Challenge the dogma-IV (The leader should be the one working in lines, not sitting in office)

1. Who can collect the material usage, scrap, labor hours and report in the Profit & Loss?
2. Who can record the waiting time and stoppage?
3. Who can do the performance evaluation of production?
4. Who can switch on the Andon, follow the instruction of CAR (corrective action report) and do the quality?
5. Who can contribute to the bottom line once the selling price is fixed by controlling the cost?
6. Who can uncover any risk of production in the frontline?
7. Who are the problems of the existing production?
8. Who can execute any kaizen proposal?
9. Who can operate the ERP?

The conventional wisdom may provide different answers to different questions.  But the challenge is there is only 1 answer.  It is the line leader.  Usually, we deem that the leader is only secondarily educated.  They cannot handle all these stuffs with their limited intelligence.  Right, as long as they are not trained, they cannot.  Every dog has its own day.  But do we steal the day of the people working in shop floor.

When I am working with my friend’s factory as part-time consultant, I met a lot of less educated people.  They possess the power to work and to dream, the strength to struggle and to learn.  What matters is their experience will radiate to their peers.

As a manager, we always focus on how to manage the work getting done.  We seldom manage to train the the operators and the leader to step up the role.

When it comes to the time of fighting for labor supply, what we should offer is not just pay/food/shelter/recreation, it should be the future perceived by the throng.

When we try to hire the trainees from technical school to the production lines to resolve the labor shortage issue, do we realize our promise of providing training which could transfer knowledge the people could not learn from their school?

Challenge the Dogma-III (Peer Pressure better than Hierarchical Pressure)

What get measured get done.  What not get measured get undone.

What boss frowns at get done while at the expense of all other job task.  The peers – upstream and downstream, are frustrated.

Expedition makes the critical task done at the expense of all other job task.  It also occupies the precious time resource of the senior.

The criticism of Senior against junior would create more disgruntle from the junior against senior.  Default to perform the necessary task would itself embarrass the wrongdoer when he is in front of his peers.  Losing face will drive the wrongdoer to regain respect from his peers in the coming future.

Management by harmonization is not a devil.  Cover-up may not be resulted provided the referee (the manager) can judge disinterestedly.

Challenge the Dogma–II (Weekly Income Statement)

In a factory operation, usually, the production is scheduled on a weekly basis.  If we put aside the sales & marketing department from the factory, all functional department are serving production.  Materials plan is on weekly basis.  HR department is looking at the production schedule for the operator recruitment.  QA check the output.  Logistics plan the weekly delivery schedule and book the container/truck.  Engineering reports the weekly progress on any issue or product development.  Everything are operated on weekly basis except one supporting department – Finance.  I have been doing finance for 20 years.  Sometimes, I am puzzled why we position in an isolated corner.  Some introspective questions are:

1. Why is the closing on a monthly basis?  Why not weekly basis?
2. What is the value of financial statement?  Provide timely information to management.  If everybody is operating on a weekly basis, should I provide the weekly management report/account and report the cost/expenses of last week on Tuesday/Wednesday or even Thursday?
3. Is there any expenses unable to split on weekly basis which prohibit us to close the week end?  Can the so-called provisional accounting help?
4. Month end closing is still mandatory, but serve as an overall review purpose and put the adjustment (must be minor if any) there.

By all means, it cannot be done overnight.  If there exist problem in month end closing, says, 10 days to close a month end, the priority should be on how to speed up the month end closing.  Otherwise, should there be a plan for it?

Challenge the Dogma-I (x-Days Liquidity)

Triz tells that there is actually no much brand new innovation.  The quick way to make something new is to synthesizes different knowledge and do the “and” while discarding the “or”.  Another way is to challenge the dogma.  There are so many “take-for-granted” rules in various industry.  In accounting, it is even more.  Let’s quote some example.

Financial Analysis has listed out many ratio formula in order to analyze the liquidity of a company, like the following:

1. Current Ratio: Current Assets / Current Liabilities
2. Quick Ratio: (Cash & Equivalents + Short Term Investment + Accounts Receivable) / Current Liabilities
3. Cash Ratio: (Cash + Cash Equivalents + Invested Funds) / Current Liabilities

The above ratio tells that if the result is > 1, the company is secured; otherwise, it has liquidity issue.  The company may fail to meet short term commitment.  Any failure may also lead to repudiation of all other creditors.

This is true.  But what critical is always the components of the formula.  It does not consider the “liquidity” at all.  Why don’t we put a X-Days Liquidity Ratio, says, a 60 days or 90 days liquidity.  Put anything that can be convert to cash within, says, 90 days, over any liability due with 90 days.  The formula is as follows:

90 Days Cash Convertible / 90 Days Due Liability

By all means, the result may be extremely sensitive, particularly for published account.  It should better be used internally!