Port Talbot’s Future

blast furnace production, metallurgy

In the UK, recent news has been dominated by the likely sale and closure of the Port Talbot steelworks. This is the last of the heavy industries that provided by far the greatest part of employment in the UK coalfields. (The coal being the original source of energy for those industries.) The pervading view is that this is a national tragedy. There are however selective memories at work here. At the end of 1985, the National Union of Mineworkers lost its battle with Margaret Thatcher over pit closures, and over the next 10 to 15 years the coal industry in the UK effectively ended. The Yorkshire coalfield, and in particular the Leeds, Bradford and Huddersfield area, already hard-hit by the loss of the textile industries in the post war years, was affected worse than most. Few shed tears for either the weavers or the miners, and the region was left to pick up the pieces on its own. So is the West Riding of Yorkshire now a howling wasteland?

I was there whilst this unfolded. With the exception of my father, every male in my family was a miner, and every woman a weaver. In the area I was raised, textiles and coal provided around half of total employment. In less than two working generations this work disappeared almost entirely. But to answer that question above, within 20 years of that momentous defeat of the NUM, most of the West Riding coalfield area was back to full employment, male and female employment had in total increased dramatically, and the jobs that replaced them were more productive and therefore better paid.

So we have an experiment, which ran in real time through my life, and mirrors almost entirely what is happening in South Wales. So what can Port Talbot learn from this historical experience? The first is that in the long run, this is an opportunity. Rather than battling to maintain the status quo, work to improve the future. Blast furnaces, used for smelting ore to produce iron, will soon anyway become obsolete. We have already made most of the steel the world will ever need, and we can recycle what we have much more cost effectively than making new steel. Just as wool blanket looms became obsolete (duvets), there isn’t going to be the need for many new blast furnaces, and due to the high energy costs in the UK they won’t be built there. Those whose only skills are operating a blast furnace will need to acquire new ones. For those who can’t, and fortunately they will be few, better provisions can and should be made. Certainly better than those provided to the people that truly did suffer when the Yorkshire mines were shut down.

The biggest learning is that we need to facilitate new businesses in the area for the long-term, and to assist people in moving to new areas to find work in the short term. The short-term answer in the Yorkshire coalfield was that our age group left. Including me. Initially to light manufacturing industry in the midlands, and then, when it became clear that high labour content manufacturing was going to move to Asia, I followed it there. Like the Irish and the Scots that have long dominated the mobile workforce of the UK, Yorkshiremen and women became nomads.   (Fun story: Ex-pats form tribes that hang out in the same bars, restaurants, sports clubs etc.   In Shanghai, our tribe of around 30 individuals had four Huddersfield Town fans!).

So how do you facilitate these long and short term solutions: Strangely enough, we seem to have forgotten how to do this as well. It is clear that Port Talbot needs a better enterprise zone.   A no corporation tax, low-cost energy, National Insurance contribution free zone that will attract investors to the area. It might not help those blast furnace operators, but it may keep down-stream steel operations in the area. And as in Yorkshire, a whole new bunch of industries that employ increasing numbers of more productive and better paid people. For those who have to move out of the area, make it easier for them. Give every person who wishes to leave a Port Talbot postcode a one off grant to relocate, and priority on any local housing authority waiting list in the postcode they want to move to. The UK has done this before, it works and it isn’t difficult or expensive, compared with the cost of keeping an obsolete technology turning out products nobody wants to buy.

Yorkshire was big enough with a strong enough economy to do this without help, but there were hard times for some, and many of us had no option but to leave. We don’t need to re-run the bits of the experiment that lead to these hardships for the people of South Wales.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us.

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

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Dealing With Distress: Project Recovery.

Injured businessman working at his desk

The pearls of wisdom dispensed in this blog last year, neglected one key aspect of project recovery: Acknowledging that a project has failed, or is dying and needs to be swiftly dispatched, is emotionally similar to a bereavement. Shock, denial, and anger are written across the faces of everyone involved, depression is looming and getting to acceptance looks a dim and distant prospect. So how do you deal with this?

Project leaders are not immune from grief, but they will be the people everyone looks to when the wreckage of the old plan finally burns to the ground and the survivors are hunting around for a new direction.   Time is still of the essence but at this point an honest and blame-free appraisal of the situation is the first priority. Laying bare the full horrors of the failure is an essential part of getting ready to start moving forward again. Yes, it is painful, and yes, as a project leader it will hold a mirror up to you, but it must be done.

