Among my career experiences I was fortunate to work in marketing for a period of time when a new VP was hired to bring organizational leadership to the business development process. The first thing he did was hunker down in his office with several members of his staff, dissecting the business development status of the company. After a couple weeks he emerged from his office to give a presentation to the staff, explaining that the first thing he does when he takes on new responsibilities is to put the challenge into perspective.

As I mentioned, this is a mature program with significant challenges. Taking my cue from this former manager, I pulled my usual post-MRP-run reports: Backlog, Planned Orders, Open Orders, On-Hand Inventory. I normally lay the data out in Excel and do the math: how many units have to be built, how many units are on-hand, how many units are being built in the open orders, and how many units remain to be built. Simply put, the way production scheduling and MRP work is:

On-Hand Inventory + Open Orders + Planned Orders = Backlog

Anything else, and you have a problem.

So, I pulled the data expecting to see everything balance and my challenge would be a function of lead time and material availability. Except, the data wasn’t adding up correctly.

By the end of the first 14-hr day I’d found some major human errors that had contributed to a portion of the problem. Once corrected and MRP was re-run, the numbers still weren’t adding up. By the end of the second day I’d found an open order that wasn’t consuming material properly. Once I showed it to my manager, she diagnosed the specific problem in about 30 seconds. I won’t go into it here because it was human error, not system error (although it would have been nice if the system hadn’t allowed the error).

So, my “normal” process for getting my arms around program materials responsibilities has been short-circuited. Fixing the issues in the system are beyond my abilities, but I’m fortunate to have a manager with the technical skills to do so and the integrity to shoulder that responsibility rather than pawn it off on me. Even so, this will be the biggest challenge of my career thus far.

I have many weeks of long hours ahead while I try to make sense of the situation from a schedule, capacity, and availability perspective. But as I tell my team, when the system is used properly, time is your friend – eventually, material is ordered properly, arrives on time, and you recover and stabilize.

photo credit: David G. Romero

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In contrast to this is planning for a mature product or program. I am taking over a mature program with a family of very complex assemblies on Monday, and this weekend will be spent preparing. Except for when I’ll be watching the Florida-Georgia game. I do have my priorities, after all.

I plan to “live-blog” the process as much as I can without giving away any proprietary information. To set the groundwork, the program is very important to my company’s current and future business and is generally considered a cash-cow. It is not without challenges however; inside lead-time demands, material shortages, and the sub-optimal impacts these have on inventory, operations, and profitability.

Step one in this effort:

Bill of Material (BOM)

Since the products are fairly complex from a technical and process perspective, I need to understand the Bill of Material. I find the best way to do this is to review the backlog and analyze the BOM and construct product trees for each active end item. Yes, I’m sure this exists already, but a few hours spent building it myself is a smart investment that will pay off in a deeper understanding of the product structure.

When I build a product tree, I like to just use Excel and I include the item attributes like:

• Item Number
• Item Description
• Procurement Lead Time (longest component lead time)
• Manufacturing Lead Time
• Fixed Days Supply
• Lot Size

Besides helping me understand the product structure and planning factors, this exposes disconnects between the way a product is planned and the way it is built in real life. For instance, if a product has a Fixed Days attribute set to 10 days, but over time the manufacturing team has found it easier to build in 15 day lots/cycles, the materials organization will always be chasing those last 5 days of components.

I’m not saying that is the case with the program I’m working on, but it is an example of what can be uncovered by doing regular reviews of the BOM.

After I complete this effort I will post again about the next step I’ll take in my preparation. If you have questions, fire away in comments.

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I’ve been involved early in the sales pursuit process several times, as well as had products/programs “thrown over the transom” as they say. I have a simple process I follow to manage the material planning function on those programs where I’ve been involved early. I follow the same process on those “over the transom” programs to place the challenge into perspective for management and the program team so recovery decisions can be made as appropriate. Here it is in a simplified flow chart:

If your company has a formal S&OP process, each of these steps is probably documented in excruciating detail and the ability to drive component orders on forecast is defined through bounded risk calculations. If your company does not have a formal process, as a material professional you can’t just sit on your hands and wait for someone to hand you the approval to buy material before you start developing your availability analysis. A professional reaches out to the rest of organization, uncovers these “hidden demands” and gets to work.

