Appreciating the Value of Veteran Employees

When I was a young industrial engineer at the food production division of a multinational company, the accounting department asked me to find out why there was a large reported loss of refined coconut oil.

They’re the ones we always look for when we need something. 

I went to the production manager and he told me to ask Mang Ben.

In the Philippines, calling someone “Mang” is an address of respect usually to an elder.  Mang Ben in my case was a fifty-plus year old veteran who had worked at the multinational’s foods processing department for more than 25 years.  Mang Ben had more experience than everyone else and he would know why there is a reported loss in the coconut oil.  (It turned out to be due to an unsubmitted form that failed to get to accounting). 

Mang Ben could tell how many weeks supply an oil storage tank has just by looking at a gauge and he knew how to “cook” the fats and oils that the multinational produced every day. He could unload a barge of coconut oil all by himself and even called shipping operators to schedule when the barges should arrive such that they’d be timed with the incoming tides.  

I’ve met many workers like Mang Ben in the enterprises I later engaged with.

  • There’s the veteran machine operator who worked for a printing press company.  He knew how to quickly troubleshoot critical equipment and was the one the owners went to if they wanted to know if deadlines could be met; 
  • There’s the storeroom clerk who knew where every spare part of every equipment of the enterprise.  Even if there would be hundreds of items, he’d know where they were kept.  He also had a box of index cards which he used to track the inventory of the items, from when and how many arrived from which vendors to when and how many were given out and to whom; 
  • There was the 30-year-old young lady who was the right-hand assistant of an owner of a trading enterprise which delivered to independent convenience stores.  She knew every inch of the warehouse she was in charge of and knew every step in the trader’s logistics operations, from order to delivery.  She would push people to deliver rush orders and knew the ins and outs of the trading enterprise’s accounting system;
  • There’s the purchasing clerk who was familiar with every vendor of the multinational company she worked for.  From the ones who delivered the expensive chemicals down to the office supplies, she knew who offered the best deals.  She was the go-to person when any of the enterprise’s managers needed something to be bought fast. 

Some executives in the past have cited operations managers’ dependency on people like Mang Ben as a sign of weakness in the system.  Relying on one person for so much may entail risk especially if that employee suddenly becomes absent or leaves the enterprise. 

On the other hand, having a very able veteran brings about opportunities.  Veteran employees like Mang Ben bring a wealth of experience that manuals or consultants can’t equal.  A manual does not quite teach how much to turn a valve in real life to get to just the right cooking temperature as well as how Mang Ben would show it in person.    

Veterans also are likely to know what improvements would be most helpful for an enterprise.  Many veteran labourers at warehouses had given me insights on how storage racks should be laid out and what kind of material handling equipment would help. I was surprised, for example, when the labourers at a toy importer said they’d settle for well-built ladders to climb than expensive forklifts to retrieve bulky boxes from the tallest rack shelves. 

And when it comes to big changes such as building a new warehouse or installing new technology, it also helps to have veterans participate.  Veterans know the products and services of an enterprise very well, if not more so than the owners themselves.  Whenever there is an introduction of something new like a new improved machine or new storage facilities, the veterans would likely have valuable input on what to watch out for especially on quality, efficiency, and service. 

Veterans would know how high a truck dock should be or where in a factory the floor would be strongest to place a new machine.  An architect or civil engineer may offer all the standards but a veteran would know via experience what and where would contribute best for something new. 

Many enterprises have veterans like Mang Ben, employees who have loyally stayed long with the business and know more about the operations than just about anyone else.  Veterans are not signs of weaknesses but people who offer opportunities for educating new employees and to consult with for improvements, whether minor or major. 

We should be grateful for the veterans in our workplace.  They contribute more than what we can appreciate them for. 

About Overtimers Anonymous

Behold The PSI: A Basic Tool for Supply Chain Planning

The PSI or Production-Sales-Inventory is a basic spreadsheet template for supply chain planners. 

It looks like this:

The PSI has three sections:  production, sales, and inventories. 

Production represents the in-flow of an item or what’s going into inventory.  A basic example is finished goods input coming from a manufacturing operation’s output.  We can also call it supply. 

Sales is the out-flow of an item or what’s going out from inventory.  An example is a shipment to a customer.  We can also call it demand. 

Inventory is the stock of an item on-hand in storage, such as how much of an item is in a warehouse. 

