Uncommon Sense: Where Is The Common Sense?
One fine day a company decided to consolidate its operations. This is common in the corporate world; it happens every day. Unfortunately, it is also common for a company to develop a good plan, and then arbitrarily change the plan to its detriment.
One particular company did just that. It started with a detailed feasibility study by a reputable consulting firm. The consulting firm recommended that manufacturing of some products should be moved to another location, and that other products should be outsourced. The firm provided a manufacturing plan that included assumptions of immediate improvements in operations from, for example, setup reductions. Benefits were based on increased revenue.
Corporate approved the plan, decided to move product A, and the detailed work of moving machines and fixtures, and relocating key individuals, began. But once the work was underway, corporate changed the plan, decided to move product B instead, and outsource product A. The reasoning looked plausible on the surface. It was felt that product B would gain a larger share of the benefits from relocation than product A. Product B runs on the same or similar machines and equipment, the fixtures can be put in the same crates, and the people who relocated could machine parts for either product. After all, making chips is making chips.
All common sense, right? Wrong!
The decision to make the change was fundamentally flawed because it was based on the sourcing team's apparent struggle to identify vendors for product A, a high-tolerance aerospace product with a limited selection of potential vendors. Product B was not an aerospace product, but many of the components were common and-more significantly-many of the common components had the same tolerances as did those for product A. As it turned out, the sourcing team had the same struggles with product B. In the end, there wasn't any additional benefit from moving product B.
In this particular case, two significant issues were not addressed in the plans. First, the machines were of different sizes. Most of the machining center tables were purchased with product A in mind. The fixtures for product B are larger and would not fit on the machine tables without major modifications. In addition, some of the parts for product B exceeded the travel of the machines.
Second was the assumption that the new facility would improve operations. However, while the new hires were good machinists, they didn't know the intricacies of the machines, the part fixtures and the detailed setup procedures.
The financial details were also questionable. There were pages and pages of details based on selecting the right product, improving operations, workloads derived from other equipment, and the increased revenue generated by the cost reductions the relocation would provide. The feasibility study and detail planning were a waste of time, effort and money because they were overruled by corporate management's concept of basic "common sense." It isn't even clear that the team understood the plan, even though the leader of the feasibility team was the general manager.
Needless to say, this story didn't have a happy ending for corporate management. When we were brought in, the first management team was already gone. The second management team and, in some cases the third, was in place. Our team stabilized the downward trends, made some beneficial changes and identified the type of management team required to run the operation successfully. But this ought not have been necessary.
This may seem like an extreme case, but is it? Just where is the common sense?