Bias, with or without

One of the largest plants in the region had three years in a row of consistent volume production –at this point the focus from the engineering team was quality control and equipment performance. On my side, I asked my team to concentrate in reducing data-processing time, improve procedures and of course reduce Days Sales Outstanding. The plant was divided in two large sections, Section I and Section II, Section I producing an intermediary product to be used 100% by Section II which produced the final product. The whole production process was very particular it involved a massive amount of minerals and high consumption of power (heat and electricity). Section I, had larger storage capacity than Section II and both with different production rates (Tons). This created a problem because from time to time Section I needed to stop production every time the Silos from Section II were at full capacity.

Everything was running business as usual when all of a sudden from one month to the next, sales started to drop, little did we know that it was one of the signs of an industry disruption nationwide was already in progress. As you can imagine sales orders were erratic and volumes were not precisely consistent, and to make things worse –due to the difference is storage capacity and production rate of each Section-, the production process became a nightmare because every time Section I had to stop, the plant required additional resources to coordinate all necessary steps to “clean” the plant and have it ready to re-start, not to mention the amount of energy and time necessary to pre-heat the Kiln (in Section I)before it was ready for production. And of course, in every turn-on & turn-off we were spending a lot of time and you guessed it a lot of cash as well.

The engineering team was meeting constantly to operate the plant in the best possible way but we remained with a lot of headaches in production. At some point I decided to join these meetings, I remember some eyes rolling every time I expressed my opinion about certain stages of the process, I understood their position since I am the Finance guy that was the big bias, -you see? What do I know about physics and things like that, right? ?We continued the discussions and gradually that bias changed when I started to approach the problem from a different angle, the story is longer but suffice to say that I visualized graphically the erratic production volume of each section of the last 4 periods, put them together (they looked as spaghetti) and imagined the structure of the DNA molecule next to it, and then I said –“Wait a minute, we all know the graphical representation of the DNA, let’s say that section I is one side and Section II is the other side in terms of volume, we can calculate the breakeven point of the necessary production rate and storage capacity between the two sections of the plant. I think that will give us the optimum production rate (on & off) possible”, everybody looked at me with their eyes wide open -they were paying attention -I can tell you that. We resume the discussion and put together a list of action items to execute the plan inspired in the DNA model. The technical bias between the engineering team and Finance disappeared that summer.

If you ask me, what made the difference? Probably the most important factor was that we all got really involved and focused on finding the solution regardless of the source.

Are you been biased in a meeting before?

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#financeandaccounting

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