I am considering a series of posts that describes how I go through each of these steps; we’ll see if the response to this post warrants the effort.

photo credit: AMagill

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# Supplier may deliver their product late or not at all
# The warehouse may be on strike
# A number of items at the warehouse may be of poor quality and replacements are still on order
# A competitor may be sold out on a product, which is increasing the demand for your products
# Random demand (in reality, random events occur)
# Machinery Breakdown
# Unexpected increase in demand

There are many reasons and methods for calculating safety stock, and one of the more common reasons I’ve seen in the world of complex electronic assemblies is Test Yield. As electronic assemblies get more complex due to smaller component packages and denser placement on the board, as well as tougher requirements for the boards themselves, there will always be issues with yield. Couple this with complex testing requirements for certain high-reliability electronic assemblies, and yield issues begin to multiply. While zero defects is the goal we all strive for through continuous improvement programs, the real world has to take defects into account. Along with the actual defect comes accounting for the turnaround time to troubleshoot and repair boards, and finally, accounting for the loss of irreparable assemblies.

It might be easy to say “Well, I’ll just take whatever my first-pass fall-out is and release that many more in each work order”. But, releasing extra quantities in each work order isn’t safety stock; safety stock is the quantity of units required in your supply chain to account for VARIANCE and achieve your target service levels to the demands from your customer. While there are statistical formulae to determine order quantities and safety stock, if you understand your planning factors and your processes, you should be able to model your order quantities while achieving inventory and service goals.

Depending how the planning factors are set in your materials requirement planning (MRP) module, you won’t be releasing the same quantity in each work order. Most MRP systems will “see” those defective units unless they are immediately placed in an inventory status that “blocks” MRP. If your processes allow for defective units to sit in WIP through the next MRP cycle, your planned orders will be reduced accordingly.

For the example below, I assumed a first-pass yield of 97% and a scrap rate of 0.5%. Another factor that is important in the cycle below is that the test occurs on Day 5 of a 5-day cycle and it takes 2 days to troubleshoot and repair the units, which means the units show in WIP at the time of the next order release. See this example:

Manufacturing Lead Time (days)	5
Weekly Demand	100
Historical First-Pass Yield	97%
Historical Final Yield	99.50%
Historical Troubleshoot & Repair Time (days)	2
Day Test Occurs	5
Initial Order Qty + Safety Stock	103

	Wk 1	Wk 2	Wk 3	Wk 4	Wk 5	Wk 6	Wk 7	Wk 8	Wk 9	Wk 10
Demand	100	100	100	100	100	100	100	100	100	100
Order Release	103	100	101	100	101	100	101	100	101	100
Order Shipment	100	100	100	100	100	100	100	100	100	100
Fallout/Scrap		1		1		1		1		1
Balance in Troubleshoot WIP	3	2	3	2	3	2	3	2	3	2

As you can see, the quantity of units in WIP from one cycle to the next fluctuates between 2 and 3 units – 2%-3%.

There will be some in your organization (for instance, the production supervisor ) suggesting you should always release 103 units in each work order. Not only are they wrong, doing so will actually drive up your work-in-process (WIP) inventory – a cerain percentage of your first-pass defects will go through a troubleshoot-and-repair cycle, making them available for finished good shipments. If you continue to release “X” extra in each work order, WIP inventory builds according to this formula:

(Units released) + (Units Repaired) – (Shipments)

In the example above, watch what happens to your WIP inventory:

	Wk 1	Wk 2	Wk 3	Wk 4	Wk 5	Wk 6	Wk 7	Wk 8	Wk 9	Wk 10
Demand	100	100	100	100	100	100	100	100	100	100
Order Release	103	103	103	103	103	103	103	103	103	103
Order Shipment	100	100	100	100	100	100	100	100	100	100
Fallout/Scrap		1		1		1		1		1
Balance in Troubleshoot WIP	3	5	8	10	13	15	18	20	23	25

As you can see, your inventory will build to infinity unless some undefined variable consumes these units. Obviously, this is not a satisfactory solution in any organization due to the impact his has on cash flow.

These examples are simple and focus only on one variable – Yield. In a robust safety stock model one would account for other sources of supply and demand variance – forecast accuracy, supplier performance, additional quality yields, etc. But the examples do demonstrate how one can easily get to a safety stock determination through logical thinking, an understanding of their internal processes, and simple math.

I would love to see other examples of how to account for variance in the supply chain, so please leave me a comment if you care to continue the conversation.

photo credit: dan paluska

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The following is a re-post originally written by me for another blog. I am in the process of streamlining my portfolio and moving the greatest posts to this site. Hope you enjoy.

Everyone has a secret way of timing the grilling of a steak to perfectly pink medium. Some use a timer, or a meat thermometer, or can tell by pressing on the steak with a thumb and feeling the resistance.

