Critical Chain - Eliyahu M. Goldratt [41]
But Don was polite. He said that it seemed they could use my talents. Then he told me how. They were about to acquire a new company, a steel mill; they expected to sign the documents next Friday. A month before, Don had devoted two days to do a brief analysis of that company. He suggested I fly there the next day, do an in-depth analysis, and prepare my recommendations. I liked it. I know a lot about the steel industry. I have published four articles about it.
I liked it a little less when he suggested he would meet me there the weekend after the company exchanged hands and we would compare notes. I was about to tell him my doubts, that a proper analysis couldn't be done in the ten days that were left, that you can't compare a riffraff analysis to a professional one, but I decided I'd better not. So I went.
They were waiting for me down there. I worked frantically. During the day I interviewed people, and nights I read tons of reports and tried to make some sense out of the piles of data I was accumulating.
At first I felt drowned. Slowly the picture started to unfold. The company, like many other steel mills, was losing money, hand over fist. But that's to be expected when competition is so fierce and steel prices are depressed.
The clients, when you dismiss their usual tendency to bitch and moan about their vendors, didn't have particularly bad complaints. Delivery lead times and due-date performance were comparable to the competition. So were prices, of course. Quality was slightly better, but not significantly.
Technology was good. Most equipment was state of the art. Except for the slitters, the machines that cut the plates to size. That equipment was bad, slow and wasteful. It must be replaced. I did the calculations. The payback was not much more than three years.
Inventory was a problem. Mountains of plates filled the company's huge yards. And it wasn't stored well; much of it was rusting. I spent a lot of time trying to find out what could be done. It wasn't easy because everybody was blaming everybody else. Finally, I found out that what they used for planning the work of that complex operation was an outdated computer system. Can you imagine? They invested a fortune in the furnaces, and another fortune in the rolling and coating departments, but they still used software written in the seventies. These steel people, I'll never understand them.
Raw materials were also a problem. Not the materials themselves, but the price they pay. They had to organize their purchasing differently. I spent a lot of time on it. I optimized the system. I was ready to show Don how, with three fewer people in the purchasing department, they could handle the same quantities and save a bundle. Minimum a million dollars a year, maybe even a million and a half.
On Friday they signed. I expected Don to arrive on Saturday morning. I was ready for him. But he called and said he had to finish something important and he would arrive on Sunday afternoon. I used the time to polish my calculations.
Sunday, at seven P.M., I was still in the lobby pretending to have tea, when he entered the hotel. He asked me to join him in his suite. I was eager to show Don my findings, to show off. So, I grabbed my papers from my room, decided that ten minutes was enough for him to freshen up, and knocked on his door.
He didn't want to look at my papers. His first question was, "What is the constraint of the company?"
I had spent enough time at UniCo to expect such a question. Naturally, I was ready. I handed him my list of constraints. Twenty-six of them. He glanced through the list, these executives read very fast, sighed, and put it aside. I wasn't surprised. With such a long list of problems, you would sigh too.
Then he asked me how much time, according to my analysis, it would take to bring this company to profitability. I didn't have an answer. Out