Aug 17 2015

TAKE A STUPID PILL

A lot of my consulting covers three areas –
(1) Understanding the process. Injection Molding is really all about common sense. Before all the simulations, left handed statistics, and black boxes attached to the mold and machine, people did some very complex molding. Yes, not as well as we can do it now; but they did do it. Nobody told them they couldn’t do it, they just did it.

(2) While computer based systems are better and faster than paper ones. You need to be constantly vigilant that the accuracy of the output your system gives you is proportional to the accuracy/precision/validity of the inputs.

(3) A lot of consulting is giving information away for free. I use the “10 minute rule”: If I can’t help you in 10 minutes, we should be talking about a contract. Usually it involves a STUPID PILL.

Our current batch of new engineers/managers are in love with Technology. But computers, data bases and simulations are a cruel Mistress. Occasionally you need to not completely believe technology unless you fully understand the charts and numbers:

Example #1
Scenario: My client got a rush order. Two days before the mold had crashed. He wanted me to (“money is no object”) find a way to pull off a miracle repair in less than three days.

Client: “No need to panic we have ‘safety’ inventory.”

Me: (two hours later) “There’s good news and bad news: The good news is we found a spare cavity. It can be polished up and put into the mold. You’ll be running tomorrow morning. We’ll repair the smashed one and hold it as a back-up. The bad news is that you don’t have any safety stock. From what I can find, you shipped it a few months ago when your customer had a ‘pull-up’ order and nobody replaced it.

Client: “But (he sputters) the Computer says we do have the inventory!!!”

Me: “Don’t trust the computer.” Here’s your pill.

Example #2
Scenario – My client was molding soft urethane in a new larger multi-cavity tool to lower his costs, but couldn’t fill it.

Me: After two days of failures – “The flow path into the cavities is too long. It’s like molding rubber bands. By the time the material gets to the gate there’s no pressure left.”

Client: “But we used a simulation! I’ve got the charts and graphs! We spent $75K on a higher capacity mold and you’re telling me it won’t work?? I’ve just made a boat anchor???!”

Me: “Let’s re-visit the simulation. Something isn’t adding up.”
Sure enough in FEA slow motion the mold filled like a champ. They’d even spent the money on getting a proper characterization on the material. The material supplier told them everything was to specification.

Then I looked at the values on the side of graphs that showed the filling. Oops! When the mold didn’t initially fill with the oil pressure set at maximum (2,000 PSI) they kept re-running the simulation increasing pressures/speeds until the mold filled. The guy running the simulation totally ignored the machine’s ability to generate pressure and a few other little details. The model actually showed it filling perfectly if the machine could generate 300,000+ PSI oil pressure and the 300T machine could generate about three times its clamp capacity. Let’s forget about the potential explosion that would have happened.

Me: “If you don’t understand what the simulation’s assumptions are telling you, all you have is an executive coloring book.” Here’s your pill.
Example #3: I get a call telling me a portable hopper/dryer doesn’t work. They checked the dew point and it was singing along at -20 F but the material tested wet after six hours!

Me: “Look at the hookups – Was the inlet at the bottom of the material hopper and the outlet at the top? Take a look. Call me back if you still have the problem.”
— They never called back. Here’s your pill.

Example #4:
Client: “I’m a ‘Master Molder’. I eat, breathe, think and drink Scientific Molding, I’m a Black Belt Quality Ninja, we pre-qualified the mold in a simulation and qualified the mold at the machine, we did DOE’s and CpK’s. Everything was fine two weeks ago but now in production, the part isn’t to spec and we’re getting black specs we can’t purge out. HELP!!!!!”

Me: “You’ve got two problems
DIMENSIONS
1. Look at the waterline hookups, are the exactly the same as the qualification set up?
1A. Check to make sure all the appropriate waterline valves are TURNED ON (both the inlet and outlet on each circuit). They were off when you hooked up the lines. Somebody has to turn them on to get water through them when you start the process to cool the mold properly. Different mold temps = different dimensions.

BLACK SPECS
2. If you material isn’t contaminated, it’s coming from the outside. Did anybody suck a damp NERF ball through your loading system to clean out the fines before you loaded in the new material? What year did you last change the air filters on the dryers? A filter will build up a huge collection of dust (wannabe Black Specs). If you don’t change them the dust will get into the hopper. A contaminated system = contaminated material = black specs. Take a look. Call me back if you still have the problems.”

— They never called back. Here’s your pill. NO! Wait!  Here’s a handful of them.

* * * *

You can call it ‘TAKING A STUPID PILL’, a reality check, or just common sense. Never totally believe your data. Whenever you’re told it’s a fool-proof-totally-accurate system, there’s always some fool out there who can defeat it, go around it, or mess it up. There’s a beauty in physically checking the system the Olde-Way: You get to interact with the folks who work for you. You get to understand what they think of your ‘management by memo’ philosophy. But most importantly, the very people who have figured out a way to go around your system will also tell you how to use it more profitably.

Take a STUPID PILL occasionally. Trust your people but verify when something mysterious happens. It will invigorate your business.

It’s your choice.

 

Bill Tobin

One response so far

Oct 21 2014

Renegotiating prices

Published by under management,processing

Recently I had a client who told me his customer wouldn’t accept the price increase due to increased materials costs. Really?
Let’s give this a reality check – Your local gas station is changing prices almost on a daily basis. The phone company tells you they’re raising your rates. Do you call either of them up and tell them you “Won’t honor the price increase” but still demand their goods and services? Nope. If you do, then I won’t be able to call you in a couple weeks and you’ll soon be walking to wherever you go.