I have a different way, one that involves a ritual appreciated by every man and woman I’ve allowed to witness.

Years ago, I found that the time it takes to grill a steak to a perfect medium equals the time it takes me to drink an ice-cold beer.

“But, what about the thickness of the cut?”

I drink faster or slower, as thickness dictates.

“What about temperature variations?”

What variations? Pre-heat the gas grill on high, place the meat on the grill, drop the temp to low, and take a sip. When you get halfway through the bottle, flip the steak.

Is this science? Is it art?

I have no idea. But I sure like grilling, and my steak comes off the grill perfect every time.

photo credit: stu_spivack

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Singapore is tiny compared to the United States (and most other countries, for that matter), but that doesn’t mean it can’t be a model. Barack Obama keeps saying that we need to buckle down and work hard to build an economy based on real production, not hollow financial chicanery. We need a little more social order, and a little less individualism [emphasis mine]. Singapore has already pulled off both objectives, and continues to provide a good example of good judgment for the United States and the rest of the world.
HarvardBusiness.org: Singapore: A Model of Judgment for the United States?

Actually, the article is pretty good and resonates perfectly with conversations I’ve had with colleagues overseas. Singapore is a fascinating place. But, that last paragraph sure did leave a bad taste in my mouth. I would argue we need more individualism, more of the thinkers, creators, and builders that will create The Next Big Thing and solve The Big Problems. I’m not so sure that Singapore doesn’t encourage individualism; I suspect the author may be mistaken. I also don’t agree that social order and individualism are mutually exclusive.

Your thoughts?

photo credit: koalazymonkey

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For each of us, there is a lifetime work-credit graph similar to a supply-demand market equilibrium graph in economics; ideally, we want to be working at equilibrium with the credit we receive. But, there are times where we work harder than we get credit for, and times where we get credit we don’t necessarily deserve. Human nature being what it is, we often put our efforts into those things that will maximize the credit we receive, regardless of the actual amount of work (or value!) we bring to our jobs.

Additionally, I’ve often complained that there is a reason that people who are good crisis managers got that way. In my experience, they experience an abnormally high number of crises, and then are congratulated for solving their own problems. I don’t appreciate these people the way others might. I believe a professional works to minimize their problems and variability, and understands their issues without needing to “go get their arms around it”.

So, I spend time every week developing tools at work that I hope will increase the value I bring to my job. It is an iterative process, always looking for that perfect tool that gives me perfect visibility. I’ll never find perfection, but the search gets me closer with every iteration.

I use most of these tools to analyze MY own performance and those things under MY control. I work in an extremely complex, dynamic environment, but the optimal work model in my industry is to minimize variation and maximize repeatability. As a Master Scheduler, I control much of the front-end of the manufacturing process – any variation on my part bullwhips through the organization. Variation isn’t something that can be avoided, however, but as a professional I need to be diligent about controlling those factors under my control.

Primarily, I use pivot tables in MSExcel in this process. I track demands over time, supply exceptions over time, excess/obsolete over time… well, you notice “over time” is the critical factor. After each MRP run (we run weekly), I export all of my data and review several critical factors: has my backlog changed, is my planned order report correct, has my excess/obsolete moved unexpectedly in either direction, and has the exception report changed positively or negatively. There are many other items I track, but I start with these and use them to uncover issues and troubleshoot them prior to someone else asking me that dreaded question, “What happened?”

I paste the data into spreadsheets and add a column for the date, then run a pivot table with the date across the top and the data being measured in the vertical column(s). Now I have a neat, easily-built, easily-understood trend analysis showing how the data changes over time. From here, I look for exceptions, troubleshoot, pareto, and start working to resolve as quickly as possible.

At this point, I am out in front of the rest of organization. No one is coming to me with a problem, asking how it occurred, and wanting to know how it will be fixed. The problem didn’t cascade or mushroom through the rest of the organization; most people never know the problem exists unless they’re involved in the resolution or I choose to tell them. The discipline with which I maintain and work this data provides me the opportunity to show my work in it’s best light. Ghandi was half right; There are two kinds of people, but I try to be in both groups.

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Except on the roads of Huntsville.

Question for Huntsvillians: Why no thank-you waves in traffic? I slow down, let you merger easily, you just drive on like I HAD to do it. I didn’t. So, give me the wave, huh?

Back in Jax, a full-blown NFL city with 1M+ residents, thank-you waves were taken for granted; you let someone in, you get the wave, you give a you’re-welcome wave back, and we all go on our merry way. Here in this less-congested, more laid-back small city, it’s bad enough we all drive like we’re at Talledega but the lack of common courtesy is disconcerting. Think of my blood pressure, will ya’?

