The 2084 Precept (12 page)

"Good morning gentlemen," I said, in my
louder than usual presentation voice and smiling a big smile. I
always smile, it sets the tone, and in any case this was a sincere
smile, they were all pretty nice guys.

"As you know," I continued, "we have
implemented many things in recent weeks, fairly rapidly thanks to
you gentlemen, and some are already having their effect on the
P&L. Other items are still in progress. But there is more to
come, and today is going to show us how we can create an estimated
17,000 hours additional annual production at no additional cost.
Now I haven't spent my time attempting to value these hours but
we're not talking labor productivity costs here which I would put
at around £800,000 per year. We’re talking about what is the value
of the additional production which would be achieved with these
additional hours, in other words what is the value-added?"

I clicked to the next image.

Nothing more, I keep it as simple as
possible. I don't like my presentations to be full of script with
me repeating parrot-like whatever is on the screen in case they
can't read.

"I have been doing some work on machine
set-up operations and I have a comprehensive summary here showing
set-up hours per year for each individual machine, the time each
set-up takes, and how frequently the set-ups are performed on
average per day or per week or whatever. As we know, setting up a
production machine to make a different product, or produce a
different product size, costs time. And during this time neither
the machine nor the employee or employees involved are producing
anything. This is, quite simply, lost production time." I handed
six copies of the summary to the CFO on my left and they went
around the table, each taking one.

"But we're not going to bother dealing with
detailed numbers in today's meeting. What I would like to do today
is mention a couple of examples, show a video of another one, and
then make three recommendations, followed of course by our usual
discussion regarding your acceptance or otherwise of the
recommendations and/or of any alternatives you may prefer. And,
also as usual, whether you wish to handle the implementations
yourselves directly or whether you would prefer me to do that."

I certainly had their interest already, and
with only a few words shown on the screen. They probably had their
misgivings at this stage, at least with regard to the size of the
obtainable benefits I was claiming but, have no doubt, that would
change by the time the meeting was over.

I clicked to the next image.

Mystery headlines. Get their interest. And
plenty of skepticism too. What on earth is he going to be waffling
about?

"These days, as you know," I went on, "many
machines can be set up more or less electronically. But we have no
such machines, nor do we have the resources at the present point in
time to invest in any. What we do have, is we have 154 old machines
of which well over half require regular set-ups, and as you can see
from the schedule handed out just now, these set-ups amount to a
total of around 34,000 hours per year. We are going to halve that
at least, maybe more."

There were disbelieving looks, what an
overstatement, what an exaggeration. Very well guys; just wait,
just wait and you will see.

"Let me mention the smallest example first.
I was chatting to an employee last week while watching him set up a
small piece of equipment involved in a new production run. He had
to dismantle the housing, then unbolt some surrounding components
so that he could reach far enough inside and downwards to enable
him to make the necessary adjustments to the machine, which he did,
basically, using a screwdriver. Having done this, he had to
reassemble the whole thing again. I asked him how long this usually
took and he said about half an hour. I asked him how often he
performed this task, and he said twice per day on five similar
items of equipment. 'But, Mr. O'Donoghue,' he said, 'it really need
take only five minutes.'"

I paused. They were now mildly interested.
What was coming next?

"'Oh really?' I said. 'Yes', he replied, 'I
just need a screwdriver with a handle about three feet long so that
I can reach far enough inside without having to disassemble
anything. You can't apply as much pressure with such a long handle
but you don't need to, it's enough.' 'Well, why don't you put in a
request to your supervisor for that?' I asked. 'I did,' he said.
'Twice. Three years ago. I heard nothing. I lost interest. If
they
don’t care, then that's their problem. Why should
I
care?' And so, folks, I did a quick mental calculation.
With 230 working days per year, gentlemen, he is spending 1,150
hours performing work which, for the sake of a long screwdriver,
should only be taking him about 190 hours. Nearly 1,000 hours of
wasted labor cost, lost time—and therefore lost production—just on
this one small item. Every year. Number 45 on your schedule,
gentlemen."

Nobody said anything, there was just a
rustling of paper as they searched out the item.

"Example number two," I continued, "are the
Vatomats. We have ten of these and they are used, as you know, for
mixing certain types of ingredients to produce a certain number of
different types of glue…sorry, sorry, adhesive."

There was some chuckling at this; after four
months I still had difficulty remembering to use their preferred
term.

"As you know, the big blades which hang down
into the vats to do the mixing have to be cleaned whenever a
different product blend is needed in order to avoid contamination
from the previous batch. Production is of course halted while the
blades are unbolted and removed and then cleaned. This takes place
on average once every day for each Vatomat and it takes about two
hours of hard scraping and cleaning. At the same time, the vats
themselves are scraped clean in similar fashion. Now…the solution
in this example is simple. We buy up to ten spare blades, we spend
fifteen minutes replacing them each time, and production restarts
immediately, no need to wait. That would mean we would lose only
575 hours production time each year instead of the current 4,600
hours. In my view, this example alone is indicative of the fact
that an overall savings target of at least 17,000 hours annually -
for the whole company - is eminently achievable."

