The Bee Hive

It may surprise some of you that not all manufacturing managers value excellent customer service, low inventory and fast throughput. What we have come to know as the "bad old days" is still embraced like a comfortable security blanket in some companies.

A few years ago, I accepted a consulting assignment for a company having problems moving product through the shop floor. Customers were'nt receiving their shipments on time even though the work-in-process (WIP) inventory was everywhere, and those customers were beginning to look elsewhere. To top it off, the company had recently acquired a new product line for which both tooling and machines had been sabotaged by the employees of the previous manufacturer. The acquisition had the company seriously in debt with nothing to show for it except piles of scrap, retooling, expenses, and engineering changes.

The company had a system. It wasn't a great system, but it was capable of more than just tracking history, which was all that it was used for. All order entry, manufacturing control, and shipping functions were done manually and put in the system retroactively. Chaos ruled!

An example of the order entry process will illustrate. Sales immediately converted a new customer order into a shop order with a lead time of two weeks. And the order was always for the entire amount. Thus, if the customer order was a blanket order for 12,000 units to be delivered 1,000 per month, the shop order would be for 12,000 units due in two weeks. When the shop fell behind, sales reacted by doubling the quantity and reducing the leadtime to make sure the shop floor understood the urgency. The owner thought this was a perfectly reasonable way for sales to communicate the relative urgency of orders. And he had recently "helped" manufacturing by purchasing additional capacity. The fact there was insufficient capacity downstream meant inventory levels were limited only by space available, but at least sales could now tell angry customers their order was in process.

I was given a promising young man to mould into a materials manager. The two of us were given carte blanche to do whatever was necessary to commit to reasonable customer order ship dates, meet those commitments, and establish performance measurements throughout the organization to maintain our progress. For the next several months, we fixed, implemented, educated, begged, and threatened. Eventually, the employees embraced the new disciplines and customer service improved until on-time shipments exceeded 97 percent. WIP was reduced until inventory turns were nearly 15, and throughput soared.

The company had completed a great metamorphosis, but one problem remained. The acquired product had drained the company of cash and the owner of energy. He decided to sell.

The new owners had the resources to get finances into better shape but proved to have no management talent outside the accounting area. We assumed that anyone with a modicum of intelligence would see the advantages of running with lean inventories and quick customer response times. We assumed our inventory control procedures, with accuracy hovering around perfection, would be eagerly accepted by anyone who saw it.

We were wrong. The new owners had their old way of doing things, and what we accomplished was viewed with suspicion. When our physical inventory turned out to be 99.13 percent accurate, seven auditors came in to find out how we had cheated. Finding nothing, they left bitterly disappointed. Over our protests, the new owners insisted we adopt their old methods. These managers were so far back from the leading edge of manufacturing that when they replaced throughput and on-time shipment goals with old-time machine efficiency measurements, they thought they were teaching us something new.

Needless to say, the company began to backslide. WIP was increased by direct mandate because the owners feared running out of work in the shop. On-time shipments began to suffer as machine operators cherry-picked orders to meet their efficiency goals. The slide continued until the company was again sold.

The new managers had viewed with derision what the old management team saw as progress. progress is always in the eyes of the manager.