The effect on the team is going to be considerable. Most of them will have been striving desperately to keep the project moving forward, in the face of insurmountable difficulties, and many will experience a great sense of failure and defeat. Recognising their heroics, and bringing them back up to speed is a key activity, and like substitutions in football, adding in some fresh legs to support them will give them a new lease of life. Projects fail for multiple reasons, but it is people who have to fix it, and the leaders needs to be playing with full-strength teams.

The project leader also needs to recognise which areas need further leadership support to get it moving forward again. The project organisation is part of the failure, and overhauling it will undoubtedly be necessary. Identifying why the organisation failed is another significant part of the recovery process, and essential to fixing it. Again, this is painful, but necessary. And never be too proud to ask for more leadership support: Recovering projects often requires specialist skills and experience, and dividing and specialising the leadership tasks is a proven way to manage this.

Finally, when standing in the smouldering ruins of a failed plan, hunt around in the ashes for your enthusiasm. You and others may have been over-using it, but you are going to need it to start the recovery process, and your team cannot get behind you until you do. Dust it off and shine it up: Put your recovery plan into action, and get moving again.

Please do share your thoughts on recovery plans in the comments.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us.

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Resuming Blogging

It’s more than 3 months now since the last blog. Without going into details, life sometimes hands out difficulties, and dealing with them becomes both essential and the only priority. These are mostly behind us now, and I can return to blogging.

The next blog, to be published tomorrow, will cover project recovery, something I discussed at length last year. I didn’t expect to be recovering a project when I wrote it, but it appears life is imitating blogging!

Inventory Isn’t Always Evil.

Fotolia_86653552_XS

Supply planners are often given responsibility for inventory, but few have an understanding of the strategic and tactical role inventory plays. Invariably inventory is seen as evil, it is a mantra of the modern supply chain. Yet many costs are incurred keeping inventory as low as possible, often several multiples of the cost of holding inventory. Here is the first sensible article I have seen on inventory management in a long, long, time. If you are struggling with setting inventory levels, this article spells out why. The usual response to ‘high’ inventory levels comes in two flavours: The forecast needs to be better or the IT system is poor. Cue massive spending on IT systems and yet another study on how to improve forecasting.   And nothing changes. Why?

In our experience, and according to the article’s author, Lora Cecere, now backed with some solid research results, there is a significant lack of understanding why inventory is necessary and the role that it plays in supply chains.

To quote:

‘In the benchmark data, companies that had clarity on inventory goals and understood inventory drivers cross-functionally make the most improvement.’

So what drives inventory levels? Here’s a short list, not exhaustive, but some of the most important factors.

Demand volatility: The forecast is invariably wrong, and by how much is important and will drive your inventory strategy.

Manufacturing capacity: The drive for Lean processes, and the emphasis on asset utilisation means there is less spare capacity to buffer demand volatility.

Out-sourcing and off-shoring: This may reduce piece-costs, but it will increase inventory, usually in finished goods in warehouses and in the distribution channel.

Production cycle-times: To meet cost-targets, manufacturers want longer runs, fewer change-overs and longer lead-times.

In-transit materials and finished goods: Globalisation has lead to significantly longer freight times for many products.

Material costs: Many processes use highly valuable materials, often in small quantities, but the total cost of this inventory can have a huge impact on inventory turns.

Promotions: Marketing promotions can frequently require stock-piling of inventory to meet a one-off demand spike.

Inventory then is valuable, both in terms of the investment in working capital and its role in satisfying customer requirements.   It is therefore getting the right amounts of it that is important.

Decisions about inventory need to be reached based on a full understanding of the business strategy. For example, production cycle times that are too short will increase costs and impact on gross margins. High finished goods safety stocks can both increase inventory carrying costs and reduce production and distribution cycle times, further destroying value. Using a more agile manufacturing strategy to increase manufacturing buffer capacity may be a more successful tactic, especially if asset utilisation improvement is not a key supply-chain success factor.

