Ronald Althaus, CFPIM, CIRM, CSCP, CPM
My life in manufacturing has been plagued by silent seasonality. As a practitioner, it plagued me regularly and years later, as an instructor, I can tell from the nods and groans of my students that silent seasonality still stalks their factories. In a best case scenario, customer demand is beautifully uniform resulting in stabilized production schedules, uniform supplier requirements and a constant takt time. Capacity requirements and utilization are stable and waste is minimal. It is the production environment of our dreams. But, even in such an ideal manufacturing environment, short-sighted managers will destroy it with their desire to beat the monthly shipping targets. This is silent seasonality. Top managers can sense when the stress level of operations people is low. It usually means making the monthly shipping numbers is in the bag so, if some of next month’s orders can be shipped this month, we will exceed the monthly target, look good to our corporate parents and, perhaps, increase quarterly bonuses. But shipping orders early may mean giving the customer a break on payment terms or something similar. Expediting purchased components leads to expensive supplier overtime and premium inbound freight. Our internal scheduling is disrupted with overtime and capacity constraints.
We may succeed at shipping some orders early but that eats into next month’s shipping targets. And we can seldom trust sales people to understand the impact of silent seasonality. If customer demand is five million a month and last month we scrambled to ship seven million, then the following month’s target should be three million because customer demand did not change. But sales will still set next month’s target at five million and tell us we are lucky it isn’t seven million since we proved we can accomplish that. The only way to ship five million the next month is to again pull orders up from the following month. This foolishness continues month after month until, at the end of the year, we have shipped the same amount in eleven months that we would have shipped in twelve. Except now we have experienced hundreds of thousands of dollars in various expediting costs and have a month of factory capacity to fill. And we gained no additional business or customer good-will doing any of it. Years ago there was a cartoon strip titled “Pogo”. The main character was quoted saying “We have met the enemy and they is us!” How true this is with silent seasonality.
I used an example of steady customer demand to make my point but it really doesn’t matter what the demand pattern is. Actual customer demand will often be supplemented by silent seasonality demand when managers attempt to exceed shipping targets by trashing other numbers that their bosses do not examine as carefully. Some readers will observe that lean processes make silent seasonality less onerous. The production flexibility imparted by the lean approach (flexible capacity, cross training, pull processes) make a factory more able to cope with variation in demand. But lean theory is very clear about demand variation. It challenges supply chain professionals to modify lean processes as customer demand changes. Silent seasonality is not customer demand so attempting to accommodate it results in waste.
There are certainly organizations out there that think in the long term and do not create silent seasonality. There are not enough of them and I toast them with the greatest respect. They understand that profitability results from long term thinking. If silent seasonality is common behavior at your company then I suggest your organization review and understand the associated costs. Then eliminate those costs or change the behavior. Don’t let Pogo’s famous quote describe your company. And, if you succeed in eliminating the costs of silent seasonality, you have really succeeded in reducing the leadtimes to your customers. Passing a leadtime reduction to your customer is likely to generate more sales. Constantly pulling shipments up, without reducing leadtimes, will only make you look good internally and briefly.
Ron Althaus is and independent instructor who teaches all APICS classes following a 25 year career in various manufacturing environments. He can be reached at 513-351-5005 or 513-703-6412 or firstname.lastname@example.org or www.althausconsulting.com.