The PSI makes visible production, shipments, and inventories over a range of time periods or what we can call time-buckets.  It’s an outlook for planning.  It’s up to the planner if he or she wants to use weeks, months, or even days for the time buckets.  It’s also up to the planner how many time buckets to plan for.  It doesn’t have to be just three as in the figure below.  It can be any number.  Some enterprises use six (6) buckets for a 6-month outlook; others go up to 12.  It is the planner and his superiors that decide what periods to cover (e.g., weeks, months) and how many. 

The PSI’s horizontal rows list the items or products.  Each row shows the production, shipments, and inventory outlook for each item via the quantities in the respective columns or time buckets. 

An item can be a product, material, or a supply or spare part. It is recommended to select an enterprise’s most important items to the PSI.  By very important, that would mean those that executives often keep an eye on. 

Working the PSI starts with a beginning inventory at the zero (ø) column of the inventory section. 

The planner’s basic aim is to track the inventories from one time-bucket to the next.  In the figure below, the planner notes that inventories at the end of week 1 becomes fewer as a result of sales in the same week. 

When the planner, however, inputs the production and sales of week 2, the inventories end with zero (ø) on week 2. 

To put what I just said in a formula:

and to put it to represent every time bucket:

where x is the time-bucket number.

The aim of the supply chain planner is to ensure there will always be available inventory for sales.  Hence, supply chain planners typically prefer there’d be extra stock at every time bucket.  

Supply chain planners typically set inventory targets for every time-bucket in line with their superiors’ policies and strategies.  Sales for each time-bucket usually are based on forecasts and customer orders. From the inventory targets, the planner computes the production or sales needed and still have enough left to meet inventory targets.

Planners focus on either how much to sell or how much to produce to meet inventory targets. 

If it’s production, planners would adapt the ending-inventory formula and make it look like this:

For a desired ending inventory of five (5) units of items A and B, the planner would set production numbers that would match sales but leave at least five units at every ensuing time-bucket. 

When the enterprise wants to plan how much of an item to sell given inventory targets and ongoing production, the supply chain planners would adopt the following formula: 

Which in the PSI would look like this:

…which looks just like the PSI for production.  😀

The PSI in the above diagrams show the same numbers but illustrates a different approach.  The planner either figures out how much to produce or calculates how much to sell for the ultimate purpose of having enough inventories at every time-bucket. 

An enterprise can tailor a PSI for its particular business. 

For an enterprise that buys finished goods and directly sells to customers, for instance, a planner can adapt a PSI from a production-sales-inventory template to one that is purchases-deliveries-inventory:

An enterprise that imports items and converts them to finished goods, a PSI may look like the one below. 

I found this especially useful in a metals manufacturer that was importing metal coils that then were then cut up and converted into steel sheets, plates, tubes and pipes.  As steel coils were the key components of the manufacturer with its weight in metric tons as the standard of measure, the PSI enabled the manufacturer’s managers to plan the quantities and timing of importing and converting expensive metals without having too much on floor for too long. 

When enterprises use a common measure from key materials to finished product, the supply chain planner could expand the PSI to a 4-column spreadsheet consisting of purchases-production-sales-inventories:

A 4-column PSI would be particularly effective for enterprises with few but predominantly high-volume products such as those in commodities.  And it opens up participation of practically the four (4) core disciplines of the supply chain:  purchasing, production, logistics, and planning. 

The PSI doesn’t require sophisticated software or hardware.  One can use an ordinary spreadsheet program (e.g. Excel) or even do it by hand with or without a calculator (or abacus). 

The PSI gives visibility to an enterprise’s supply and demand picture from present to future for key items, whether finished goods, materials, or parts. 

The PSI’s limit is that the more items an enterprise has, the more tedious it becomes to plan and track.  ERP systems coupled with up-and-coming artificial intelligence (AI) software can make up for that.  Many enterprises, however, rely on planners to plan the items they carry.   

Even with its simplicity and features, it’s hard to find an enterprise that actually uses a PSI.  Many planners tend to devise their own templates, using spreadsheets mainly, despite the availability of integrated planning tools provided by expensive software. 

Most of the planning spreadsheets I’ve seen are hard to understand or are very specialised.  When I present the PSI template to planners, however, I’ve gotten very positive feedback with executives welcoming its application. 

A PSI is a basic manifestation of what a supply chain planner does, which is to plan production or estimate the demand needed with a minimum amount of stock at every time period.  It is a basic tool for supply chain planners.  It’s simple to set up and provides a comprehensive canvas of what an enterprise’s supply and demand would look like in the present and future.  It has its limitations in the complexity of an enterprise’s items and operations. But at the very least, it provides a foundation for planners to manage inventories and optimise supply chain productivity. 