Inventory decisions are usually trade-offs vs other key business tactics and strategic aims. If demand is highly elastic towards price, then large inventories and long supply-chains may be the only way to survive, as manufacturing in lower-cost locations is essential. The key-point is understanding how your customer’s demands are changing, and how the supply chains need to react. In the UK for example, omni-channel is already real, and those slower to react have taken a beating, not on price, but on customer service.  On the other hand, once mighty players such as Tesco have taken a pounding as newer retail players have cut away vast swathes of customers with highly innovative customer offerings, that demand cost-effective supply chains, and pricing that moves inventory swiftly through their channel.

Inventory management is an important part in how you keep your supply chain Triple-A, and the skill in managing inventory is highly indicative of how successful you are as a company. All functional areas need to have input into the decisions, and the end-to-end inventory level required is an emergent factor of the strategy and tactics of the entire supply chain. Inventory management is not an isolated discipline that supply planners set parameters for based on arbitrary decisions about safety stocks, cycle-times, order-fill rates and the year-end closing inventory targets. Driving inventory down requires changing strategic choices and tactics, and just cutting safety stocks or reducing cycle-times may not always be the process that yields the best results.

 

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Learnings from the Coalface of Project Management: Part 5. A PM’s Progress.

In Part 4, we looked at why you are communicating progress. This week, let’s look at how. Project Managers (PM’s) are responsible for workstreams that deliver results to the stakeholders: Three groups of people that need to be aligned for projects to be successful. Communication is the key to keeping them aligned.

Projects begin for a variety of reasons, but in the supply chain world they are usually about creating value, and turning that value into profits.  So the first priority in communicating is are we on track to deliver those profits, by successfully executing the plan, on time, and on budget. Before we look at how we do this, here are some rules-of–thumb about communications.

  • Pictures work best. Photos say more than you can ever describe.
  • Diagrams are better than words, but only if you can see instantly what they mean to convey.
  • Progress reports are for both review at the meeting, and for later reading. Call out what you want to discuss by making the text bold, or put in a separate text box.
  • Numbers in excel work-sheets communicate more to the person who compiled them than anyone else. Avoid them as much possible.

So now let’s look at how. When preparing your progress reports, remember your team-members are busy with their tasks: The workstream mangers are monitoring schedule, spend and addressing issues: The executives are running the current business. Long, time-consuming reports and updates don’t get read and if they do, bog down the reader in the detail. Try and keep the messages short and to the point. If a problem is significant prepare a summary and options for resolution as a separate report. Keep it focused on the items that are critical:

Here is one template that I like to use: This one is heavy on text, as preferred by the client at the time. I also have a variety of charts that can be dropped into this format, depending on the type of project.

Slide1

Each element on this slide can also be expanded out on subsequent slides if further explanation is required.

For quantities tracking, Excel bar charts can easily be formatted to drop into the report. If schedule is highly important, add in a Gantt chart in PowerPoint format that communicates well the stages of the project, progress and the key milestones.

Project reports such as these have the major benefit that you can explain progress quickly and succinctly whilst highlighting the key decision points. They have been developed over several years of project management work. Our experience is that the team-members adopt them because they save them time, and sponsors like them because they get to the point, quickly. Using presentations in a common format also eases understanding across multiple workstreams. When progress reporting is standardised and straightforward the Project Manger gets a double win, happy team members, and happy (as far as that ever gets) sponsors.

Contact me by email if you would like some sample slides in PowerPoint format

 

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Tackling the Last 10 Per Cent

Climbing a mountain

I was asked recently what the biggest risk was to completing a project on time.  The project in question was a factory build, the sales team had already booked it out from the completion date and reputation risk was at the forefront of their minds. My response was the last 10 per cent: A project’s darkest hours are just before completion. Let me explain why.

Factory builds are always unique. They may have similarities to previous builds, but all differ in multiple ways, and that means there will be surprises. And the place these unwelcome guests hang-out in is in the last 10 per cent, when all the multiple workstreams come together to create a working whole. Or not working as is more often the case. What looked good on paper, or in the 3-D walk-throughs doesn’t always translate into the finished article. Unlike products, which can be prototyped, factories are a one-shot transaction. Once built, you are going to have to deal with it.

