How Strong Is Your Business?

Monsoon season in Arizona takes hold in a month or so and it had me wondering what business owners do to weather storms -- both literal and figuratively. With the weather that has been striking across the nation -- hurricanes and tornadoes, floods, forest fires, earthquakes -- a business owner needs to have a contingency plan in place to deal with these events. Do you have one?

Do you wonder what could these weather events have to do with your business and its success or viability? Imagine this: A physical business location could be harmed by a storm if there is a flood,

fire or even loss of electricity.

Running a virtual business, such as my coaching business -- means I have to have access to Internet, electricity to run my computers and much more. I also need to make sure my computers and all of my systems are backed up in the event of a computer meltdown. It happens and if you don't have your systems backed up, you could lose your client lists, your inventory tracking and your invoicing systems. Could you recover?

Do you use cloud storage? Do you back up your computer systems to an offsite location regularly? If you back up weekly, have you considered what you might have lost during those previous six days?

There are myriad items that many business owners don't consider when thinking of whether they could weather a storm or a computer meltdown. If you want a walk through and an idea of what could be lost and how you can protect yourself, your business assets and your company's bottom line, give me a call!

Cash Is King In #Manufacturing

I think you will agree that one of the biggest problems for companies is cash flow. After all, cash is the lifeblood of your company .You buy your supplies with it, you pay your employees with it and of course you get to pay taxes with it.

However, many companies are lax with their cash flow management, which is very dangerous in these days when loans are harder to come by to tide you over.

4 Ways to Improve Your Cash Flow:

1. Try to do credit checks before you start up with a new customer. Folks who pay others promptly will probably continue to do so. The ones that pay slower, well you get the idea.
2. Send out invoices promptly. Again, this seems pretty straightforward but I’ve seen companies wait until the end of the week or even a month before they invoice. GET THE BILL OUT QUICK and YOU’LL GET PAID QUICK!
3. Improve your quality by making good parts the first time and they won’t be rejected. Seems counter intuitive but if you are not constantly, crediting and rebilling your customer’s accounts for bad parts you do make, your cash flow will improve and you won’t be wasting time doing paperwork.

Is Your #Manufacturing Company Safe From Cyber Attacks?

In light of the recent cyber attack at Goodwill stores and the attacks on Target and any growing number of retail locations, I wanted to take some time to point out the risks you and your employees are taking perhaps without full knowledge of the consequences.

First a few facts:

• 63% of companies let their employees use USB devices to transfer company information for use at home.
• 40% of employees use services such as DropBox or Box.com for cloud storage of personal and
  
  company information without their employer’s knowledge.
• “Phishing” for employee information on social media sites is now one of the most prevalent methods to gain information about a company before launching attacks.
• Most people do not use separate computers at home from their children or spouses when working on company information. They have no idea what programs, viruses, keystroke loggers etc. may have been downloaded by these family members.

Does Your #Manufacturing Company Use 3D Printing?

I found this article on 3D printing intriguing. Do you use this technology in any of your manufacturing processes?

Gartner predicts that by 2018, at least seven of the world’s top 10 multichannel retailers will be using 3D printing technology to generate custom stock orders, at the same time as entirely new business models are built on the technology.

“Some retailers are already selling 3D printers to consumers, and as they become more readily available, consumers could use them to ‘manufacture’ their own custom-designed products,” said Miriam Burt, research vice president at Gartner. “We also expect to see 3D copying services and 3D printing bureaus emerge where customers bring 3D models to a retailer or provider and have increasingly high-end parts and designs printed, not just in plastics but in materials including ceramics, stainless steel, and cobalt and titanium alloys.”

You can read the entire article here. I'd love to know if you're using this technology.

Why Kanban Doesn’t Work For #Manufacturers

For many #manufacturers, Kanban is a way of life. It assures minimal inventory and costs of goods sold. They’ll produce only what parts are needed for the next operation or shipment to the customer. On paper, this is terrific. In practice, well, here’s the rest of the story.

For manufacturers that have predictable requirements AND have done research to determine the proper lot size to release in terms of time required and cost for that number of parts, Kanban works pretty well.

Here’s the rub. Many manufacturers adopt Kanban releases without considering how the new system will impact the internal and external systems. For example, let say this manufacturer got a firm order for 1,000 parts from their customer with deliveries of 100 per month for 10 months. However, their internal processes

to make, buy and/or assemble this part are not predictable and may even be described as erratic. For instance, they are not able to process 100 parts per month through their system making or buying these parts. In addition, the time required to make 100 or even 200 parts exceeds a month.

