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That’s one thing I noticed in aerospace. The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than

That’s one thing I noticed in aerospace. The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than to have a 2 month buffer to handle demand surges or scheduling variability. Then they’d leave for similar roles at bigger companies.

throwaway2048 6y ago
That's a plague amongst modern management and corporate operations, you return amazing numbers by cutting all your inventory and production slack and it works fantastically, until a slight hiccup occurs and it fucks your production for years to come. But that is the next guy's problem, not yours. Efficiency and Robustness are very often a tradeoff, the more efficient you are, the more prone your entire operation is to minor disruptions. Something akin to overfitting in machine learning. Also something to consider is what happens when the entire economy is forced in that direction, where you either cut everything to the bone for the sake of efficiency, or go out of business due to competition.
- GlennS 6y ago
  There's also the issue that it's much easier to do quality control when you're receiving your supplies Just In Time. The longer the lag between producing a faulty part and trying to use it, the harder to diagnose the problem. The analogous software problem is probably having database backups sitting around without regularly testing if you can successfully restore from them.
  - varjag 6y ago
    A two month warehouse buffer doesn't really pose any problems to QC.
  - hef19898 6y ago
    That's why QC happens when parts are received. And not when they are to be used. And I really wished I the "everything is running on JIT" meme to die. Because it is just plain wrong.
akiselev 6y ago
> The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than to have a 2 month buffer to handle demand surges or scheduling variability. That sounds like a contractor milking a cost-plus contract.
- Guest42 6y ago
  Can you explain? This was a cost center for a large conglomerate with a number of multi-year contracts but I haven’t heard of cost-plus contracts only cost-plus pricing.
  - cptskippy 6y ago
    > haven’t heard of cost-plus contracts I don't know why someone would agree to them, but they're fairly common. Nasa awarded Boeing a cost-plus contract for the SLS. Basically they're awarded a contract for the cost estimate plus any overruns, it's basically a blank check.
hef19898 6y ago
Coming from a Supply Chain function in aerospace, I have to agree and disagree. 2 months of stock are somewhere around a turn rate from 4-6. A region some aerospace companies can only dream of. The problems are, that they stock to much of some parts and not enough from others. That problems gets worse when programs reach end of life, obsolescence is a severe problem then. Most of the demand fluctuations in aerospace, less so for spares, is home made. Delivery lead times and production lead times are so long, that done right, fluctuations are mainly a problem for long lead time items. And that is manageable.
- Guest42 6y ago
  I meant 2 months more as a floor across a majority of items(and it’s been a long time since then so there’s a certain amount of rounding). Production wanted to eliminate shortages whereas executives and accountants wanted to optimize turn rates while claiming to care about shortages. Overall, each of the projects had around 2000 unique parts (at least for what this particular plant was making). Occasionally, newer contracts would get a much higher prioritization and could grab parts (and employees) from older projects. Another scenario that would lead to extra demand was having test failures on a project that was nearing design freeze. I ended up changing industries to financial services, but will always have a deep respect and appreciation for what went into those projects.
  - hef19898 6y ago
    The funny thing is, that aiming for inventory levels, or certain levels across the board, can increase the likelihood of shortages. Higher stock means larger production lots and longer lead times. If for some reason your planned production / procurement doesn't match demand, almost a certainty with large production runs, one part cart run out of stock. And the large production runs make replenishment of this part difficult.
    - Guest42 6y ago
      It was a very fun game that required knowing the capacity of each supplier and their suppliers as well. The sales orders had to get matched up with airplanes and sometimes the planes would have shortages that would then instantly changes years' worth of scheduling. Overall I felt like there were a number of good strategies but that sometimes the strategizing interfered with the execution. Peoples tenure and the projects they went through often influenced their notion of ideal. By the time I started getting comfortable understanding these things, it was time to get a new job.

throwaway2048 6y ago

That's a plague amongst modern management and corporate operations, you return amazing numbers by cutting all your inventory and production slack and it works fantastically, until a slight hiccup occurs and it fucks your production for years to come. But that is the next guy's problem, not yours. Efficiency and Robustness are very often a tradeoff, the more efficient you are, the more prone your entire operation is to minor disruptions. Something akin to overfitting in machine learning. Also something to consider is what happens when the entire economy is forced in that direction, where you either cut everything to the bone for the sake of efficiency, or go out of business due to competition.

GlennS 6y ago
There's also the issue that it's much easier to do quality control when you're receiving your supplies Just In Time. The longer the lag between producing a faulty part and trying to use it, the harder to diagnose the problem. The analogous software problem is probably having database backups sitting around without regularly testing if you can successfully restore from them.
- varjag 6y ago
  A two month warehouse buffer doesn't really pose any problems to QC.
- hef19898 6y ago
  That's why QC happens when parts are received. And not when they are to be used. And I really wished I the "everything is running on JIT" meme to die. Because it is just plain wrong.

akiselev 6y ago

> The executives would far sooner run out of parts and have very expensive delays in order to hit turnover targets than to have a 2 month buffer to handle demand surges or scheduling variability. That sounds like a contractor milking a cost-plus contract.

Guest42 6y ago
Can you explain? This was a cost center for a large conglomerate with a number of multi-year contracts but I haven’t heard of cost-plus contracts only cost-plus pricing.
- cptskippy 6y ago
  > haven’t heard of cost-plus contracts I don't know why someone would agree to them, but they're fairly common. Nasa awarded Boeing a cost-plus contract for the SLS. Basically they're awarded a contract for the cost estimate plus any overruns, it's basically a blank check.

hef19898 6y ago

Coming from a Supply Chain function in aerospace, I have to agree and disagree. 2 months of stock are somewhere around a turn rate from 4-6. A region some aerospace companies can only dream of. The problems are, that they stock to much of some parts and not enough from others. That problems gets worse when programs reach end of life, obsolescence is a severe problem then. Most of the demand fluctuations in aerospace, less so for spares, is home made. Delivery lead times and production lead times are so long, that done right, fluctuations are mainly a problem for long lead time items. And that is manageable.

Guest42 6y ago
I meant 2 months more as a floor across a majority of items(and it’s been a long time since then so there’s a certain amount of rounding). Production wanted to eliminate shortages whereas executives and accountants wanted to optimize turn rates while claiming to care about shortages. Overall, each of the projects had around 2000 unique parts (at least for what this particular plant was making). Occasionally, newer contracts would get a much higher prioritization and could grab parts (and employees) from older projects. Another scenario that would lead to extra demand was having test failures on a project that was nearing design freeze. I ended up changing industries to financial services, but will always have a deep respect and appreciation for what went into those projects.
- hef19898 6y ago
  The funny thing is, that aiming for inventory levels, or certain levels across the board, can increase the likelihood of shortages. Higher stock means larger production lots and longer lead times. If for some reason your planned production / procurement doesn't match demand, almost a certainty with large production runs, one part cart run out of stock. And the large production runs make replenishment of this part difficult.
  - Guest42 6y ago
    It was a very fun game that required knowing the capacity of each supplier and their suppliers as well. The sales orders had to get matched up with airplanes and sometimes the planes would have shortages that would then instantly changes years' worth of scheduling. Overall I felt like there were a number of good strategies but that sometimes the strategizing interfered with the execution. Peoples tenure and the projects they went through often influenced their notion of ideal. By the time I started getting comfortable understanding these things, it was time to get a new job.