Operations, Processes, and Decisions

Are you sending the right message to your subordinates when

• you ignore reading their reports or their suggestions
• you say “Safety First” and then do not attend a meeting to discuss a safety issue because you are busy
• you cancel training courses for subordinates because they have a lot of work
• you send subordinates for training courses that will not add value to their performance
• you discuss too many ideas and then implement nothing
• you don’t have time to listen to them
• you spend hours and hours in useless meetings
• you don’t care about their needs
• you lie to your boss
• you avoid taking decisions
• you do not evaluate them based on their skills and performance
• you stop learning
• you set up impossible targets
• you want to be the best in Quality, Price, Flexibility, Control
• you don't cooperate with other managers
• you never appreciate the subordinates work
• you let some subordinates know that their job is not so important
• you do all the above

Selecting smart performance measures is a difficult task. A good set of performance measures stimulates managers and employees to achieve company goals while another set may result in achieving those measures but not achieving the real company goals.

For example, using productivity measure alone may result in increasing company inventory and quick deterioration of equipment. Using productivity per employee increases the individualism and decreases cooperation between employees.

As I discussed before, one has to analyze his case and select the most suitable measures. For example, when the productivity of one person is not dependent on other persons, then using measures per employee may be reasonable. However, when many employees and departments cooperate to produce one unit product then the measures should focus on the performance of the plant (not the person). A combination of personal measures, departmental measures, and company measures seems, for me, the best choice in all cases but with different weights.

Some managers focus only on the quantitative measures and do not like qualitative measures. This results in not measuring the performance of certain activities or measure them partially. How can we measure the service activities? Some quantitative measures such as lead time can give some indication but how can we measure the customer satisfaction. Internally, how can we measure the employee cooperation with other employees.

Tamer Salama left a good suggestion about building database with multiple locations of the same spare parts. Thanks! He was interested about the benefits of e-purchasing for industrial companies in developing countries.

e-purchasing can decrease the lead time because the suppliers will neither take time to receive our RFQ (Request for Quotation) nor to send their offers. Currently, sending RFQ (Request For Quotation) by fax, and sometimes send drawings by mail, costs time and money. Then, the supplier has to rewrite everything in his quotation and send it, again, by fax. By e-purchasing, the supplier may check the specifications and drawing through secured web site. Moreover, if we have partial shipment based on consumption, then supplier can check the consumption pattern and get prepared for the next shipment without any effort from our side.

POSCO is one of the leaders of steel production in the world. They have very good web site and they are using several "e-tools". Their e-procurement site shows many benefits of e-purchasing and it shows how they are using the world class supply chain management tools such as supplier development.

Three years ago, I was attending the graduation ceremony of Rensselaer Polytechnic Institute as an MBA grad. At that time, I was asking myself what is the most important thing I have got from the MBA program. My answer was "there are several ways to success and several ways to failure. You can do the same things that the most successful is doing and end up failing and vice versa".

One has to study all the factors affecting his business and then come up with the suitable strategy. Then, this strategy should be the guide for all policies and plans of every department/section/employee. Great strategies fail if they do not match the business environment and also if they were not the guide of our plans and decisions.

One should be cautious when reading management books written by experienced managers because most of the time they are talking about their organization. Their organization is different from yours..the market is different ….the culture is different….

Even in the same organization, some subsections may need different management style. I worked in Utilities operation and maintenance in the 1990s. While the operation of water treatment plants may need the operator to make a decision every few hours, the maintenance technicians need to do so every few minutes. The reason is that the maintenance activities are not the same everyday and they always need the maintenance technician judgment and quick action.

Industrial companies in developing countries face many challenges in the purchasing of spare parts. One of the main challenges is the very long lead time of purchasing. Most of the equipments are purchased from abroad and so are the spare parts. When you have some spare parts available from a local source, then you can have fewer items in your inventory and depend on the fast delivery from the local supplier when needed.

The long lead time causes difficulty in the planning of spare parts purchasing. When the lead time exceeds 1 and 2 years then the planning is almost impossible. Please recall that we are talking about spare parts.

Another problem is the fluctuating quality and delivery reliability of local suppliers. This leads to another big problem in the planning. In short, increasing the variability does not allow the demander to be able to plan.

I think industrial companies in developing countries should work and invest together to improve the performance of local suppliers. They also should encourage foreign companies to have some of their parts manufactured in a nearer location. Using e-purchasing can participate in decreasing the lead time.

There are other sources for the long lead time and variability. What is surprising that some of these sources are created by the people in these companies such as the very variable and long time for approval of requisitions.

I think what is important in selecting the proper maintenance strategy is to be able to implement it. We can simply classify three main strategies: Break down (Reactive), Time based (Preventive) and Condition Based (Preventive/predictive). Some engineers think that one of those strategies is better than the others. However, each one is the best for certain equipment/parts.

If the downtime cost and machine repair cost is very low compared with preventive/predictive maintenance cost, then breakdown maintenance works very well. An Exception to this is the safety operating condition. Time based maintenance is better then condition based in the cases where the downtime cost is very high and the set up time is long. Condition Based Maintenance sounds very attractive but there are several problems in implementing it: (1) some troubles cannot be discovered by monitoring tools such as vibration. For example, a symmetric wear in a shaft may not indicate any thing in the vibration tools. (2) It may need more plant stoppage which is expensive when the set up time is long.

In some cases, it is good to use condition based tools to adjust the cycle of the time based maintenance. This is very good but sometimes it makes people less committed to time based maintenance. In practice, some people claim they are using condition based maintenance when in reality they are adopting breakdown maintenance. This happens when they wait until the vibration measures reaches the maximum operating range.