I show a picture in one of my seminars of a three year old little girl, holding the leash and walking a three year old German Sheppard. I ask the class “Who’s walking who?” They invariably get it wrong – they tell me the dog is walking the girl. Dogs have been taught when their pack is composed of humans, they will never be the Alpha if they wish to live for any length of time. The girl will always walk the dog.

As molders, when your customer tells you they won’t honor a righteous price increase they are really saying “I want you to lose money, so I can stay profitable”. Dumb isn’t it?

Resin companies don’t single you out for a price increase. When they raise prices, everyone gets the increase at the same time. Those who have in-house stocks of material may benefit in the short term but they cannot avoid the new price of material the next time they make a purchase.

This is one of the impolite components of JIT – you are always the victim of the marketplace.
Buyers say they won’t honor a price increase for five reasons (although the list is endless).

Because they think (automotive) “It’s a privilege to do business with us” they are so big, they do it because they can. This is usually accompanied with the threat of ‘dozens of people like you who’ll do it 15% cheaper’ or ‘we’ll go offshore’ and blah, blah.

They conveniently forgot (ignored) your quote that said: “The price is based on material being $X.XX per pound. Kilo, ounces-of-gold” etc. OR you were silly enough simply to quote a part price leaving off the material cost.

They tell you they can only adjust their budgets twice a year.

They tell you it will take at least 120 days to adjust the system to reflect the new prices and cut the checks.

KOST IS CING!!!!”

By the numbers let’s look at each one of these ‘reasons’:

#1 There is no ‘privilege’ to doing business with anybody. Those who pay their bills in full are good customers; those who don’t are problem customers. Recent history has shown us the degrees of ‘loyalty’ large customers have to their supplier base: So long as you do everything they want you’re considered loyal. But when you finally object to losing money, they’ll look for someone else to. If there a dozen local companies or offshore molders who could do it 15% cheaper you wouldn’t have been awarded the job in the first place.

#2 Forgetting or ignoring some clause in the contract is an interesting trick. However it cannot go ignored. Business is business.

#3 -#5 Anybody who tells you they can’t adjust the system, process a change, etc. has conveniently forgotten they paid premium prices to you when the really needed parts, or paid the airfreight to bring in the part to keep their lines from shutting down.

This is simple School Yard Bullying. So what do you do?

Most people, usually hang up the phone, whimper and ship the parts either at a minimal (read: unacceptable) profit or no profit at all.

What molders don’t realize is “Who’s Walking Who?” If your customer doesn’t have the $.05 part you make, he can’t sell his $2,000 widget. Who is in control of the situation? You, not the customer.
I’ve been shouting to the void for years about a policy manual (you can download one for free in the FREE STUFF section of my website). It addresses the concept of pricing changes.

I have one client whose system is so automated that when he gets a release to run more parts off an existing purchase order, or his quote finally becomes a PO: he contacts the customer and informs him of the current price of parts. If the customer agrees (in writing) he runs the order. If they don’t agree, he won’t run it. They do this for every order. It’s his ‘policy’ and he won’t be bullied otherwise. He doesn’t tolerate threats. Threaten to pull the job, he’ll tell you to come over this afternoon and pick your molds and parts, so long as you come complete with certified checks to cover everything you owe.

If you want to be a smarty-pants when your customer says he can’t (won’t) honor the price increase for three months, you can tell him you won’t (can’t) ship for three months. While this is a great way to start a yelling match; it does put the issue directly on the table.

In reality it’s a privilege for your customers to do business with you and not the other way around. You got the job because you can deliver a quality part, on time, at a reasonable cost. While there’ll be a big deal about being the low bidder; they’ll pay anything to keep production going. Occasionally you might remind your customers that YOU choose to do business with THEM. You both have the right to cease to do business with each other if the relationship changes any time you want.

The ultimate solution is to stand firm on a fair price increase. Don’t negotiate it. You are passing through the costs of doing business and you can’t tell the people who sell you the Customer Specified resin you won’t accept their price increase. If anything, your customer might want to call the resin supplier and mumble words about not longer being a ‘preferred resin supplier’.

As a business person you are entitled to make a profit. If you want drama and stress, have teenage kids. Tell your customers ahead of time how you’ll handle resin price increases. When they happen, tell them you told them about it and what the new prices will be.

Buyers are exceptional actors. While they’ll tell you they can’t do it, they can. When they say they’ll pull the job because of price, they haven’t lined anybody up to take it over and with JIT firmly grafted to things like PPAP, once they place the job it is almost impossible to relocate it in a short period of time.

Counter the buyer’s arguments with your documented delivery performance record. At the end of the day the buyer would rather have someone who consistently keeps his pipeline full than a low cost supplier who can’t deliver reliably.

* * * * * * *

You can read this, think you’re held hostage by your customers and go to bed crying.

Or you can ‘man up’ and not lose money anymore. It will be a little tough not allowing the buyer to bully you anymore but it will soon be a whole lot easier to come to work in the morning.

Or you can just ignore this until your customers put you out of business.

Your choice, it’s only money.

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Nov 11 2011

A new Buzzword COMMON SENSE

While I’m all for LEAN, SMED, JIT and all the buzz-words/multi-letter acronyms there’s an interesting argument for common sense. Continue Reading »

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Nov 11 2011

Total profit in four simple steps

Published by under management

I was in the owner’s office that overlooked the production floor where all the machines were making parts.  His comment was “Look at that, a money machine!”  Interesting.  When we got around to discussing why I was there; he was complaining about his minimal profits although his machines were busy.  And there’s the problem: are you making money or just running your machines? Here are four simple (inexpensive) steps to make money: Continue Reading »

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