"No, not anymore," says Jons. "At the moment, in fact, we don't even have a single active contract with Burnside's people. That's the reason I'm calling. For the first time in months, they've expressed interest in buying something from us again."
"What are they interested in?"
"Model 12's," he says. "They need a thousand units."
"Terrific!"
"Maybe not," says Jons. "They need the whole order by the end of the month."
"That's only about two weeks away," I say.
"I know," says Jons. "The sales rep on this already checked with the warehouse. Turns out we've only got about fifty of the Model 12's in stock."
He's telling me, of course, we'll have to manufacture the other 950 by the end of the month if we want the business.
"Well... Johnny, look, I know I told you I wanted busi- ness, and you've pulled in some nice contracts since I talked to you," I say. "But a thousand Model 12's in two weeks is asking a lot."
He says, "Al, to tell you the truth, I didn't really think we could do anything with this one when I called. But I thought I'd let you know about it, just in case you knew something I didn't. After all, a thousand units means a little over a million dollars in sales to us."
"Yes, I realize that," I say. "Look, what's going on that they need these things so fast?"
He tells me he did some digging and found out that the order had originally gone to our number-one competitor, who makes a product similar to the Model 12. The competitor had had the order on its books for about five months. But they hadn't filled it yet, and this week it became clear they would not be able to meet the due date.
"My guess is that Burnside turned to us, because they've heard about us offering such fast turn-around to everyone else," he says. "Frankly, I think they're desperate. And, hell, if there is any way we can pull this off, it'd sure be a good way for us to save face with them."
248
"Well, I don't know. I'd like that business back again, too, but..."
"The real kick in the head is if we had only had the foresight to build a finished goods inventory of Model 12's while we had those slow sales months, we could have made this sale," he says.
I have to smile to myself, because at the beginning of the year I might have agreed with that.
"It's too bad," Johnny is saying. "Aside from the initial busi- ness, it could have been a big opportunity for us."
"How big?"
"Strong hints have been dropped that if we can come through on this one, we could become their preferred supplier," says Jons.
I'm quiet for a moment.
"All right. You really want this, don't you?" I ask him.
"So bad I can taste it," he says. "But if it's impossible..."
"When do you have to let them know?" I ask.
"Probably sometime today, or tomorrow at the latest," he says. "Why? Do you think we can really do it?"
"Maybe there's a way. Let me see how we stand and I'll give you a call back," I tell him.
As soon as I get off the phone with Jons, I round up Bob, Stacey, and Ralph for a meeting in my office, and when we're all together I tell him what Jons told me.
"Ordinarily, I would think this is out of the question," I say. "But before we say no, let's think about it."
Everybody looks at me with the certain knowledge this is going to be a waste of time.
I say, "Let's just see what we can do, okay?"
For the rest of the morning, we're busy with this. We go over the bill of material. Stacey checks on raw materials inventories. Ralph does a quick estimate of how long it will take to produce a thousand units after the materials are on hand. By eleven o'clock, he has calculated that the bottlenecks can turn out parts for the Model 12 at the rate of about one-hundred per day.
"So, yes, it would be technically feasible for us to take the order," says Ralph. "But that's only if we work on nothing else for two weeks except the thousand units for Burnside."
"No, I don't want to do that," I tell him, thinking about us
249
screwing up relations with a dozen customers just to please one. "Let's try something else."
"Like what?" asks Bob, who is sitting there with us, looking about as enthusiastic as a bump on a log.
I say, "A few weeks ago, we cut our batch sizes by half, and the result was we could condense the time inventory spends in the plant, which also gave us an increase in throughput. What if we cut the batch sizes by half again?"
Ralph says, "Gee, I hadn't thought of that."
Bob leans forward. "Cut them again? Sorry, Al, but I don't see how the heck that can help us, not with the volume we're already committed to."
"You know," says Ralph, "we have quite a few orders we'd planned to ship ahead of their due dates. We could re-schedule some of those in the priority system so they'd ship when prom- ised instead of early. That could give us more time available on the bottlenecks, and it wouldn't hurt anybody."
"Good point, Ralph," I tell him.
"But, hell, we still can't get a thousand units done no-how," drawls Bob. "Not in two weeks."
I say, "Well, then, if we cut the batch sizes, how many units can we do in two weeks and still ship our current orders on time."
Bob pulls on his chin and says, "I guess we could look into it."
"I'll see what I can find out," says Ralph, standing so he can leave and go back to his computer.
His interest finally piqued, Bob says, "Maybe I'd better go with you so we can noodle this thing out together."
While Ralph and Bob are wrestling with this new possibility, Stacey enters with news about inventories. She's ascertained we can obtain all the materials we need either from our own stocks or from vendors within a few days, with one exception.
"The electronic control modules for the Model 12 are a problem," says Stacey. "We don't have enough of this type in stock. And we don't have the technology to build them in-house. But we've located a vendor in California who has them. Unfortu- nately, the vendor can't promise a shipment of that quantity in less than four to six weeks, including shipping. I'd say we might as well forget it."
"Wait a minute, Stacey; we're thinking about a little change in strategy. How many modules could they give us per week?" I
250
ask her. "And how soon could they ship the first week's quantity to us?"
"I don't know, but doing it that way, we might not be able to get a volume discount," says Stacey.
"Why not?" I ask. "We'd be committing to the same thou- sand units-it's just that we'd be staggering the shipments."
"Well, then there's the added shipping cost," she says.
"Stacey, we're talking a million dollars in business here," I tell her.
"Okay, but they'll take at least three days to a week to get here by truck," she says.
"So why can't we have them shipped air freight?" I ask. "They're not very big parts."
"Well..." says Stacey.
"Look into it, but I doubt if the air freight bill is going to eat up the profit on a million-dollar sale," I tell her. "And if we can't get these parts, we can't get the sale."