Silver Linings

Economically, we're not out of the wood yet. For the business I work at, sales continue to be greatly reduced from the same period a year ago. We saw some signs of recovery in the second quarter, but as we close out the third quarter, our order backlog has dropped back down.

September has been particularly slow. For our core business segment, the volume of product we are shipping this month is no more than what we shipped in August. However, due to the vagaries of our accounting system, we have five weeks of production this month, versus four weeks last month. For each week this month, we only have 80% of the activity compared to each week in August.

The bottom line to this it that there isn’t enough work for all the employees to have a full schedule. There is always the temptation in this situation to keep people busy by running extra inventory. Inevitably, however, you end up running the wrong mix of product, leaving you short of raw material to run what your customers will actually want. Also, by building inventory on the theory of “build it and they will come,” you make the correction that much worse when you finally recognize that increased sales are not just around the corner.

So I’m biting the bullet. I’m scheduling two fewer production days next week. At least this will give us a chance to do our end of quarter inventory on straight time. Normally we have the inventory crew come in at midnight after the last production shift at the end of a month, and they get time and a half.

The excess production only built up during the second half of this month. For the first couple of weeks in September, not only did we have a short week because of Labor Day, but we also had a lot of people out sick, which, in a perverse way, cut into our capacity. I needed all the healthy people who showed up for work. It was only after the wave of illness based and everyone came back to work that we began overproducing.

You know, not everyone can see the silver lining in a flu pandemic. And they call me a pessimist.