spreads the word about us to other customers. Inventories are a fraction of what they were and still falling. With more business and more parts over which to spread the costs, operating expense is down. We’re making money.
The following week, I’m away from the plant for two days with my personnel manager, Scott Dolin. We’re at an off-site, very confidential meeting in St. Louis with the division’s labor relations group and the other plant managers. Most of the discussion is about winning wage concessions from the various unions. It’s a frustrating session for me—at Bearington, we don’t particularly need to lower wages. So I’m less than enthusiastic about much of the strategy suggested, knowing it could lead to problems with the union, which could lead to a strike, which could kill the progress we’ve been making with customers. Aside from all that, the meeting is poorly run and ends with very little decided. I return to Bearington.
About four in the afternoon, I walk through the doors of the office building. The receptionist flags me down as I pass. She tells me Bob Donovan has asked to see me the moment I arrive. I have Bob paged and he comes hurrying into my office a few minutes later.
"What’s up, Bob?’’ I ask.
"Hilton Symth,’’ he says. "He was here in the plant today.’’ "He was here?’’ I ask. "Why?’’
Bob shakes his head and says, "Remember the videotape about robots that was in the works a couple of months ago?’’ "That was killed,’’ I say.
"Well, it was reincarnated,’’ says Bob. "Only now it’s Hilton, because he’s productivity manager for the division, doing the speech instead of Granby. I was having a cup of coffee out of the machine over by C-aisle this morning when I see this T.V. crew come trooping along. By the time I found out what they were doing here, Hilton Smyth is standing at my elbow.’’
"Didn’t anybody here know they were coming?’’ I ask.
He tells me Barbara Penn, our employee communicator, knew about it.
"And she didn’t think to tell anybody?’’ I say.
"See, the whole thing was re-scheduled on short notice,’’ says Bob. "Since you and Scott weren’t around, she went ahead on her own, cleared it with the union, and made all the arrangements. She sent around a memo, but nobody got a copy until this morning.’’
"Nothing like initiative,’’ I mutter.
He goes on to tell me about how Hilton’s crew proceeded to set up in front of one of the robots—not the welding types, but another kind of robot which stacks materials. It soon became obvious there was a problem, however: the robot didn’t have anything to do. There was no inventory for it, and no work on its way.
In a videotape about productivity, the robot, of course, could not simply sit there in the background and do nothing. It had to be producing. So for an hour, Donovan and a couple of assistants searched every corner of the plant for something the robot could manipulate. Meanwhile, Smyth became bored with the wait, so he started wandering around, and it wasn’t long before he noticed a few things.
"When we got back with the materials, Hilton started asking all kinds of things about our batch sizes,’’ says Bob. "I didn’t know what to tell him, because I wasn’t sure what you’ve said up at headquarters and, uh . . . well, I just thought you ought to know.’’
I feel my stomach twisting. Just then the phone rings. I pick it up at my desk. It’s Ethan Frost at headquarters. He tells me he’s just had a talk with Hilton Smyth. I excuse myself to Bob, and he leaves. When he’s gone and the door is shut, I talk to Frost for a couple of minutes and afterwards go down to see Lou.
