How to Look Good at the Cost of Your Successor (Please Don’t!)–Part 1

This post series will be an unusual one. I will tell you how to look good in manufacturing at the cost of your successor. Of course, I do NOT want you to do that. Not only will there be no improvement, but instead the plant will be worse in the long run at the cost of a short-term benefit. This is a somewhat sarcastic post on the dirty tricks you can use to look good, while at the same time driving your (future) plant into the ground. The responsible managers of course will be somewhere else before the inevitable happens. Even though the approaches below are bad for the plant, I am sure some managers will use this as a checklist. But I hope that even more people will see it as a list of warnings for bad managers.

The General Idea

Business fraudManaging is not easy. Making the right decisions and improving your company is difficult, especially if the available information is uncertain and incomplete. Sometimes, managers find it easier to simply pretend to do good and fudge the numbers instead of improving the bottom line. I have written about this before, for example How to Misguide Your Visitor, or a whole series on Lies, Damned Lies, and KPI on how to fudge numbers, the effect of number fudging (it promotes liars), and possible countermeasures (e.g., go to gemba).

This post looks at another shady trick, where you save money now at the expense of the future of your company. For continuing success, you need to invest into the future of the company. Failure to do so will save you money now, but will damage or even destroy the company later. Unfortunately, some managers are more interested in their career than in their company. To be fair, some companies are also more interested in their company than in their people, hence often this is also a case of mutual disrespect. It seems like this is more likely to happen in publicly traded companies, where the quarterly stock performance is more important than the long-term outlook. Privately owned companies, often owned by the same families for decades, seem to have a much longer-term view.

All these dirty tricks below save money now, but the damaging effect will be visible years later. Even better when the damage cannot be properly estimated now or even later. In any case, by then the manager is long gone, presumably promoted for saving so much money. Ugh! Anyway, let’s talk how to drive the company into the ground while a manager jumps up.

Maintenance

Red Oil CanMaintenance is a prime example where the benefit of the expense is delayed. You reduce the number of people (labor cost) or give them additional tasks, reduce their qualification (cheaper labor), cut the spare parts inventory (less tied-up capital), and more. At first glance, you have saved the company some money. However, the long-term outlook will be worse. If you cut maintenance like this, the machines will still work… now, since the current machine performance depends on past maintenance. But it will be much worse in the future. Depending on your plant, it may take one year, three years, or even more than five years, before the number of breakdowns increase, the spare part availability goes down, and generally up-time and quality becomes worse. In my experience, this is a popular way to cut costs in quite a few plants.

Quality

Boring InspectionSimilar to maintenance, saving money on quality can also be seen only much later. This, however, depends on your customer. Some customers (for example, automotive companies) regularly check quality, and will rip your head off (verbally and legally) if your products are not up to expectations. Private consumers especially do not have the ability to test, nor do they have a large sample size to evaluate quality. Even worse when the parts are made in another country with a different legal system, or where the legal system may even support companies to evade responsibility. Some countries even have a reputation for bad quality.

For example, if your washing machine breaks, are you just unlucky, or are there thousands of other customers who suffer from a low-quality product? You will know only over time from anecdotal evidence on social media. Even then, it will be much more difficult to get compensated (Sorry, your warranty has expired…). It would be different for a laundromat-chain with thousands of washing machines, as they know quickly if products are bad, and for them it is worthwhile to make a stink about it. They also have much better chances of getting at least some sort of compensation (free maintenance, reimbursement, replacement,…).

In general, customers who order many parts from you will find quality problems quicker and can put much more pressure on you than customers who order few items from countries with a dubious legal customer protection. A shady manager can save a quick buck in a company with a good reputation for quality by using cheaper parts and materials, loosening tolerances and standards, reducing testing and easing testing criteria, and then leaving before the customers take notice and the reputation of the company nosedives. I am not going to name examples, but it has happened, is happening now, and will happen in the future. You probably know a few examples yourself.

In my next post I will continue with many more areas ripe for such manipulation, like service, research and development, improvements, and training, before my last post finishes this series with the worst one (employee motivation) and the one easiest to spot (sell the plant and rent it back). Keep on reading for lots of more possibilities for skullduggery. Hopefully, these do not happen at your plant, although chances are that in at least some areas the cuts may be larger than sensible, although nobody really knows how much the future impact really will be. Now, go out, do actual improvements instead of just pulling expensive money from the future, and organize your industry!

 

4 thoughts on “How to Look Good at the Cost of Your Successor (Please Don’t!)–Part 1”

  1. Paraphrasing Peter Drucker: Financial goals eat improvement projects for breakfast. I never saw a technical decision win a budget or forecast sheet in bad companies, so, the – bad – way to keep aligned is to follow the bad companies finance decisions.

  2. True examples within Factory Environment. It really happened and it is happening nowadays.

    Thanks for sharing.

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