Personally, I blame it on the Yankees that move here. They’re a rude people. So let’s do what we can to educate them, shall we?

Give us a wave!

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Two guys were hiking in the woods when they startled a bear. They took off running, and one guy said to the other “We’re never going to outrun this bear”.

The second said, “I don’t have to outrun the bear, I just have to outrun you.”

For years, people in my post-baby-boom generation have been told that the secret to success and happiness is work-life balance. They rank their priorities and consistently (and rightly) place family above work, then interpret “balance” and “priorities” to mean they should be spending as much TIME with their family as they do at work. They make it a point to be at every soccer practice, PTA meeting, and handle their share of the pick-up duties. I myself believed this for many years, right up until I was laid off several years ago.

This is when I learned an important lesson: Placing your family ahead of work in order of importance doesn’t necessarily mean you devote the same amount of TIME and ENERGY to being WITH your family; it means you place your family’s welfare and well-being ahead of work. Believe it or not, your family doesn’t ALWAYS need you around. But, they do need you to provide a home and food and health care and the other necessities of life. And then they need your time. It is work, your job, that provides these things.

Like it or not, there are going to be people that are as good or better than you. There can only be one #1, and if you want to be that star performer, the one that is still around when the layoffs are done, you will have to work harder. Don’t give me that tired old mantra “Work smarter, not harder”. Today it is “Work smarter AND harder“.

There are going to be great periods at work where everything runs smoothly and you’re out of work on time and you’re able to coach the t-ball team. But there are also going to be periods where the challenges are huge, and the winners at work will be the ones that step up and do what is necessary to overcome the challenges. These periods don’t last forever, although sometimes it can feel like they will. So, explain to your family that for the next few months you’re going to miss dinner twice a week, then stick around and take care of that last meeting at 6 pm.

In my current position, I recently transitioned what I do to another plant in my company located in Asia. At the time, I was working my way out of a job but I embraced this and I worked the long hours and made the tough decisions. Late-night conference calls and 4 a.m. email checks, with a ton of complex, difficult work in-between were the norm for several months.  Now, I’ve been entrusted with several programs that have been deemed critical to the future of our business unit in Huntsville, all because I made the choice to work harder and smarter. This is paying off by providing the security my family needs right now, and the opportunity to improve our financial situation despite the worst economic times in our lives.

Lest you think this is a self-congratulating post, allow me to point out that my counterparts in Asia that now work my old program are 12 timezones ahead of me. When I arrive at 7 a.m., I have a full inbox of complex communications, and these continue to come well into my morning. When I leave between 6 p.m. and 8 p.m., I’ve already received the first of the emails for the following day. Remember this the next time you wonder why manufacturers build everything they can overseas.

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Among the insights aboout celebs will use and be able to monetize Twitter, and how the early-adopters are beginning to react, was this nugget:

More Hay and less Needles
This increase in people, and brands of all sorts joining Twitter will cause more noise and content to be created. We haven’t even seen the half of it, as devices like your car, laptop, can start auto-emitting signals that could become tweets. As a result, expect more filtering tools and analysis by humans to matter more and more.

To me, these would be needles, not hay. I’ve heard of the emergence of technologies that would permit a refrigerator, for instance, to send a signal to the owner and the warranty-repair facility when it senses a component failing. Adding this capability to to electronic and mechanical devices in the home, utilizing Wi-Fi as the signal transport, and Twitter (or Facebook or just plain old e-mail) would be a killer-app for someone like me.

For instance, my car, sitting in garage, would be within my wireless network and would send a tweet saying “Time to change the oil (or brakepads or transmission fluid…)”. If the car had the ability to sense critical failures and notify me: “I am sensing a loss of radiator fluid in excess of normal usage”, it would trigger me to search out a leak in a hose before I wind up on the side of the highway with a looming tow and expensive repair bill.

Would I pay more for a car/refrigerator/washing machine/dishwahser/TV with this feature? Sure, depending on the product and its tendency to fail. A car is easy; repairs are expensive and I am not a car-guy. I need prompting of this sort. Household appliances? Depends. Most of mine last years and years and years, so the value I would perceive for this technology would not be as great as with a car.

Like any option on any product, there will be a market for this technology that will depend on the relative value of the technology versus the price of the product (easier sell on more expensive products) and the perceived value to the user. Do I see making twitter a utilitarian tool, in addition to a social networking tool, a good thing?

You bet.

Oh yeah, Tweet me.

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