Tag: Loss to Society

Highest and Best Use, the Family Silver, Loblaw’s, Organizational Change

Posted on by

Deploying what we have- our people, our talents, our assets- to their highest and best use maximizes their return and maximizes everyone’s satisfaction. Change happens in our lives, in our families, in our organizations. 

When change happens, it provides us an opportunity to reassesss our assets and redeploy them to their new “Highest and Best Use.”

Wonderful memories of holidays, birthdays, and special occasions.

The Family Silver

My parents married in 1950. My mom was Canadian, and she shopped at our local Loblaw’s, which was a Canadian grocery chain that had stores in Ohio. A familiar taste of home in her new country.

Today we have frequent shopper cards, frequent flier miles, and  store perks. In the 1950’s, they had S&H Green Stamps and Loblaws also had “PC’s”- Premimum Coupons. You could purchase these premium coupons based on the dollars you spent on your groceries. You could redeem those coupons for ‘Premium Merchandise.’  My mom stretched her budget and maximized her buying power with Loblaw’s PC’s which she redeemed for this 8-place setting of Rogers Silver flatware in 1953- just in time for Christmas!

Before there were frequent shopper programs there were other ways to reward customer loyalty.

The silver  and the fancy plates came out for every holiday, birthday, and happy family gathering.

Until my folks retired. They retired to Florida, half a continent away from the Ohio branch of the family, and the silver never again saw the light of day – or of candles on the table. It too was retired.

A few years ago, I helped my dad move into assisted living back in Ohio. I helped him clear out his home. He asked me to take “Mom’s Silver” and put it to good use.

But my family was already dispersed- both daughters married and out of state; my son at college. When they returned home  for holidays, we were so happy to spend time with them, that what is now the  “Family Silver” was the farthest thing from our mind.

Highest and Best Use

What is the highest and best use of this asset we now call the Family Silver?  For us, the joy of still having it connects us to memories of happy days of a different era. But our entertaining is mostly behind us. The silver is a wonderful trophy, not to the victors, but to the survivors. It is just a trophy. What  higher and better use could it have?

My oldest daughter and her husband have a great start to their careers. They have many friends, and do a lot of entertaining. They have a life ahead of them of holidays, birthdays, and other happy occasions. What is the ‘Highest and Best Use’ for “Mom’s Silver?”

Her sister is deployed out of country, she does not need more ballast from home at this stage in her life.

I think that its highest and best use will be with my daughter as she builds new traditions, and memories with her husband and their friends in their home in Wisconsin.

Change happens.   It happens to families. It happens to companies too.

Loblaw’s no longer has stores in Ohio. When my brother moved to Canada he met Bob Loblaw, of the Loblaw family. Bob Loblaw was designing left handed surgical tools for left handed doctors. I’m not sure how that worked out, but it is a far cry from the retail grocery business.

Change happens to families. When it does, we need to ask, “What is the highest and best use of our assets? Are they adding value to our lives? Creating lasting memories and helping us achieve what we want to with the people we love?”

Organizational Effectiveness

What about our companies? Are we deploying our company’s assets, both technical and human, at their highest and best use?

Like the family silver, they may be assets on the books, but if they are not being utilized effectively, if they are not deployed at their highest and best use, what are they really to us?

As a guy with more years in manufacturing and quality than I would care to admit, I would say this: They are a loss. A loss to society, a sub-optimum arrangement that prevents your company  from achieving its highest and best.

This story about the ‘Family Silver’ isn’t just about the family silver. It is a lens to help us understand that the idea of ‘Highest and Best Use’ is the way to maximize our effectiveness.

What ‘Family Silver’ do you have that is effectively retired? Sitting out of sight and out of mind? Not just machine tools, processes, materials. What about your people? Are they each operating at their ‘Highest and Best Use?’

Jim Collins talks about having the right people on the bus. Then on the right seats on the bus. Assuring that your people are operating at their ‘Highest and Best Use’ is another way of getting at the truth behind Collins’ point.

I hope that you are operating at your highest and best use. And that the people and processes under your authority are too.

Highest and best use. It is the key to happiness, success, effectiveness and satisfaction.

Oh- if you read this post, please don’t tell my daughter… we’d like it to be a surprise when she visits next.

Nylon 12, Tsunamis and Lean Supply Chains

Posted on by

The March 31st explosion at Evonik Industries in Marl, Germany is likely to have the same effect on worldwide automotive production as last year’s Tsunami and reactor accidents in Japan.

We remember the first time we got a letter from an automotive supplier in the 1980’s  “awarding us sole supplier status” for a couple of items, followed immediately by a fire and security survey to assure that we would not shut down our customer in the event of a “problem” in our shop.

“I think that we should tell them that in order to give them the low price they wanted, we had to cut somehere, and fire protection at our one truck loading area was what we chose,” suggested a young member of the commercial team who even then couldn’t abide the bankrupt thinking of the great Detroit automotive industry.

That young man has matured, and understands that sole sourcing reduces variation for all downstream processes.

But he still wonders how business men can make “Business Plans” that fail to intelligently manage risk of failure at sole supplier facilities of critical, essential, non- substitutable materials?

The economists will insist that there is a loss to society if backup stocks are held any where in the supply chain.

The geniuses in finance and purchasing will strut how they have eliminated every bit of waste  by maintaining “lean inventory” thus maximizing profits- without any understanding at all about supply-chain implications and risk factors.

And the finance boys are right, as the sales team will surely raise the price of autos in light of strong demand but greatly reduced supply due to the supply chain’s failure to have adequate -dare I say it- safety stock?

The loss to society will be the sum of the costs of the damages at the plant that was destroyed, as well as the lost wages of workers who will NOT be building autos due to this accident, and the increased price paid by buyers who must pay the price demanded because they need to replace their car. Plus  the cost of a gazillion PPAP’s and material trials for the  substitution / replacement of Nylon 12, knowing the automotive industy’s love of  and addiction to documentation.

Yes, that sole  sourcing lean inventory business strategy that is unthinkingly accepted throughout the automotive industry  is perfect- for a world in which accidents don’t happen, chemical plants don’t explode, and tsunamis and nuclear plants don’t lay waste to entire districts of manufacturing.

Sole sourcing and Lean inventory is perfectly calibrated to a world where those things don’t happen.

Unfortunately, that is NOT the world we live in.

Instead of minimizing stock at each and every inventory in the supply chain discretely, perhaps it is time for the “businessmen” to do some supply chain contingency planning to assure that adequate stocks are distributed throughout the supply chain to mitigate the possibility of a single source failure.

The OESA Original Equipment Suppliers Association  is doing yeoman duty to  fact find, manage this, and help their members understand the impact to their business.

You can find their sensemaking on their home page here. Look under the OESA HEADLINES for the latest developments.

Photo