In this build, there are more than 30 different sub-contractors on the project: The equipment for the main production process line is coming from more than 10 different suppliers. There are no turn-key specialists in this business. When the parts arrive, the technicians are going to have to fit them all together, and I am confident they won’t: At least, not at the first time of trying. So assembly times stretch out, commissioning times expand and the project teams, already tired, come under more and more pressure. This is the time the Project Manager has to make the big calls that will keep things on-track.

Project contingencies are in there for a reason. Sponsors may be coveting these contingencies in a bid to make savings against budget, but the Project Manager has to stand up and protect schedule and quality as well. Factories are built to deliver products, and the value missed from lateness or below-capacity performance needs to be kept foremost in the sponsor’s mind.   Suppliers are working to protect their profit margins, but again, they need to be reminded they also promised to deliver outcomes. All of these have to be met head-on and those responsible held accountable. It is not time for faint-heartedness, emotions run high and good-temper takes a vacation.

As a Project Manager, during this period be as available and as visible as possible. Daily informal meetings with contractors, project team members and other stakeholders can help make speedy decisions and quickly raise problems to the surface where they can be solved. It is time to expedite the solutions; inquests solve little and can wait until later. However many problems the project hits, it has to be kept moving forward. The final 10 per cent sometimes feels like it will never end: But it will, and you can then sit back, take the plaudits and move on. Successful project managers are never idle for long.

Do you have techniques for navigating the last ten per cent? Please do share in the comments.

If you want to learn more about the Cosmapec approach to supply chain development and project management, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Learnings from the Coalface of Project Management. Part 4: Communication Matters.

Architect and foreman construction discussion on location site

This post is a follow-on to Parts 1-3 which can be read in summary here

Project management is a crucial part of the organisational skills required in most companies. It used to be regarded by many as an intrinsic ability, and not a learned skill. There are some characteristics that are necessary for a project manager, such as thinking clearly under pressure, that are probably innate. Practice however can develop skills such as these, and experienced Project Managers (PM) are almost preternaturally calm, even in the midst of chaos. Another essential skill is an ability to communicate well, and this can undoubtedly be learned

Engineers lead many projects, and anyone who works with them knows, they chose their profession because they like working with things rather than interacting with people. But with the right processes and procedures in place, good communication (even by engineers) is still possible. Most project communications are about what the project team has accomplished, the problems it has overcome, and what will happen next. Which is why they are mostly uninteresting to the intended audience, people don’t attend the review meetings, and project governance suffers as a result. Governance is about getting the important information to the project sponsors, so that the best decisions get made. So make your communications about decisions.

Sponsors are the people with a dog in the fight, and that dog is called reputation. On big projects they have made promises to the leaders and owners of the organisation, and now they are depending on the PM to deliver them. And as every good PM knows, mostly the expectations have been oversold, and reality was on suspension when the promises were being made. Reality, however cannot remain suspended indefinitely, and so PM’s need to make sure their sponsor knows when this is about to happen, what the available options are, how much they will cost, how long to implement and the likelihood of success. A few plausible reasons to explain the issue that the sponsor can use are also helpful.

In projects, it’s essential to delegate decision-making, (mostly downwards to ensure progress is made) but the ones that may lead to delay, cost overruns or most important of all, reputation damage to the sponsor, need to be delegated upwards. Successful PM’s keep their sponsor looking good, even if the situation is not. Sponsors, like all leaders, have power and influence, and hang on to it like barnacles; The experienced PM makes sure to provide no tools for others to prise the sponsor off the rock. The biggest PM’s sin is dropping surprises into review meetings. Sponsors need to know if there are serious issues before the review meeting, and have time to weigh the options before the meeting itself. The progress review meeting is the PM’s best opportunity to keep the sponsor feeling good. It is here where successfully dealing with failures can turn them into triumphs.

So review meetings are important. At the start of the project, work with the sponsor to ensure the steering committee is clear that review meeting non-attendance could be a career-ending event without prior sponsor approval. Don’t take on a project where this isn’t a rule. Keep the meeting focused and structured with sections on schedule, progress, cost and scope. Use charts and diagrams widely, words sparingly and photos generously. Leave the review team to read the progress reports at their leisure and focus on the decisions. Above all, don’t hide anything from sponsors that will ultimately be a bigger issue if it is not confronted immediately.

 

If you want to learn more about the Cosmapec approach to supply chain development and project management, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.