About Overtimers Anonymous

Balancing Unstoppable Production and Benefiting from It

I used to work in a flat glass factory. 

The flat glass factory I worked at used float technology.  It starts with a furnace that melts raw materials such as silica (sand), soda ash, dolomite, and limestone.  Molten glass flows from the furnace to a tin bath, a chamber of molten tin, in which the liquid glass from the furnace floats on the molten tin to produce an almost flawless sheet of flat glass. 

Float glass factories run continuously.  Shutting down is out of the question because it risks damaging the furnace and tin bath which would result in lengthy cleaning and expensive rebuilding. 

Re-starting a float glass facility is likewise very expensive.  Restoring the flow of float glass requires tedious re-calibration operations and the difficult pulling of the liquid glass from furnace to tin bath.  

I know because I participated in one such operational re-start.  It was hot, time-consuming, and it cost the company I worked for a lot of money. 

The economics of keeping a float glass hot and running outweighs any temporary shutdown regardless of whatever the demand for glass is.  Unless it’s a permanent shutdown, flat glass companies will keep their float glass plants running no matter what. 

Float glass plants typically produce a minimum of 450 tons of sheet glass a day.  Glass companies, however, believe there is enough demand to absorb the daily unstoppable production.  Never mind that glass demand fluctuates with the highs and lows of the construction and automotive industries.

Unstoppable production is a reality in several industries.  Steel manufacturers have blast furnaces that cannot be shut down.  Petroleum corporations cannot outright stop the output of oil wells.  Farmers cannot reschedule harvests. 

We are taught that the purpose of supply chain management is to fulfil demand.  How does one then balance the management of unstoppable production with the swings of customer demand? 

Unstoppable manufacturing dictates the need for efficiency.  Ongoing production operations means ongoing supply of materials, supplies, and labour.  There has to be enough storage space, materials handling, and transport to handle the continuous manufacture of products.  At the same time, enterprise executives need to ensure that there is demand for what is continually produced.  Sales and marketing managers would strive to find buyers or markets to sell whatever is made.

Continuous production, however, should not be the centre of attention.  Selling products to keep manufacturing operations efficiently running should not be the sole purpose of supply chain professionals.

Customers and what they want should always be the focus.  There should be a balance between supply and demand in which the supply chain operations aim to meet customer expectations at the same time reap the benefits of such for the enterprise’s stakeholders.   

Flat glass companies market a variety of products.  They sell custom-cut window glass for buildings.  They produce coated glass window panes that insulate homes from the heat of the sun and thick glass sheets for furniture tables.  They sell glass for car and truck windshields.  They also sell glass that are used for solar panels and photoelectric cells.  The variety of products sums up to a high demand which justifies the continuous production of flat glass. 

Agricultural enterprises also allocate harvests in a variety of ways.  Fruit companies sell outright to wholesalers and supermarkets and at the same time export to other countries.  They also sell to fruit processing enterprises which manufacture canned and preserved items. 

Supply chain engineers (SCE’s) can help unstoppable producing enterprises by focusing attention on distribution and inventories.  They can help managers determine how much of what product to make, how and where to spread the items, and how much raw and packaging materials to buy and store. 

Oil companies, for instance, invest in storage tanks and lease super-tanker vessels to temporarily store production when demand is low.  The companies would dispatch the super-tankers to position their stock near to buyers who would be ready to purchase them when demand recovers. 

SCE’s can also help find out what kind of product to make and keep.  For example, SCE’s can determine how much work-in-process inventories to make instead of finished items.  Steel and metals manufacturers produce heavy rolled-up coils and ingots which they later convert to items such as bars, parts, sheets, plates, and pipes.  With the help of SCE’s, manufacturers can set inventory policies for work-in-process products and devise customised make-only-when-needed systems for finished items. 

Manufacturing is not a quick on-and-off kind of operation.  There is a cost when production facilities halt and re-start.  As much as possible, production lines should operate continuously, for efficiency’s sake. 

Efficient production, however, is not the end-goal of supply chain professionals.  Fulfilling customer demand is.  An unstoppable production process exists because of the confidence an enterprise has in selling all of what it would make.  Balancing the flow of product from vendors to manufacturing to logistics to customers should always focus on delivering to customer expectations and in terms of what enterprise stakeholders seek in terms of their organisation’s strategic mission and goals. 

An enterprise can make plenty, deliver plenty, and profit from plenty, with the help of supply chain engineering expertise. 

About Overtimers Anonymous