"There is something I don't understand,"
said Ron Frisby, the production boss, "how can you restart
production before you've finished cleaning the vats?"

"Good point Ron, you can't. This job is at
present done by hand. But using industrial grinders, the
vat-cleaning job would also only take about fifteen minutes.
Cleaning the blades is admittedly a more complicated task,
intricate you might say due to their shaped design, but industrial
grinders could also be used for that and overall I estimate it
would take about an hour per blade. That means that in addition to
the saved production time, you would also save a few thousand labor
hours cleaning the blades. Then all you need to decide is whether
the surplus hours can be productively used elsewhere, or whether it
is simply better to reduce headcount."

"But Peter, this really wouldn't be
possible. These adhesive leftovers are highly inflammable, just a
single spark from an electric grinder could cause a dangerous
explosion."

"Yes Ron, I understand that. But not if we
buy the specially protected ones. The ones used, for example, to
perform unusual or specific cleaning tasks on ships' tanks. Such
tools are on the market, or you can even have them custom-made if
your requirements are extremely exceptional ones, if there awkward
angles to be dealt with and so on. I see no problem there."

I looked at him to see if he had anything to
add, maybe I had missed something—it certainly happens on
occasion—but he didn't and presumably I hadn't.

“And,” I finished, “we might also need to
look at whether we can save even more money, for example by
increasing the batch volumes and thereby reducing the number of
times the equipment needs to be cleaned throughout the year.”

"Peter," said Charles Goodridge, the CFO,
"The idea sounds like it could be a good one but I seem to recall
that those blades cost something in the range of £10,000 each and
we just don't have the money to buy
one
, let alone ten. As
you know, we have to scrape everything together every month just to
meet our wage bill."

"Charlie, it's good to have the finance guy
always thinking about the money," I said with a smile. "But I think
you will agree with me that for the past two months we haven't
exactly had to scrape any money together. We're not making losses
any more. The last two monthly P&Ls show a profit and we have a
positive cash flow as a result of that. But…if necessary…with a
first year payback for you of, let's say at least 400%, I could
personally arrange financing for you or maybe even lend you the
money myself for a cheap interest rate of, say, 5% perhaps?"

He smiled back at me. "Point taken, Peter,
point taken."

Ron spoke up. "Tell me, Peter, how did you
come across this subject?" Aha, looking to find out why one of his
guys would have talked about it to me, but not to his supervisor.
Or alternatively, why the supervisor had never mentioned it to
Ron.

"Well, I was just doing one of my walkabouts
on the shop floor and I happened to see somebody cleaning a blade.
And so I stopped, and I watched, and I started having some
thoughts, possibly very naïve ones I thought to myself at the time.
But asking never hurts anybody and so I started asking the guy some
questions. And I found out that my thoughts were not necessarily
naïve at all. I then discussed them with the foreman, and he
couldn't find anything stupid about them either. And I then worked
out the numbers. That's it."

Ron didn't say anything. He looked a bit
embarrassed in fact, not surprising with his boss sitting there.
But in reality, he had nothing to be embarrassed about at all. It's
easy when you are a guy from the outside, you start querying
everything, some of your questions are amateurish or even downright
stupid, and on the other hand some of them are not. More proof that
consultancy is easy, if you ask me. Just walk around, look, ask
questions, and listen.

"Gentlemen, I am only giving us a couple of
examples here today and it may well be that we need to look more
closely at everything in my list. All of the listed items appear at
first sight to be clear cut cases. But some might not be. The
simple question today is whether you think they need looking into.
And here is the last item I wish to show today. It is a video of
another set-up. I had the video made six weeks ago after obtaining
agreement from the works council and the employee himself and
guaranteeing in writing that we would only make one copy and return
it to them after we have finished with it. Mind you, I told them
they might want to keep it instead of destroying it, use it for
group training purposes. We will see in which way they could do
that when I get to my recommendations."

I switched on the video. It showed an
employee starting to do a machine set up. After about ten minutes
the employee suddenly straightened up and walked away, going
off-screen.

"What's happening?" asked Fred Staples, CEO,
his first words in today's session.

I stopped the video. "Well, Fred, he can't
find a tool he needs and so he's gone off to find it." And yes, I
knew what the next question was going to be.

"But if he knew you were going to video
him," said Fred, "why didn't he make sure he had the tool with
him?"

"Ah," I replied, "that is the point. That
tool is supposed to be hanging up on a tool board a few feet away.
Look, there it is in the video, quite a few empty spaces on the
board. The problem is that other guys often take the tools they
need for something they're doing and then they are supposed to
bring them back and hang them up in their proper place again."