Tuesday, April 13, 2010

So you think you can do better

Have you ever looked at how a company was being run and thought to yourself "I could do better!"  About fifteen years ago I worked for a small manufacturing company.  I was working there because I had closed my own business after a deal with a larger company didn't pan out.  Funny thing, NO ONE wanted to hire a guy who's last job title was President!  I thought I'd be a great employee, because I understand what being an owner is really like.  A recruiter told me that the thinking was more "He wants to be the boss" or "He'll stay until he finds another job"

So for 15 months I worked my way up from the bottom.  Then one day the lady in bookkeeping tells me the company has enough money to make payroll for two more weeks, we have no recievables, and we are out 90 days with every vendor.  Time to freshen up the resume!  At 7:30 am the next morning the owner calls me into his office.  He's decided to make me plant manager!  Great! I'm thinking Captain of the Titanic.  So now what?

At 8:00 am I lay off 5 out of 10 employees.  The other five I bring into the conference room and tell them the truth. "An hour ago we had enough money to last two more weeks, now we have enough for 4 weeks.  I need you to work with me.  If I can't figure this out, then in one month we'll all be out of a job"  I tell the owner "I laid off the salesman, if you can't bring me an order with a deposit check then nothing I can do will help."

The shop, which has had no real work for months, has been making and stocking parts we don't need, consuming labor, materials and power.  One part, we now have a 10 year supply!  I call over a machinist and point him to a leaking air pipe. I tell him "Before you go home tonight I want that air leak, and any others you find fixed!"  I set everyone else to servicing, repairing, rebuilding all the tools in the shop.  Someone asks why I am 'wasting' money doing that when we have no work.  I tell them "When we get work we will need to do it quickly and well, or nothing has changed and we are done" I fix the air conditioner, it hasn't worked in five years, and it takes $30 worth of parts. Summer is almost here. Above 90 degrees and you labor bill just about doubles. We find out that the belt on the vertical bandsaw, that they have been changing by prying it off with a screwdriver, is released by opening the door on the back, that was screwed shut because the latch was broke!

Two months later the bookkeeper asks me why our electric bill is suddenly so much lower.  I ask how much.  She says it has been $600 and climbing for several years, now it is only $300.  I tell her "It was an air leak in a pipe that no one bothered to fix!  Once I repair the 3 horsepower compressor, instead of always using the 25 horsepower one, it'll drop even more."

The owner gets us a job, and a deposit check.  An old customer needs another machine.  We pull out the old drawings and look them over.  I call a meeting and vow that we WILL deliver this machine on time, and it WILL work correctly before we ship it!  After looking at the drawings I realize this machine is poorly designed.  I call the customer, and he says "Yeah, after we get it from you we rebuild part of it" and he tells me what changes they make.  I decide we can do better than that.  I make a Bill Of Materials and carefully figure out exactly WHEN all this stuff is needed.  Then I call each of our vendors.

I tell each vendor that I have new position, we are broke, and I can't pay them any of the old bills, If they cut us off I will understand, but we will close and no one will get paid. However, if they will agree to supply all materials on a COD basis I will pay a small part of the old bills every time we get materials from them.  What I also need is timely delivery, and I'll give them a schedule and keep them updated on our progress.  Only one vendor cuts us off, the others thank me for the honesty, and we find another vendor and move on.

When things are this bad, do you know what you've got?  Leverage!  Half the employees got laid off, the rest are worried about it.  The vendors won't get paid if they fight you, and you've got the customers check!  For the first time in a long time, everyone is rooting for you!

Eight weeks later we are pushing a huge wooden crate on to a truck.  It contains a very nicely built machine that works well, and it is right on schedule.  The shop foreman turns to me and says "This is the first you know!"  A little confused I asked "The first what?"  He says "It's the first machine the company ever delivered on time.  In fifteen years we've never done this before!"  I am amazed, I had no idea that it was that bad before.  But turns out it was even worse.

Three months go by and I don't hear anything from the customer with the new machine.  So I make a courtesy call to see if everything is okay.  When I ask him about the machine there is a long silence. then he says "I don't know if it works, it is still in the crate out in the warehouse"  I ask why and he tells me "The first machine we bought from you was nearly 6 months late. I almost got fired over the second machine, when it was more than 8 months late.  So this time I placed the order a year early!  No one could possibly believe you'd deliver on time, and we won't need the machine for at least another 9 months!"

A few weeks later we were building another machine for another customer.  We didn't have sales before because the salesman didn't know how to sell.  The owner however was a great salesman, and all those sales that never quite happened before were suddenly pouring in the door.  We still weren't out of the woods financially, but things were looking up.  A mechanic came into the purchasing office with a little spring in his hand, and said he needed a box of them.  I was sitting there and asked  him how many he actually needed.  He said he needs 3 but we always got a box of 100 because they were cheaper that way.  I asked the purchasing agent what they cost.  She said they were 75 cents each.  I told her to order 6. The mechanic said "Springs are cheap, what's the big deal?"  I told him. "We are buying 6, and I have $70 left over to make payroll this week.  Does that work for you?"

In about 6 months time we had sales that were 300% of our best previous year, we were current with our vendors, and I was beginning to worry about hitting delivery dates again.  I pleaded with the owner to stop selling, take a nice bonus for himself, and let me continue straightening things out.  But this was the year of the big bi-annual trade show.  As the shop foreman would say "He wants to pee with the big dogs, he just can't lift his leg high enough!"  He decided to build three custom machines to take to the show.  To do that he pulled our 3 top mechanics off of jobs for customers.  Then he pulled carefully scheduled materials from nearly every job, some with normal deliveries of 12 weeks!  Two days before the show those machines were being loaded onto a truck, and I was answering phone calls from a long list of angry customers that I had to notify that their machines would be one to two months late.  I submitted my resignation the next morning.  The one thing you can NOT change is an owner!

We remain friends.  Ten years later I was out of a job again, and I worked there part time.  They were struggling again, always late on delivery, and the new plant manager offered me a full time job.  Thanks, but once was enough!

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