David Dayton wrote a good “story” post this week. He tells the story of a situation his company was in where their supplier did not want to continue working on an order, and the strategies they employed to motivate production.
No matter what the reason, when your factory has officially passed the we’re-losing-money-on-this-project point, expect to see product laying around, no more QC, no managers, and expect no one to answer your calls.
Here are David’s four main action points – how they moved things forward:
1. We continually reassured them that even though things were late we were indeed still interested in the remaining qtty’s.
2. We then reassured them that we were going to not only pay for what we ordered, but we would pay on time and pay for any additional costs that were due to changes or our mistakes
3. I went into the factory and met with the owner.
4. To get what we wanted (product done correctly, at the same price, ASAP) we basically gave in on everything that we could that didn’t affect product quality or cost us cash out of pocket.
In our situation we had two positions of strength–the outstanding balance of payments and our physical presence in the factory.
David also makes a good point about dealing with factory managers, and how they can be part of the problem:
Managers, the very people that you’re depending on to help you push through difficulties, may be the problem. Just like back home, different departments in large organizations work on budgets and they allot time to specific projects. They when they overspend in either time or money, they get in trouble. Precisely because they are tied to these specific limits they can’t always see the big picture. Sometime a single project that busts their budget is the worst thing they can imagine and so they freeze up or stop the hemorrhaging in their department. When this happens, you need to get up a level, get above the managerial trees and recruit a GM or owner to direct these lower lever guys to do what’s best for the factory (as opposed to what’s best for their personal fiefdom).
This is one of the reasons we prefer to deal with smaller factories. That way we deal with the boss, the one who stands to lose and gain the most by getting the order done right. The boss of a small factory has the power to rearrange everything if he decides it is necessary.