People & Process

Few weeks ago, I happened to have a chance to meet with a Singaporean senior executive who is running a factory in a remote area of Guangdong province.  This is a foreign company.  His concern is on the local finance operation of the factory as well as the operation.  He would like me to share my experience being in GD for > 20 years.  I just elaborate 2 factors – People and Process.

Although I am an accounting professional when I started my career in GD province, I have moved away from accounting since 2010 with more focus on supply chain.  However, the acumen developed from being in the accounting profession for > 20 years has enabled me to look at figures teleologically, if not affect EBITDA then Balance Sheet and how.  As I mentioned in other blog entry, I would intend to dig out the root cause – what and why lead to this result and how to avoid it as well?  I will unquestionably attribute it to people and process.

I further advocate the maxim “lean manufacturing is to accumulate small changes to a big change”.  However, manager in general would like to focus on big change and they may not care about what small changes are necessary.  This should be the job of supervisors.  But supervisors must be inclined to focus their attention to support managers’ goal in order to keep their jobs.  So, who care small changes?  Why do not follow the will of the managers?  Front-line operators will follow the same suit.  However, lean tells us that all kaizen come from every corner of shop floor.  If they could not voice their observation and suggestion, the factory is doomed.  People care is the antidote.  How?  Let the front-line challenge us for what we have not done well – equipment, materials, process & etc and what we have not set well – policy, safety, pay scale, food and shelter, & etc.  Respond it promptly, not to defend, not to offend and at least, explain if not properly understood by the people, beg for patience if not able to fix it shortly.  If the change is not costly to favor people, do it and it will be definitely good to the company.  Over the past 5 years, I collected a lot of suggestion and stimulation from the frontline.  They teach me a lot and enable me to think about how silly we are – how comes we could make such small mistakes which cause to line stoppage/low efficiency/excessive scrap!  Above all, no matter what hierarchy the people are, they would like to get things done efficiently and effectively.  These are impressed when I read the complaints from the WeChat group of the line leaders and the QQ group chat of operators.  Just let them voice out and the company will benefit

Then I moved on to process.  I am not a fan of ERP system.  It is mainly due to my mishap with the companies I worked with – not a company using SAP.  But I realized that a good Excel template is better than a good module.  I further explain the goodness of small systems, like mini-MRP for accessories/consumables, multi-variate MPS that is 100% tailor-made, Budget Capex system to keep track of ACE/PR/PO operation, system how to allocate limited common materials to various customers requirement…..

You know what?  The executive looked impatient with what I have said – it is too away from accounting!  Notwithstanding my explanation from the root-cause-analysis perspective, I realized that this conversation is becoming useless.  He then asked me a question if I could define cost of sales.  To my surprise, I am more thinking why he is asking an accountant that kind of question.  Surprisingly, because of the deeply predisposition with bottom line of a factory (EBITDA), I unintentionally include selling & distribution expenses in the cost of sales.  Anyway, it is an accident.  The conversation ended with a question from me about their existing business of the factory, which is predominately on export with a very small portion in mainland China.  Odd enough!  Is this a real European company with factory located in China?

Well, good stuff!  I do not have any question at all.  I am thinking in this way – if I got a chance to visit his factory, I may have tons of questions that may further annoy this executive.  In short, we do not have any consonance in factory management.

Till now, you may wonder what kind of conversation it is.  Right, it is a job interview.  An agent approached me over WeChat for finance professional to look after the finance and I.T. function for a factory.  It is interesting and I never come across.  Even though I do not intend to change my job, it might be a good experience to share with somebody my management philosophy if he/she is passionate with factory management.  Though it is not a happy meeting and took me 5 hours of traveling time, I still appreciated the chance of talking to somebody.  It has been a year that I did not do any seminar.