Forecast, Supply, Demand, Recriminate

October 14th, 2007

Some of our products are made exclusively for certain high-profile customers. In these kinds of arrangements, the customers are expected to forecast ahead of time what quantity of product they will need. The forecast does not have to be precise down the the last unit, but it does have to be in the right range by a hundred or so, because it can take a long time for all the necessary components to make their way from Russia, China, India, Korea, England, and Mars.

If the customer sells far more tools than anticipated, they will ask us why we are not sending them more product and what is taking so long. We will try to find a polite way to tell them that parts are harder to make than promises. If the customer does not go over the forecast and we are still unable to deliver the planned quantity for some reason–a quality issue, let’s say–than the customer will want to know what’s going on and why they shouldn’t order the next lot from our competitor. We will try to find a convincing way to tell them it will never happen again and to make up for it without making another committment that maybe we won’t be able to keep.

If both of these things have happened with regard to the same customer, only different products, then when the sales people who get paid for making promises talk to the production people who get paid for making tools–but not too many unneeded tools–then the marketing people will ask why we did not meet their unrealistic promises, and we will ask why they made promises that broke the rules for what we could keep, and then they will ask how they are supposed to make promises we can keep if we are aren’t going to keep the promise they made that did follow the rules. And the marketing people will suggest that we get closer, more reliable sources for our parts, and we will say we’d love to do that but we’d all get fired for choosing the higher-cost provider, and then the marketing people will say that’s fine we’ll just lose the customer. And people will use naughty words.

And then the people in charge of getting the components in here on time will ask me to put together reports showing how naughty the sales people were in placing and changing orders, and also on how bad we really did measured by the official and agreed standards versus the arbitrary sales promises. Also the people who are responsible for building the tools once the parts are available will point out and emphasize all the times when the tools were built but did not get shipped, so the plant manager will ask me to put together a report showing the specific reason why each item did not ship and also to fix the problems while I am at it. Most of those reasons will wind up being rules that people in another part of the business made about what days we can ship to what foreign countries and whether we can ship part of the order or must ship the whole thing at once, but none of that seems very relevant to the production people who just want to ship the hot potatoe.

Then I will tell everyone that I can make a report that will tell them anything about any order at any time, only it will take several days to complete. And my boss will say, “Good, have it done by lunch. Just kidding.” And I will wonder if he has any idea what size kid that is. And I will go back to my desk and there will be a message from one person wanting me to cancel an order that is in the process of shipping and a message from another person wanting me to ship an order today, urgently, for an important customer. Also there will be many more things like that so that at the end of the day, or rather half an hour after the end of my shift, when I am shutting down open programs, I will come across one and say “What is this?” And then I will remember, “Oh yes, that is the report I was supposed to finish before lunch. Well, tomorrow I will really concentrate on it.”

To Boldy Go Against All Advice

October 14th, 2007

Great innovators are the ones who do what everyone said can’t be done. Columbus. Orville and Wilbur. Einstein. Edison.

Great idiots are the ones who attempt to do what everyone said can’t be done. Since they are so much more common, their names are less famous, though a good historian could name a few (shame on me). Small-time fools expire in the moment of their own education, but the great and powerful fools can leave rows and rows of gravestones as tribute to their innovation.

Since the matters of Acme are not martial, an outcome of actual gravestones will hopefully be avoided. The powers the be have decided to close one distribution center, consolidating it with another. However unpleasant, this could be simply a wise business decision. But the one they choose to close has been the control center for a number of plants, and I have heard mainly good things about it. I visited the site myself and thought it was in excellent working order. The center they are consolidating into I have never personally seen, but I have not heard anything about it about it in particular. From as much I am priviliged to know, therefore, it seems possible that scores of wage workers are losing their jobs because the other warehouse is closer to corporate bigwigs.

Why should I take the most cynical interpretation of inconclusive data? Because of first-hand experience. At our site a certain manager is tearing out our existing inventory storage architecture to install a new system. Nothing wrong with the idea of doing that. The problem is when you dislocate inventory without giving it any kind of official new location, so that it exists in a limbo that depends for its coherence on the care and good keeping of temporary wage workers. Add to this that your new system, while in place physically, also does not have systematized locations with processes for adding, deleting, changing, and reassigning locations. Add to this that your new system, of plain racks, is not getting adequately funded to buy purpose-specific racks. Instead there are ominous rumblings about reusing existing beat-up, repurposed, mismatched racks.

Add to this that your whole new theory of inventory management, sending to the assembly lines the exact quantities and mixes required to complete the scheduled work, is falling apart in every way; the schedule doesn’t hold up, the assembly lines build when there is nobody around to resupply them (which requires either an excessive buildup ahead of time or a lag after the fact, or simply shuts down the assembly), and that the supplier-owned inventory manager is under such strict orders not to release extra inventory (by the same manager) that material handlers cannot get enough parts out in advance of the assembly line’s need for them.

Add to this that the nominal manager of the stockroom said, “Don’t do this thing this way.”

Add to this that everyone involved in the actual physical and transactional processes said “Don’t do this thing this way,” and only the people who hear only the pitch that “this will reduce inventory” are excited about it.

Add all that together, and what do you get? A fool or a hero. Time will tell.