What they should do is have an honest internal discussion and face the reality that only putting 100 pieces at a time into the system causes both higher per piece costs and delivery issues. A second step would be to increase the release size to take into account the completion and needs variations and suck up the inventory costs to carry parts that can’t be delivered.

To Be Or Not To Be A Job Shop

If you were to ask #manufacturers ion Arizona if they are a “job shop,” I’d guess a great percentage would say, “Yes.” They’d say they work on “jobs” and of course a “shop” is just another name for a facility or factory.

In my mind, a true job shop is one that makes discrete quantities of parts on a purchase order and ships them all to a customer in one shipment. No long-term delivery or commitment requirements. On the other hand, a

shop that does have longer term purchase orders with multiple releases and/or formal purchase agreements or contracts is not what I would describe as a job shop.

Let’s go through some of the pros and cons of each so you can clearly see what type of business mix you have and whether it works best for you.
                                   
“Job Shop” (as described above)

Why Manufacturers Don't Really Need Six Sigma

Before you go apoplectic on me, let me explain. In a perfect world, there is no need for any manufacturing shop control systems. No ERP. No SPC. No labor reporting. And of course, no Six Sigma.  “Not possible” you say? “We need those systems,” you say.

Simply put, everybody would do everything correctly, on-time with perfect "repeatability". Workers would be constantly improving their work habits, workstations and processes on their own without the need of an external “system” to guide them. Parts would be released at the proper time to allow for the most efficient and least cost production methods. All costs would meet or beat those quoted and would be repeatable every time.  Even machine maintenance would be performed before any failures occur that would upset the perfection. Clearly, this is utopia and you can’t get there from here.

Manufacturers: You Gotta Do Something!

Reading this title you might get the idea I think people don’t do anything. Not true. What I do mean, is that

many manufacturing companies, both in Arizona and across the country, get so caught up in the everyday hustle and bustle that they wind up putting out fires over and over without addressing the lingering and nagging problems that are draining their businesses of valuable time and money.

If you don’t start focusing ON your business, you will most likely need additional fire extinguishers to handle the increasing number and size of problems that will continue to rob you of your time and ultimately your satisfaction in owning a business.

Resolutions And Musings On Business From A #Manufacturing Consultant

I’ve been giving a bit of thought what my business New Year’s resolutions will be in 2014 and I think I've figured them out.

My central themes in my consulting practice are costs and cost control. To be truly competitive and profitable, you’ve got to know what your costs are to accurately price quotations. Whenever I talk to a new/potential or existing client in 2014, I resolve to ask them three questions:

1. Do you have a system in place that accurately tracks direct costs?
2. Does this cost system have the ability to add indirect costs to give you a complete cost structure for a particular part, job or customer?
3. Do you review these costs for each job and customer to see how you are doing vis-à-vis the pricing of your products?

Is Your Management Style Conducive To Your #Manufacturing Firms' Success?

If you're the owner or operator of a manufacturing business, you likely have face to face contact with your employees and management staff on a daily basis. Because of this, have you ever wondered whether your management style was conducive to the productivity of the operation as a whole? It's something to think about as the new year has rolled in and you might be making changes in your plant to make it more profitable and productive.

#Manufacturers Must Know Their Facility

Reading this title, I’m sure that you rolled your eyes and thought, “why the heck is this guy talking about these three boring topics; Facilities, Utilities and Acquisition. The simple answer is that these three items are the least thought of in everyday operation of your business even though they may be the very basis of the expansion of your plant.

Facilities: Concrete, steel beams and roofs.This topic covers your building, property and storage facilities you use. Since your business has to be housed somewhere, you must concern yourself with the building in terms of its construction and maintenance. Don’t know much about concrete or steel beams?

Do You Know What Your Job REALLY is?

You’re the president of a manufacturing company. Do you know what your “job” is? If you’re the president of a smaller company, chances are you are wearing a lot of hats. In a bigger one, maybe not. In either case, there have to be clear lines of where your job begins and ends.

By the way, this applies to every employee of the company. Yikes! Does this mean that as an owner I’ve got to define exactly what each employee is supposed to do and just as important, what the boundaries are? Simply put: yes. That is your job as the president. If you’ve got an HR person, you can delegate it but ultimately it’s your baby.

If you’re not the president, this applies to you as well. You’ve got to know exactly what you are responsible for and what authority you have to carry those tasks out.

One Manufacturing Cost You Can Control: In Two Easy Steps!

The purchasing process in your manufacturing company is one of the few cost drivers that can be directly

controlled. You can elect or not to spend “x” amount of money for a given product, machine or service.

However, if it is not controlled, well, all bets are off and profits will suffer. Period.

Step #1 Get firm quotes
One of the most important steps in purchasing is to obtain firm quotes on goods and services before that purchase orders are written. Seems simple, but I’ve seen many companies just send in blank P.Os to their vendors and hoping for a “fair” price. Right!!

Quality Counts In All Manufacturing Company Processes

Quality impacts on your manufacturing company's bottom line. Some of you may think that ensuring quality Six Sigma, Toyota Production Systems, SPC, et al.

means implementing a sophisticated system. Oh, boy here we go again talking about Lean,

As a manufacturing consultant, I'm here to tell you that, "YES!" you can have a successful company without doing any of these things. I can already feel that some of you are about ready to get out your Six Sigma Belts and break some heads! Before you do, I will also say that unless you can come up with programs that can duplicate some of the successes of these processes and systems, your quality will suffer. If your quality suffers so, too, will your profits.

Manufacturing: The Wealth Creator

The drumbeat of the pundits is that manufacturing is dead and that our country will evolve into a service society that will be much better. Yea, right! FYI, only three industries create wealth: Mining, farming and manufacturing.

Sorry all you day traders, lawyers and high-falutin' investment types. All you do is move the money around skimming a little off the top for yourselves. Thanks for helping the manufacturing world get stronger by providing us support. This is great news for manufacturing consultants and those involved in process improvement. 

Sure you claim to “create wealth,” but how many people can claim that working at Starbucks (I actually like Starbucks) made someone rich. Investment bankers get rich by making deals and putting financing together... for those of us in the manufacturing industry! 

In other words, instead of parents hoping their kids will someday become lawyers, accountants and other sorts of pencil pushers, why don’t they send their sons (and daughters) to a school to learn what it really takes to make things either in the shops or by owning one?

Manufacturing Consultant David Senkfor works those in the gear manufacturing and industry to help them implement process improvement practices. He is available for speaking, consultation and coaching.  

I Scream when I hear that "Quality is Free"

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I have heard “Quality is Free” so many times I could scream. On the surface, it’s true. Once you get the equipment, training and processes under control, making good parts is like falling off the proverbial log.

But, and it’s a big but, you gotta get there first. You can’t make a silk purse out of a sow’s ear. The same is true with quality. You must build it into the parts, You can’t inspect it into them. As much as the quality departments of most companies are concerned, they and they alone make sure the parts are good.

Well, that’s a little disingenuous. If the parts are good, then the inspection should be a breeze and the inspectors just check the parts and verify/record the results for the certification or inspection package that will be filed or sent with the parts to the user.

However, if the process is bad, the equipment out of spec or the operators of the production machines aren’t trained, well you get the picture. SPC, Six Sigma, ISO and all the other neato nifty inspection/quality methods are there to make it easier for the operators to maintain the quality. BUT, if the basic processing of the parts works against the quality of the parts, you may as well beat your head against the wall.

It costs time and money to get your entire operation into the loop. It is up to the management to decide if it is really in their interests to invest in programs that only add cost without dealing with the underlying issues that must be addressed before putting sophisticated inspection and quality systems into place.

The Senkfor System - “Three Steps To Success”

You can choose one, two or all three of these steps for your company

Step #1 ~ The Process David Senkfor or one of his team members trained in the method, conducts an analysis of your organization. Special attention is paid to the three ‘cost points’ of your operation and how efficiently they are functioning. Information from the analysis is input to the Senkfor System Software which produces a detailed report of where your workflows, processes and pricing work well and where they need to be improved. An estimate is provided as to how much money you can save/make by implementing the changes that are recommended. Step #2 ~ The People Meetings are held to discuss how well people are working together in your organization to produce the best possible products and services for your customers. Inputs are made, based on the key findings of these discussions, into the Senkfor System Software and an assessment is produced showing where you and your employees are performing well in meeting customer expectations and where improvements in teamwork, communication and coordination can be made. An estimate is provided as to how much money you can save/make by implementing the changes that are recommended. Step #3 ~ The Pricing A review is conducted of your products/services and how they are positioned in the marketplace relative to pricing, competitors, customer base and planning for the future. Key data points are entered into the Senkfor System Software and a report is produced that enables you to see how well you are doing in the industry relative to your competition and what steps you can take to strengthen your marketing, brand awareness and profile. An estimate is provided to give you an idea of how much better you could do by growing your business vs. maintaining the status quo.